October 18th 2003

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Articles from this issue:

COVER STORY: ENVIRONMENT: Don't spoil a good story with the facts ...

CANBERRA OBSERVED: Reshuffling the decks

AGRICULTURE: Unrestricted water trading a danger to farmers

FEDERAL ELECTION: Deregulation, drought, the dollar and the $7.5 billion surplus

FAMILY: AFA Conference calls for strengthening of marriage law

COMMENT: Poor always the losers in a middle class game

LETTERS: WA capitulates on Competition Policy (letter)

LETTERS: Taiwan and the UN (letter)

LETTERS: First Mildura Irrigation Trust (letter)

LETTERS: Rural economy (letter)

LETTERS: The future of rail (letter)

TAIWAN: Making strides in biotech

STRAWS IN THE WIND: Flying down to Rio / Shooting stars and black holes / Digging holes and filling them up again

RELIGIOUS AFFAIRS: Dr Pell's new appointment welcomed

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Making strides in biotech

by Jeffry Babb

News Weekly, October 18, 2003
Jeff Babb looks at the way the Taiwanese Government has helped create and underwrite the island-state's biotechnology industry. Are there lessons here for Australia?

Biotech is big news, but can Taiwan repeat its success with the information technology industry and become a world centre in biotech, as the Government in Taipei intends?

In addressing the "Bio Taiwan 2003" trade fair at the World Trade Centre, President Chen Shui-bian said the Government had included biotech in its "Challenge 2008: Two trillion, two stars" industrial development program in an effort to make Taiwan into a regional biotech hub with a sound investment climate, as well as a genetic study centre and a "flower kingdom".

The title refers to the hoped-for NT$2 trillion (A$500 billion) value for the biotechnology and nano-technology industries.

The Government has helped set up 77 biotech companies and introduced combined capital investment of NT$53.9 billion (A$2.7 billion) into the industry.

In southern Taiwan, 17 companies have opened in the Taiwan Science-based Industrial Park as of the end of last year, with NT$12.6 billion (A$630 million) in total investment.

In addition, the biotechnology section for companies in the Hsinchu Science-based Industrial park is slated to become operational in 2006 following an injection of NT$27.3 billion (A$1.3 billion).

A "national flower park" planned for central Changhua County and an "orchid biotech park" for southern Tainan County has seen the first stage of their construction.

Blueprints for an "agricultural biotech park" in southern Pingtung County and an "ocean biotech park" in eastern Ilan county have also been completed.

Two state-owned enterprises, the Taiwan Salt Industrial Corp and Taiwan Sugar Corporation have also diversified into the biotech sector by exploring the domestic cosmetics market.

"Since the biotechnology industry possesses a high value added potential, we thought the Government should make efforts to help expedite the research and development of the nation's key biotechnology industry in the internationally competitive market," said Premier Yu Shyi-kun.

Is this effort paying off?

Government statistics show that private investment in Taiwan's biotech industry has increased significantly in recent years, up from NT$12.1 billion (A$600 million) in 1999 to NT$20.3 billion in 2002. The number of newly established biotech firms also grew from three in 1997 to 150 in 2002.

While government is prepared to throw money at the biotech industry and private companies have taken up the running, the biotech industry is very different from the information technology industry.

For one thing, money is very slow to come in. It could take ten years from the beginning of a project to the time it is commercialised - meaning no income for a small company.


There are ways around this. Australia, for example, has a flourishing biotech industry based on the propensity of Australian investors to support speculative ventures on the Australian Stock Exchange.

If the Federal Government were to support initial public offerings (IPOs) of small biotech firms, it would give them access to capital while the ventures came to fruition.

This is, of course, highly speculative and biotech stock prices are subject to wild swings, but it is likely to be a popular investment vehicle on the Taiwan Stock Exchange.

Biotech industry leaders also stress the role of venture capital firms to support start-ups.

Such venture capital firms do exist in Taiwan, and the Government is assisting these private risk-takers in their investments, to support the fledgling biotech sector.

As access to markets is controlled by massive international chemical and pharmaceutical companies, it is vital, as again industry leaders stress, that Taiwan companies form links with international companies.

The Government has also been urged to take a number of legislative initiatives, which could aid the industry.

Biotech firms have called for a biotech products quality certification system, as local companies have seen promising prospects for their newly developed technologies in the international market and they are keen to maintain these advantages.

The role of the Government in the biotech industry was the highlight of the Biotechnology CEO Forum held by the opposition Kuomintang (KMT) in Taipei and also the APEC biotech conference held in Taipei in late September.

The obscure legal framework, uncoordinated government policies and obstacles to raising capital were hindering the development of the biotech industry, said industry experts.

"The ambiguous legal framework in Taiwan has caused many firms in the biotech sector to not dare to pioneer new fields with good business potential," said Chris Tsai, chief executive at Bionet Co, which runs the first umbilical cord blood bank in Taiwan.

Hwang Sam-rong echoed Tsai's point, saying,"We need to revamp Taiwan's system with regard to various biotechnology issues," with laws governing the sale of stem cells and protection of information should be established as soon as possible.

Industry experts also caution that biotech covers everything from gene technology, Chinese herbal medicine to pharmaceutical development and urged the Government to make headway and concentrate on one or two fields, saying that either Taiwan can try to compete with the giant US chemical and pharmaceutical giants, or try to find a competitive niche like Japan and Germany.

Many government enterprises are involved in the biotech industry, but often don't seem to have much of an idea of what other government bodies are doing.

Assuming a dominant position in the biotech market will be much more difficult than information technology, if only because so many countries are trying to do the same thing.

Taiwan has been compared in biotech development to a jazz band - all heading vaguely in the the same direction, but each adding its own clamor, whereas Singapore is like a symphony orchestra - all playing the same score and keeping tune, says David Silver, president of BiotechEast in Taipei.

  • Jeff Babb is an editor with Taiwan's China Post

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