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1、Guide to Taiwans health industries July 2024ContentsPageForeword1Executive summary21.Taiwans healthcare system51.1 Healthcare overview71.2 Governance framework81.3 Healthcare delivery infrastructure101.4 Demand and utilisation trends151.5 National health expenditure202.Taiwans biomedical industry273

2、.Biotechnology sector374.Pharmaceuticals sector435.Medical devices sector516.Key links and resources577.How PwC can help59This publication was compiled by Damian Gilhawley,an industry specialist at PwC Taiwan.The content is drawn from publicly available information and is current as of 30 June 2024,

3、unless otherwise stated.ForewordHealth systems around the world are facing a host of challenges,including ageing populations requiring more care,rising healthcare costs,a shortage of medical workers and the recovery from the Covid-19 pandemic.At the same time,consumers and patients are expecting new

4、 clinical and care delivery capabilities(centred around digital solutions)and better experiences from health systems across their end-to-end care journeys.In response,health systems are working to transform towards a more sustainable model of care delivery,as can be seen in Taiwans efforts to build

5、on its successful Covid response and accelerate healthcare innovation.Taiwan has a high performing healthcare system that is recognised for its universal health coverage and care,but it faces mounting pressure to meet the rising demands of a fast ageing population and chronic diseases.Digital health

6、 is playing a key role in countering those challenges,as seen in the growing number of strategic alliances between local medical institutions and businesses in innovative areas such as AI,Big Data and IoT.Furthermore,the government is actively fostering the growth of Taiwans biomedical industry and

7、accelerating the development and commercialisation of emerging medical technologies and treatments for precision health.These innovation activities are attracting growing interest from international health and biomedical companies in Taiwans health industries market and the potential opportunities f

8、or growth,investment and collaboration.In view of that,PwC has compiled this comprehensive introductory guide for organisations wanting to know more about Taiwans healthcare system and its biotechnology,pharmaceutical and medical device sectors.We hope you will find the guide to be a useful referenc

9、e resource.If you would like more information or have questions about Taiwans health industries and how we can be of help,please do not hesitate to contact us.Lily WongHealth Industries Advisory LeaderPwC Taiwan1PwCs Guide to Taiwans health industries|Executive summaryTaiwans healthcare systemKey fe

10、atures Taiwan has a high-performing healthcare system that is internationally recognised for its universal health insurance coverage and provision of high-quality and affordable healthcare and medical services for all.The government-run compulsory national health insurance(NHI)programme provides the

11、 population with easy access to an extensive network of contracted hospitals and clinics,most of which are privately owned.NHI benefits are comprehensive and uniform,with all medically necessary services covered,and patients face few limits on their choice of provider or doctor since there is no str

12、ict gatekeeper or referral system.The healthcare system is highly digitalised,making extensive use of health information technology to assist administration,clinical care and public health,which centres around a credit-card-sized NHI smart card.National health expenditure is low by international com

13、parisons,reflecting the monopsony power of the government,as the single buyer and payer of healthcare services through the NHI,to control spending.The NHI uses a global budget payment system,which caps reimbursement levels for medical services,to constrain the rapid growth of healthcare expenditure,

14、with shortfalls largely borne by medical institutions.Main challenges A rapidly ageing population and a growing chronic disease burden,together with the rising costs of new medical technologies and advanced treatments,are putting increasing strain on the healthcare system.A major structural issue is

15、 the all-you-can-eat provisions of the NHI programme and relatively weak constraints on demand and supply,which encourages overuse and wastage of healthcare resources.The lack of a primary care gatekeeper allows for patients to seek treatment for minor ailments at hospitals,leading to overcrowding a

16、nd overworked conditions for health workers and causing retention problems.Supply-induced demand for medical care also drives up health resource utilisation,as the prevailing fee-for-service reimbursement mechanism incentivises hospitals to compete for outpatient business with clinics.Due to underfu

17、nding and fiscal constraints,the NHIs adoption of cost-containment measures has led to challenges in balancing costs and medical care,impacting patient access to new and innovative drugs.With the NHI continuing to face mounting financial pressure due to rising healthcare demand and costs,there is a

18、pressing need for additional funding and deeper reforms to ensure the schemes sustainability.2|PwCs Guide to Taiwans health industriesExecutive summaryTaiwans biomedical industryIndustry overview Taiwans biomedical industryincluding the applied biotechnology,pharmaceuticals and medical devices secto

