The Taiwanese Situation

Positives:

The Taiwanese Government is committed to building a complete biotechnology ecosystem in the country.

54 Thompson, S. (2001). President of the Royal Society of New Zealand.

Taiwan’s efforts and policies to develop its biotechnology industry, and its strategic use of clusters have been quite successful. Today there are over 160 private firms engaged in the development of biotechnology products in Taiwan today. These firms range in size from 3 to approximately 400 employees. Since 1979, when the government began to target the

development of the biotechnology industry, the number of biotechnology companies has increased at a compound rate of growth of 12.7%. Almost all of these firms were established as small businesses, with 74% initially having fewer than 50 employees and 90% with initial capitalization of NT$500,000 or less.⁵⁵

In general, Taiwan has specialized in a few areas of biotechnology. Since 1995, more than 400 biotechnology firms have been established (not all of which continue to be involved in the industry). These firms primarily focus on developing medical devices, biologics and traditional Chinese medicines, with approximately 60% of these firms being primarily in one of these three endeavors.

Large numbers of technical experts of Chinese ancestry have returned to Taiwan to work within the science parks that have been established. Whether investing in plant construction themselves or engaging in production or R&D work, these people have made a significant contribution towards raising the level of technology in related industries in Taiwan. One of the major contributions that the industrial parks have made to Taiwan’s industrial

development is, therefore, the role it has played in introducing overseas technology and encouraging technical specialists living overseas to return home.⁵⁶

Taiwan’s direct investment policy under which the government provides financial support to help establish larger companies in key fields results in stock ownership by the government enabling some of the investment to be returned (or a profit made) but also, importantly, gives the government voting rights and the ability to influence the behavior of the firm.

Negatives:

55 “New Industry Development Strategy and Measures: Biotechnology Industry,” (2003), Taiwan Ministry of Economic Affairs, Industrial Development Bureau,

56 San, G. and Wang, J.C. (1996) ‘Science and technology and industrial development strategy in Taiwan’, Conference on Economic Policy and Industrial Development – An Appraisal of Economic Development in Taiwan, Taipei, Yu Kuo-hua Cultural and Educational Foundation, (in Chinese) June 5.

Like New Zealand, Taiwan’s regulatory environment still has too many restrictions and disincentives with regard to innovation. There is a need in both countries to clean up, simplify and remove regulatory barriers that discourage the private sector’s investment in R&D.

Biotech research in Taiwan is largely conducted by government labs and universities. Local biotech companies lack the required infrastructure to conduct and commercialize research.

Collaborations with government research labs and universities are likely to provide the much needed impetus for the biotech industry.

The shortage of research and development as well as human resources is hindering

government policy. Due to issues such as the demand for technology transfer, there needs to be an increased focus on the recruitment of top-level managers and scientists, import of innovative research equipment, and partnerships with biotech-competent countries.

The concentration of venture capital funding in mature markets (largely consumer electronics and semi-conductor) requires evaluation. The capital invested into emerging industries is insufficient to induce the required levels of R&D, and so, innovation. Incentives to provide funding to the biotech industry, which requires many years before any ROI is shown, are needed.

In Taiwan, the government is characterized as ‘interventionist’, as opposed to merely facilitating innovation e.g. the establishment of research institutes to directly conduct a range of research that then becomes available to local industry. In effect the Taiwan government is focused on providing the tools of innovation i.e. technically educated students, government funded research, training, information. Shyu has suggested that in this approach the needs of industry are not always served by such a supply-sided policy.⁵⁷ He explains that this is due to the separation of education, industry and government and due to the political nature of such a government focused system.

Table 7. Summary of findings

57 Shyu J. Z., National Innovation Systems in The Borderless World, 2006

New Zealand Taiwan

Positives

y Government has played a significant role

y Funding has increased y Organised/joint effort by

government depts. To

implement planning initiatives y Regulatory environment is

open and transparent y Positive developments

continue in the area of taxation y The recent formation of NZBio,

and inclusion in the Australia New Zealand Biotechnology Alliance and various other support and promotional programs

y Government commitment building a complete biotechnology

ecosystem in the country

y Strategic use of clusters has been quite successful

y Specialisation

y Large numbers of technical experts of Chinese ancestry have returned to Taiwan to work within the science parks

y Direct investment policy

Negatives

y current NZ commercialisation sector is small and immature y problems in the seeding

stages, with insufficient experience in both business and technologists to transfer ideas to the commercial incubator stage

y overall structure of the funding system may hinder some aspects of the innovation process:

• hinders co-operation between the research organisations with universities and CRIs competing for limited contestable funds

y CRIs are revenue earners, thus often neglect existing

infrastructure in favour of creating their own

y Research at universities is often more basic than applied, i.e. in the area of the

researchers’ expertise and

y Regulatory environment still has too many restrictions and disincentives y Local biotech companies lack the

required infrastructure to conduct and commercialize research y Concentration of venture capital

funding in mature markets (largely consumer electronics and semi-conductor) requires evaluation y Interventionist, supply-sided policy

may not always serve the needs of the industry

interest

y SME R&D limitations