BTC: Accelerate product market entry, enhance capital market and foster talent pool

The annual BTC (Bio Taiwan Committee) conference, which has been a key policy forum for Taiwan’s biotech industry concluded on September the 9th.  Experts from Taiwan and abroad gathered together to discuss on how to foster the growth of Taiwan's biotech industry, and pointed out several important directions for development of the pharmaceutical, medical equipment, healthcare, food and agriculture industries.

One of the outcomes of the meeting is the mechanism for accelerated review processes of new drug and medical equipment.  Following the green pathway, domestic R&D companies of new drug and medical equipment will be able to get fast approvals of their products.  In addition to benefiting from a shortened R&D time-span, companies targeting Taiwan as the initial market for new drug will also benefit from pricing advantages in the National Health Insurance (NHI).  For example, TaiGen  has filed application to the NHI and expects to get a favorable price for its new anti-infective Nemonoxacin (???).  This price will also serve as a reference in future entries of the drug to China and other overseas markets.

A good-sized capital market is essential for fostering development of biotech start-ups.   To promote a world-caliber biotech capital market in Taiwan, president Chi-Huey Wong of Academia Sinica recommends setting up several large-scale biotech venture capital funds, based on combined inputs from the National Development Fund, state-owned enterprises or public banks and domestic biotech ventures.  To help retain talents in biotech companies, the meeting also recommends offering stock options to non-fulltime employees, and excluding stock option revenues and cash capital increases from combined income taxes.

The current total revenue of Taiwan’s biotech companies is about $400 billion TWD, according to a statistics by the Ministry of Economic Affairs.  About 70% of the revenue are based on the domestic market.  However, the biotech industry is a global industry, and therefore has to develop into the international market, and hence make sustainable innovative breakthroughs in global market strategy.  Recently, USA signed a historic Trans-Pacific Partnership (TPP) agreement, wherein provisions for pharmaceutical and biotech patent protections are expected to markedly impact the global biotech industry.

Biotech drug patent issues draw keen attention

The TPP, which covers the second highest portion (40%, after WTO) of global economy, comprises USA, Japan, Australia and 12 other countries as the founding member states.  One of the TPP provisions that draws keen attention from the biotech industry concerns the confidentiality protection period of new drug.  Current leader in the field of biotech drug - USA, had advocated a 12-year protection period, while other member states such as New Zealand and Australia, a 5-year protection period - due to high annual drug expenditures.  An 8-year protection period was recently agreed upon after negotiations among the members.   This implies relatively early revelation of new drug confidential information, and hence relatively early entries of modestly priced biosimilars to the global market for benefits of worldwide patients.

In addition to shortening the confidentiality protection period of new drug, a "patent linkage system" which initiated in the USA has been introduced.  The system will serve as a forewarning measure during the market approval process of new drug or medical equipment, by linking up the examination and registration procedures with product patent status to check for patent infringement.  It has been implemented in USA since 1984, with the main purpose to protect newly marketed drugs against subsequent applications and resolve patent disputes before the drug is marketed.  After implementation of the “patent linkage system”, the TPP member states will have stronger protection of innovative drugs.  The drug market of Taiwan is relatively small compared to those of Europe and China, therefore new drug companies of Taiwan have been targeting the US market by integrating patent analysis into business models.  In the long run, the patent linkage system should offer marked advantages to new drug developers.   However, for the majority of Taiwan biotech companies who are generic drug developers, changes in international market competitions after the TPP agreement will remain a key focus for astute observation.