19、rsis a strategic priority focus for promotion and development under government policy initiatives.Strong policy support and investment has produced a comprehensive biomedical ecosystem spanning the entire industry value chain,from research,discovery and development to manufacturing and marketing.The

20、 domestic market size of the biomedical industry reached US$20.2bn in 2022,with the pharmaceuticals sector representing the largest share at 46%,followed by medical devices(31%)and biotechnology(23%).The current industry focus is on biomedical innovation,centred on the development of precision and d

21、igital health solutions,which is creating opportunities to transform patient care and improve healthcare delivery.Biotechnology sector Decades-long government support and commitment has helped drive the expansion of the biotechnology sector since the 2000s,which has quintupled in market size over th

22、e past 20 years to US$4.7bn in 2022.The sector is highly rated for its investment attractiveness due to its complete biotechnology infrastructure and value chain,as well as ample clinical trial experience and cost-competitive R&D and manufacturing.Growth momentum remains strong,supported by the cont

23、inued promotion of innovative biomedical R&D and investment,a robust biotech IPO market and the maturation of drug pipelines and service offerings.Pharmaceuticals sector Taiwan is a net importer of pharmaceuticals,reflecting a large and growing demand for chronic disease treatments as the population

24、 ages rapidly,with the sector having a market size of US$9.2bn in 2022.The tight-budgeted hospital market accounts for 80%of total pharmaceutical sales,which limits profits for drugmakers,and this is further compounded by a long reimbursement timeline and annual price reviews.As demographic and epid

25、emiological trends will increase future demand for new drugs,the government plans to speed up the approval process and provide more funding for breakthrough drugs and treatments.Medical devices sector A fast-ageing population and related higher demand for healthcare products and services,especially

26、for advanced devices,is driving growth in the medical devices sector,which was worth US$6.3bn in 2022.The sector depends on imports for 60%of domestic demand,mostly for high-end devices used in hospitals,while local device makers rely on exports of mid-to-low-end medical equipment for 60%of their re

27、venues.Current efforts to move up the value chain seek to increase higher-value device manufacturing and greater uptake of new medical technologies,which is underpinned by government policy support and guidance.3PwCs Guide to Taiwans health industries|4|PwCs Guide to Taiwans health industries1.Taiwa

28、ns healthcare systemPage1.1 Healthcare overview71.2 Governance framework81.2.1 NHI programme overview91.3 Healthcare delivery infrastructure101.3.1 Hospitals and clinics111.3.2 Doctors and nurses131.3.3 Digital healthcare141.4 Demand and utilisation trends151.4.1 Chronic disease burden151.4.2 Ageing

29、 demographics161.4.3 Healthcare resource utilisation171.4.4 Medical tourism sector191.5 National health expenditure201.5.1 Health spending flows211.5.2 NHI financial status221.5.3 Cost-containment policies231.5.4 Private health insurance255PwCs Guide to Taiwans health industries|6|PwCs Guide to Taiw

30、ans health industries1.1 Healthcare overviewTaiwan has one of the top healthcare systems in the world,according to several international rankings.The key reason is its National Health Insurance(NHI)programme,which provides universal and affordable health coverage and care to the islands 23 million p

31、opulation of citizens and residents.Enjoying easy access to a comprehensive range of subsidised and high-quality healthcare and medical services,and facing few limits on their choice of provider or doctor,public satisfaction with the NHI remains consistently high at about 80%-90%.Some of the best fe

32、atures of Taiwans healthcare system were on display during the Covid-19 pandemic crisis in 2020-2022.The virus outbreak had a much more moderate impact in Taiwan than in other areas across the globe,due in large part to the experience and capabilities of its health sector.In addition to leveraging t

33、he lessons learned from the 2003 SARS epidemic,Taiwans early successful response to the pandemic was made possible through integrating innovative health information technology and a robust healthcare infrastructure.Such achievements notwithstanding,the NHI,like many other healthcare systems around t

34、he world,has encountered numerous challenges over the years,including serious financial deficits.The government has managed these through successive policy adjustments and reforms,in particular the implementation of a second-generation NHI in 2013.But even so,the NHI continues to face several issues

35、,as highlighted by the return of deficits in recent years,which will necessitate further substantive reforms to secure its future viability.The main issue is the all-you-can-eat provisions of the NHI scheme and relatively weak constraints on demand and supply,which tend to encourage overuse and wast

36、age of resources.For example,the lack of a gatekeeper referral system enables unfettered access to care,with per capita outpatient visits twice the OECD average.Also,widespread overprescribing is common since the prevailing fee-for-service reimbursement mechanism and a lack of proper prescribing and

