Business Model for Asian Biotech Company Focus on New Drug Development
Date Issued
2007
Date
2007
Author(s)
Jiang, Tsung Shann
DOI
zh-TW
Abstract
Medicines contribute enormously to public health. The discovery and development of new drugs have improved people’s quality of life and saved many lives. The consumption of drugs is vast, ever increasing, and makes the industry as one of the most profitable economic activities in the world.
The interests of pharmaceutical companies and those of the public may overlap but, oftentimes, are not identical. To ensure that the industry works in the public interest, an effective and efficient regulatory regime is indispensable. Under the conventional regulatory system, a new drug must have gone through rigorous scientific studies and clinical investigations during its research and development process before its final approval by the regulatory authority. Such research and development activities are very time consuming, extremely expensive and full of uncertainty and risks on its final outcome of success. While making commitment in promoting public health, the pharmaceutical industry must seek reasonable return on investment in order to warrant its own survival, first, as well as its long term growth and prosperity, the next. In return to its commitment and effort in promoting public interest, the government, therefore, provides incentives to the industry through patent and administrative protection measurements so that a large monetary rewards can be realized to those pharmaceutical companies lucky enough to have a new drug finally approved and launched.
In recent years, the competition of generic drugs has significantly reduced the profitability of Brand Name Company. As soon as the period of patent protection of a brand name product has expired, generic versions of the drug may enter the market. Immediately, the sales of brand name drug will be threatened by generic drugs. Except for the threat comes from the generic drugs, the traditional pharmaceutical industry also faces an even bigger threat coming form the biotech industry which sprouts everywhere, grows rapidly and enjoys its faster development process of protein drugs. Facing such threats, the pharmaceutical industry has chosen to either invest more into R&D in order to speed up the final approval of its next series of new drugs, or has taken strategic moves such as “merger & acquisition” or through collaboration with Biotech Company in order to elevate its competitiveness in this arena.
In view of the enormous potential of the biotech industry, the Executive Yuan of Taiwan government has set definitive policies, since 1995, to enhance and promote its birth and growth of this industry and subsequently has observed significant increase in number of bio-tech companies as well as steady growth of its output value of this young bio-tech industry in Taiwan. Meanwhile, the Executive Yuan has set up criteria to model a success and mature bio-tech company, so-called “Success Story of Incubation”, as having 1) registered capital over NT 500 million dollars; 2) market capital in 5 times; 3) company size of 50 employees or more. As of the day of this writing, none of the bio-tech companies has qualified for such criteria and there exists large gap for further growth. It is the right time to take after the success stories of the world wide pharmaceutical and bio-tech companies and to build our own business model as a Asian Biotech company focusing on New Drug Development.
This thesis will summarize the strategies adopted in the global pharmaceutical industry and the regional situations in Taiwan. Based on this summary, we will compare the business models between a Taiwan-based biotech company and the other cases in the same region (Asia) so as to discuss the best strategy for the company and to propose the best solution to achieve the goal of being a “Success Story of Incubation”.
Subjects
製藥
新藥研發
經營模式
亞洲
中草藥
Pharmaceutical industry, biotech industry focus on new drug development, business model, Asia
SDGs
Type
other
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