Dallas, TX -- (SBWire) -- 10/09/2010 -- In our Q410 update, Taiwan has again retained sixth place – on a regional basis – in BMI’s Pharmaceuticals & Healthcare Business Environment Ratings, out of the 17 markets surveyed in Asia Pacific. Globally, Taiwan’s TWD123.4bn (US$3.81bn) pharmaceutical market is viewed as the 27th most attractive, out of the 83 markets surveyed within our ever-expanding pharmaceutical universe. However, although well-developed, the Taiwanese market represents a challenging proposition, given its strict pricing and reimbursement environment, which hampers market access for innovative medicines, as well as pending patent expirations. We therefore forecast an unspectacular compound annual growth rate (CAGR) to 2014, which will come in at 3.72% in local currency terms, to give the overall market value as TWD148.1bn (US$4.94bn). Given the increase in trade links between China and Taiwan, the two countries are working towards regulatory system improvements. To this end, they recently signed a cross-strait bilateral agreement on the protection of intellectual property rights (IPR), which also concerns pharmaceuticals. The agreement aims to encourage and protect innovation, as the countries aim to create a formal platform for solving disputes and improve their international competitiveness. In a related – and worrying – development, however, an official investigation reportedly found that as much as 25% of pharmaceutical products in Taiwan are counterfeit, substandard or illegal, which is an area in need of attention.

In the meantime, the Taiwanese government remains committed to the development of the country’s biotechnology industry. The authorities are aiming to make the biotech industry one of their priority sectors for attracting foreign investment, with a view to increasing the annual output value of the industry to more than TWD1trn (US$30.86bn) in four years. The government also envisages an increase in the research and development (R&D) contribution in the field of biotechnology to some 3% of GDP by 2014. However, in a development that somewhat clouds the attractiveness of the country’s biotechnology sector, the director of well-known Academia Sinica's Institute of Biomedical Sciences, Chen Yuan-tsong, was being investigated by the Shilin District Prosecutors Office in Taiwan over the potentially illegal awarding of contracts.

In terms of other major developments in Taiwan that will have an impact on the performance of its pharmaceutical market, we expect that consumer price index (CPI) will finish the year at 2.0%, on the back of continued economic expansion and demand-pull pressures. However, while the Taiwan's economy is demonstrating a continued recovery (we expect a 5% GDP expansion in 2010), the pressures on public healthcare and pharmaceutical finances posed by the lack of separation between prescribing and dispensing and overprescribing, among other factors, will preclude a stronger value growth of the pharmaceutical market. Additionally, we reiterate our below-consensus 3.4% real growth forecast for 2011, expecting a coming Chinese slowdown to weigh heavily on Taiwan's economy next year.

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