37、 dispensing separation incentivise providers to profit from patient treatment.A rapidly greying population and a growing chronic disease burden,together with the rising costs of new health technologies and treatments,are putting strain on the healthcare system.With Taiwan projected to become a super

38、-aged society by 2025,NHI expenditure on elderly healthcare will grow sharply in the years ahead.Besides driving medical costs higher,ageing demographics will also entail a shrinking workforce and a reduced premium base,which,in turn,will exacerbate the sustainability issues currently facing the NHI

39、 programme.The health authorities are already taking steps to address many of these issues,including efforts to shift some of the burden of primary care away from large hospitals,and greater use of cloud-based data-sharing platforms to reduce waste and inefficiencies and improve patient outcomes.Add

40、itional and deeper reforms will be needed over the mid-to long-term as demographic and epidemiological trends put mounting pressure on NHI finances.But healthcare is a politically contentious issue,so any major policy changes will likely be a protracted process.Instead of a complete overhaul,such as

41、 a third-generation NHI,it is more likely the health authorities will focus on continuous improvements and reforms,especially with regards to drug pricing policies.Meanwhile,NHI premiums rates were raised in 2021 to mitigate growing deficits,and another rate increase is anticipated in the near futur

42、e.Controlling costs and waste also remains a priority,with provider and patient behaviours being scrutinised more closely and further constraints imposed,such as the 2023 increase in certain co-payments.The rest of this chapter looks more closely at the key elements of Taiwans healthcare systeminclu

43、ding its governance framework,delivery infrastructure and workforce,patient demand and resource utilisation trends,and healthcare expenditure and financingand examines the major sustainability challenges facing the NHI.7PwCs Guide to Taiwans health industries|1.2 Governance frameworkThe Ministry of

44、Health and Welfare(MOHW)is the main regulatory body for health and social welfare matters in Taiwan,and its mission is to promote the health and well-being of all citizens.Its responsibilities encompass health promotion,disease prevention and control,medical care,long-term care,food and drug managem

45、ent,social insurance,social welfare,social assistance and protective services.The MOHW also administers the operations of 26 medical institutions(mainly hospitals and psychiatric centres)and 13 social welfare institutions.Taiwan has a two-level administrative structure of healthcare governance.At th

46、e central level,the MOHW is the responsible authority for overall health administration,including policy development and regulations,as well as the guidance,supervision and coordination of regional health bureaus.At the local level,there are 22 public health bureaus under the jurisdiction of city an

47、d county governments,which are responsible for managing health and medical care matters within their respective areas,as well as 374 public health centres islandwide.The MOHW has six subordinate agencies which look after different areas of health and social welfare.These include the Taiwan Centers f

48、or Disease Control(CDC);Taiwan Food and Drug Administration(FDA);Health Promotion Administration(HPA);National Health Insurance Administration(NHIA);National Research Institute of Chinese Medicine(NRICM);and the Social and Family Affairs Administration(SFAA).The NHIA oversees and administers Taiwans

49、 national health insurance programme,commonly known as the NHI(see Figure 1).The MOHW supervises the NHI through its NHI Committee,which helps plan and monitor NHI-related tasks,and its NHI Dispute Mediation Committee deals with health insurance disputes.As the single-payer insurer,the NHIA is respo

50、nsible for managing health insurance affairs,medical quality,research and development,manpower training and information management.The organisations operations are supported by six regional offices connected by a health information infrastructure and are funded out of the central government budget.F

51、igure 1:Organisation of Taiwans health systemSource:The Commonwealth Fund,International Profiles of Health Care Systems.Executive Yuan(Cabinet)Ministry of Health and WelfareNHI CommitteeHospitals and clinicsInsuredNHI DisputeMediation CommitteeNational Health Insurance AdministrationPlanning Divisio

52、nNHIA Taipei DivisionNHIA Northern DivisionNHIA Central DivisionNHIA Southern DivisionNHIA Eastern DivisionNHIA Kaoping DivisionEnrollment DivisionFinancial Analysis DivisionMedical Affairs DivisionMedical Review and Pharmaceutical Benefits DivisionInformation Management DivisionSecretariatPersonnel

53、 OfficeAccounting and Statistics OfficeCivil Service Ethics Office8|PwCs Guide to Taiwans health industries1.2.1 NHI programme overviewThe NHI was established in 1995 to provide universal health protection by merging and enlarging Taiwans then-existing social health insurance schemes,which at that t

