You might have noticed discussions about "weight loss drugs" in the news. Novo Nordisk, a Danish biotech pharmaceutical company, has long specialized in obesity and metabolic treatments, while Eli Lilly, a U.S. pharmaceutical company, has focused on diabetes treatments. Both companies have launched GLP-1-based weight loss drugs (initially developed to treat high blood sugar due to diabetes), and their market values have surged. This has allowed the biotech industry to gain significant attention alongside the AI boom.
This article will provide a brief overview of Taiwan's biotech industry and its future prospects.
Taiwan's Current State of the Biotech Industry
Biotechnology is, in simple terms, the use of living organisms or biological systems to create various medical products and technologies. This field integrates the latest technological advancements to enhance medical treatments and improve human health and healthcare services.
In Taiwan, as the population ages, the elderly population in 2023 has doubled compared to 2002. In addition to Taiwan's growing demand for chronic disease treatments and elderly care, international companies are also investing in Taiwan, making the biotech and medical device industries a continuously expanding sector.
Below we will divide the biotech industry into three main categories—pharmaceuticals, health supplements (food technology), and medical devices—for a more detailed explanation.
The Biotechnology Industry Category
Pharmaceuticals
Pharmaceuticals involve the research, manufacturing, and sale of drugs, covering the entire process from scientific research to product launch. The pharmaceutical industry mainly includes active pharmaceutical ingredients, traditional Chinese medicine, Western drug formulations, biologics, and biosimilars. Taiwanese companies have traditionally focused on producing Western drug formulations for export, with some companies now developing new drugs, primarily focusing on generic drugs and biologics. In recent years, due to the pandemic, aging populations, and rising healthcare costs, the focus on new drug development has increased globally, leading to the emergence of biosimilars and CDMO (Contract Development and Manufacturing Organization) services.
However, new drug development is a high-risk, high-reward endeavor. It requires passing three clinical trial phases and obtaining regulatory approval before hitting the market, making the process time-consuming and costly. Some companies license promising drugs to international pharmaceutical giants during clinical trials to earn royalties. Key players in Taiwan include companies like Oneness Biotech (4743), Foresee Pharmaceuticals (6576), Lotus Pharmaceuticals (1795).
Health Supplements (Food Technology)
Health supplements, also known as nutritional supplements, are approved by health authorities and labeled with specific health benefits. Their benefits typically include nutritional support, immune enhancement, and sleep improvement. The pandemic heightened public awareness of health, creating enormous opportunities for health supplements. By 2021, Taiwan's health supplement market was worth nearly NT$100 billion, and the annual growth rate continues to rise. Despite having popular products and advanced technology, Taiwan relies heavily on imported raw materials, and much of the market is driven by domestic demand. Profit margins for health supplements are often linked to branding and advertising, as consumers tend to trust large, well-known brands.
In addition, Taiwanese health supplement companies often explore innovative products and export opportunities based on consumer demand. With rising interest in natural, organic, and additive-free supplements, manufacturers are focusing on providing personalized nutrition solutions. Major companies in this sector include Norbel (6844), MedFirst Healthcare (4175), Great Tree Pharmacy (6469).
Medical Devices
The biotechnology and medical sector is one of Taiwan's six core industries, and medical devices is the largest sector in terms of output, export percentage, and growth rate. Taiwan’s medical device industry continues to innovate, integrating AI, cloud computing, mobile sensors, and smart diagnostics to meet clinical needs.
Medical devices are classified into three levels based on risk, from low to high:
- Class I medical devices (low risk): cotton swabs, gauze, mechanical wheelchairs, medical masks, etc.
- Class II medical devices (moderate risk): blood glucose meters, blood pressure monitors, thermometers, ear thermometers, etc.
- Class III medical devices (high risk): coronary artery stents, pacemakers, etc.
Key companies include Easywell Biomedicals (1799), Unicon (4150), Icares Medicus (6612).
Conclusion
After reading this introduction to the biotech industry, you may have gained a basic understanding of the industry. The biotech industry has its own unique characteristics, and news such as successful drug development, regulatory approval, or strategic acquisitions can cause significant fluctuations in stock prices, making it a popular choice for investors seeking high-risk, high-reward opportunities.
