Pharmaceutical Companies Returning to Taiwan to Form New Base

September 18, 2006

 In the 1990s, Taiwan pharmaceutical companies were consistently among the top ten-ranked in the US market. In the past two years, many companies have been returning to Taiwan to seek new technologies and to reduce costs -- a trend that indicates that Taiwan's own pharmaceutical industry technology has greatly improved and is reaching international standards.

Some of those returning to Taiwan include Allan Chao of the top-five pharmaceutical giant Watson, Chen Chih-Ming, founder of top-ten company Andrx, and Larry Hsu, president of Impax Labs. These people have returned to Taiwan in the several years to find technology and cooperation partners, with the hope that Taiwan can serve as a production base and once again establish their strength in the global market.

In 2005, Watson Pharmaceuticals yielded revenues of USD 1.65 billion, and in order to find upstream material pharmaceutical factories in Asia, last year the company increased its investment in ScinoPharm Taiwan. Watson is now the largest shareholder in ScinoPharm, with shares of over 50%, exceeding Uni-President Group's share.

ScinoPharm Taiwan posted earnings of NTD 1 billion for the first half of 2006, and after many years of development, is currently making profits. As Watson's need for raw materials from Asia grows larger and larger, ScinoPharm's role as Watson's upstream material medicine supplier is becoming greater in importance.

In addition to ScinoPharm, Watson holds huge distribution channels in the US, which is used for product marketing by several of Taiwan's largest pharmaceutical companies, Yung Shin and Standard Chemical and Pharmaceutical.

Last year, Impax Lab -- which posted revenues of USD 200 million -- applied to build a factory at the Hsinchu Science Park. The company also hopes to invest NTD 4 billion to build two generic medicine factories at the Zhunan Industrial Park, with construction slated for next year. The company hopes to cut personnel costs by more than half while continuing to manufacture pharmaceutical products that comply with US standards.

Impax Labs was founded by Larry Hsu, and has a market value of approximately USD 1 billion. At the beginning of the year, he visited many countries in search of a new production base, and decided on Taiwan in the end -- the main reason being that the company had already established technology cooperation relationships with several Taiwan manufacturers.

Andrx is the 16th largest scientific pharmaceutical company in the US. After retiring from Andrx, founder Chen Chih-ming returned to Taiwan to form the Ancheng International Pharmaceutical company. He recently purchased the Mai-de Pharmaceutical Factory's production line in Taoyuan, and entered a strategic partnership with Empax Pharma, a pharmaceutical R&D company. Chen hopes to enter the US market using Taiwan technology.

With the emergence of the generic medicines market In the 1980s, many left Taiwan to work in the field, with the exception of Huang Song-xiong of American Pharmaceutical Partners from South Africa.

Xu Zhao-hui, Vice Chairman of IVAX said the Taiwanese stand out in the global generic medicines field -- but Taiwan's achievements are not well-known in the Asian market. As the market continues to grow, Taiwan must speed its development in Asia, said Xu.

(Economic Daily News)