FINDING A NICHE
Hsing-Jien Kung, president of Taiwan's National Health Research Institutes, believes that "instead of developing along the
same lines as the industry in the US," Taiwan should "look to position itself as a niche player, that can offer innovative
solutions to larger countries."
Picture of National Health Research Institutes (NHRI) facilities
Rongjin Lin, chairman of TTY Biopharm, perhaps the most pioneering and internationally successful of Taiwan's 'old guard'
of generics companies, puts it more succinctly. He tells his peers in the industry, "Find a cost advantage, or find a niche!"
Costs in Taiwan aren't too bad, with a corporate tax rate of 17 percent and labor outlays that the industry reports are stable
relative to China's more inflationary environment. But Taiwan's generic industry, populated by SMEs who in this small, M&A-averse
market may form consortia but not mega-companies, lacks the scale and vertical integration to play the commodity game.
ScinoPharm: By the numbers
Taiwan has opted for a niche. Charles Lin of US-focused generics producer Lotus Pharmaceuticals reports, "We have focused
on so-called 'multiple barrier' products—products that are difficult to produce, and therefore represent significant barriers
to entry: formulation barriers, potency barriers, bioequivalence barriers, and so on. We have partnered with strong local
API producers like Formosa Laboratories, which are also capable of operating on this level. Our strategy is to avoid competition,
rather than meet other companies head-on."
Karen Wen, President, Mycenax Biotech Inc.
Charles Lin hopes that this strategy will be his entry ticket to the global market—especially the US. He says that Lotus doesn't
want to be a 'local' company anymore. Like many of its peers, Lotus sees diminishing returns from its traditional Taiwan-based
business, and is constrained by the size of the market even on good years. "Most of us are trying to go global, but the problem
is in the capability. Only two or three local generics companies, ourselves included, are actively pursuing an international
agenda," says Lin.
Wen Lung Su, Chairman, Taiwan Advance Bio-Pharmaceutical Inc.