Taiwan Pharmaceuticals and Healthcare Report Q4 2012

Having been calculated to have reached TWD135.10bn (US$4.59bn) in 2011 sales, Taiwans pharmaceutical market is expected to post a compound annual growth rate (CAGR) of 3.3% in local currency terms to 2016, which is considerably below the historical (2006-2011) – and already modest - growth of 4.6%. While patented drugs comprise around two-thirds of the market, barriers to entry for research-based companies are considerable, and include unfavourable intellectual property (IP) and pricing and reimbursement climate. Nevertheless, we expect patented drugs to retain their market share over the next five years, partly due to concern over the use of generic medicines exists among patients.

Headline Expenditure Projections

- Pharmaceuticals: TWD135.10bn (US$4.59bn) in 2011 to TWD140.05bn (US$4.59bn) in 2012; +3.7% in local currency terms and -0.1% in US dollar terms. Forecast unchanged from Q312.

- Healthcare: TWD953.29bn (US$32.42bn) in 2011 to TWD1,017bn (US$33.56bn) in 2012; +6.7% in local currency terms and +2.9% in US dollar terms. Forecast unchanged from Q312.

- Medical devices: TWD52.63bn (US$1.79bn) in 2011 to TWD54.88bn (US$1.80bn) in 2012; +4.3% in local currency terms and +0.5% in US dollar terms. Forecast slightly higher from Q312 due to the revision of historical data.

Risk/Reward Rating

Taiwans score in the current version of our proprietary Pharmaceuticals & Healthcare Risk/Reward Ratings (RRRs) remains unchanged in relation to the previous three quarters.

With a composite figure of 60.2, Taiwan is again ranked sixth out of the 18 countries surveyed in the Asia Pacific region, above Hong Kong and below Singapore. Taiwans risk component remains judged more favourably for multinationals than its rewards, which are subdued by factors such as relatively low pharmaceutical prices and opaque reimbursement.

Key Trends & Developments

- In July 2012, government officials and medical specialists called for better integration across different disciplines to accelerate biotechnology development in Taiwan, which is seen as having the potential to improve its competitiveness by better integration of the academic, industrial and government sectors, according to Wang Jin-pyng, the president of the Legislative Yuan. While formulating national health insurance reforms, the authorities must take into account future developments in the pharmaceutical industry, said Jin-pyng.

- In May 2012, Taiwan-based Sinphar Pharmaceutical started construction of a new factory for manufacturing cancer reagents. Building the plant is expected to involve total investment of around TWD500mn (US$16.7mn), Sinphar chairman C.W. Lee said. The factory is likely to start mass production in April 2013 and its maximum annual capacity will be 5mn injection reagents, he said. The total investment in the new factory is expected to be returned by 2016.

- In the same month, a research team from National Cheng Kung University (NCKU) in Taiwan reported the discovery of a potential anti-osteoporosis and anti-rheumatoid arthritis drug, the anti-interleukin-20 (anti-IL-20) antibody. The team is led by Ming-Shi Chang, professor of NCKUs biochemistry and molecular biology department. The team will license some intellectual property and transfer specific technology to Danish drugmaker Novo Nordisk for a cash consideration of US$13.3mn when the project is completed successfully.

BMI Economic View

Contrary to consensus expectations, recent economic data releases suggest that the worse is not yet over for Taiwans economy. The Council for Economic Planning and Developments (CEPD) coincident index shows that the economy has seemingly bottomed out, with the index inching into positive territory for the first time in seven months. That said, as we look at data that provides more leading indication, we observe signs that further weakness is in store for the economy.

BMI Political View

The capital gains tax saga presently unfolding continues to undermine the government and President Ma Ying-jeous bid to consolidate support following Mas reappointment to a second term. Just five months into the job, ex-Finance Minister Christina Liu resigned from her position, citing ideological differences with regards to the capital gains tax proposal. The tax issue exposes the fact that a vacuum exists between Ma and his cabinet, and the legislature. Until we begin to witness Ma and his team consolidate their power within the government, we highlight that the policymaking process going forward may be challenged.


The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.