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Taiwan Pharmaceuticals and Healthcare Report Q1 2012
Business Monitor International, Nov 2011, Pages: 112
Business Monitor International's Taiwan Pharmaceuticals and Healthcare Report provides industry professionals and strategists, corporate analysts, pharmaceutical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Taiwan's pharmaceuticals and healthcare industry.
BMI View: We maintain the view that Taiwan is an attractive pharmaceutical market given its relatively large pharmaceutical sector (US$4.1bn) and its close proximity with China will attract investors who wish to make inroads into the Chinese market. Its moderate growth and a highly regulated pharmaceutical environment will attract risk-adverse investors. However, downside risks include the government’s commitment to provide affordable healthcare for its people and consequently cutting drug prices, lowering profit margins for pharmaceutical companies.
Headline Expenditure Projections
- Pharmaceuticals: TWD129bn (US$4.10bn) in 2010 to TWD135bn (US$4.64bn) in 2011; +4.7% in local currency terms and +13.3% in US dollar terms. Broadly in line with our forecast.
- Healthcare: TWD759bn (US$24.12bn) in 2010 to TWD783bn (US$26.9bn) in 2011; +3.2% in local currency terms and +11.7% in US dollar terms. Broadly in line with our forecast.
- Medical devices: TWD46bn (US$1.47bn) in 2010 to TWD49bn (US$1.70bn) in 2011; +6.5% in local currency terms and +15.3% in US dollar terms. Broadly in line with our forecast.
Business Environment Rating: Taiwan experienced a 2.43% decrease in its Business Environment Rating (BER) from 61.7 in Q411 to 60.2 in Q112. This decrease was due to a decline in its Industry Rewards score, which rose from 57 to 53 as we forecast a slower pharmaceutical sales compound annual growth rate (CAGR) of 3.9% in the medium term. In contrast, Singapore (fifth) which was ranked above Taiwan (sixth) is expected to have a CAGR of 4.7%.
Key Trends & Developments
- In October 2011, a total of 280,000 people received flu vaccination shots during the first three days of the annual vaccination programme that started in Taiwan on October 1 2011, according to the Centers for Disease Control (CDC). CDC Deputy Director Shih Wen-yi revealed that 220,000 free influenza shots have been used out of a total of 2.66mn, indicating 60,000 more vaccinations than in same period a year ago.
- In September 2011, a vaccine against enterovirus 71 (EV71) is likely to be launched in Taiwan by 2014, according to Hsiao Mei-ling, deputy minister of the country’s Department of Health (DoH). The vaccine, developed by Taiwan’s National Health Research Institutes (NHRI) to immunise children against EV71, has cleared the first phase of clinical trials. However, second and third phases of the trials still require completion. Taiwan has invested TWD1bn (US$33.94mn) in the development of the vaccine since 2007.
- In the same month, Taiwan’s Hsinchu Biomedical Science Park (HBSP) approved 12 firms to set up their operations in the park with TWD1.62bn (US$54mn) in investments, reports CAN, citing park authorities. The firms, which will be located in the park’s biotech building, will be engaged in the development of technology, including artificial tooth roots, drug delivery systems, orthopaedic implants and other high-end medical products. The park, covering an area of 381,000sq m, will include a hospital, research centre and biotech development and industrial incubation facilities.
BMI Economic View: Taiwan’s industrial and trade activity exhibits clear signs of slowing. Industrial production and exports are unlikely to hold up in the coming quarters as a retardation in global economic activity continually weighs on the economy. Although we may see production and exports pick up in the immediate term – as Christmas and New Year festivities draw closer – we expect to see an overall deterioration through Q411 and 2012.
BMI Political View: With Taiwan’s national elections coming in a few months, opinion polls show that electoral support remains equally divided between the Kuomintang and the Democratic Progressive Party. This reinforces our view that the elections are too close to call at the moment. We remain convinced that cross-Strait relations between Taiwan and China are unlikely to be affected regardless of election outcome in 2012 as economic ramifications outweigh the political aspirations.
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