54、ime covered only around 60%of the population.Coverage under the NHI is now close to 100%as enrolment is mandatory for all citizens and foreign residents,who have access to healthcare services in case of illness,injury and childbirth.The scheme is primarily funded by a payroll-based insurance premium

55、 which is jointly borne by the insured,employers and the government.This general NHI premium is based on an insured persons monthly salary at the current rate of 5.17%,and it is also payable for dependents.In addition,the insured are charged a supplementary NHI premium of 2.11%on certain other types

56、 of income they receive.Together the premiums account for about 90%of NHI revenues,with the balance coming from government premium subsidies for low-income households and other specific groups,fines on overdue premiums,public welfare lottery contributions and tobacco health and welfare surcharges.Th

57、e NHI offers a comprehensive benefits package which covers all medically necessary services.This encompasses inpatient and outpatient treatment and care(both primary and specialist),prescription drugs,dental care,traditional Chinese medicine,childbirth care,physical rehabilitation,home care,chronic

58、mental healthcare and end-of-life hospice care.The NHIA determines which services are to be covered by the NHI in consultation with a broad range of stakeholders,and such decisions are subject to budgetary considerations.The bulk of NHI-covered services are provided through a predominantly private h

59、ealthcare delivery system,though some hospitals are owned and operated by public authorities.While it is voluntary for providers to participate in the NHI programme,around 93%of hospitals and clinics in Taiwan have joined it.Contracted facilities file claims with the NHIA for reimbursement of servic

60、es provided to insured patients,and they are reimbursed according to plural payment programmes under a global budget payment system(see Figure 2).Individuals enrolled under the NHI programme enjoy almost free access to healthcare.The premiums collected by the NHIA are used to help pay for the health

61、care expenses of the insured,although co-payments are required for outpatient care and prescription drugs and co-insurance for hospital stays,subject to limits and exemptions.To ensure that people who need healthcare are not denied access because of their financial circumstances,individuals meeting

62、certain conditions are exempt from co-pays,such as patients with catastrophic diseases.Figure 2:Framework of the NHI programmeSource:National Health Insurance Administration.InsuredNHIAHealthcare providersNHI cardPremiumsClaimsReimbursementsPatient co-paymentsBudget sources Insurance premiums Lotter

63、y contributions Tobacco surchargesHealthcare and medical services9PwCs Guide to Taiwans health industries|1.3 Healthcare delivery infrastructureProviding equal access to healthcare is a foundational pillar of Taiwans NHI programme,and so the insured have freedom of choice among different providers.T

64、hey also receive unfettered access to doctors,including hospital-based specialists,since there is no requirement to register with a primary care physician(like in the UK).The NHIA ensures that access by maintaining an extensive network of contracted providers,which is a mixture of public and private

65、 hospitals and clinics,dentistries,pharmacies and other facilities(see Figure 3).In general,provider licensing by local health authorities and hospital accreditation by the Joint Commission of Taiwan(JCT)are trusted to assure an acceptable standard of care,and serve as the basis for contracting with

66、 the NHIA.According to the Medical Care Act,there are two types of medical care institutions:hospitals and clinics.Based on accreditation results,hospitals are classified as medical centres,regional hospitals and district hospitals.Also,medical care and treatment is divided into Western medicine and

67、 traditional Chinese medicine.The institutions in each tier are expected to fulfill distinct functions in healthcare service delivery.Clinics and district hospitals are primarily responsible for monitoring and treating stable chronic diseases,whereas regional hospitals and medical centres focus on t

68、eaching,research and providing care for emergency cases and challenging diseases.Although Taiwan has a bi-directional referral system in which patients can be referred between higher and lower tiers,patients can directly access any level of healthcare/specialists without a referral.There is a high l

69、evel of healthcare-seeking behaviour in Taiwan,as it is part of the local culture to take medicines or to seek medical help frequently,even for minor ailments.With no gatekeeper restrictions under the NHI,people tend to flock to large hospitals regardless of whether they have serious or mild illness

70、es,which has led to an over-expansion of tertiary medical institutions dominating outpatient primary care delivery.To address this imbalance,the health authorities have sought in recent years to strengthen a tiered medical care system.Since 2017,the MOHW has been actively promoting a tiered approach

71、 to healthcare in an effort to allocate resources more efficiently and engender better healthcare-seeking behaviour.The policy aims to progressively reduce the number of outpatient visits to larger hospitals by setting target goals,while at the same time increasing the publics use of primary care fa

72、cilities.It encourages two-way referrals for transferring patients between the higher and lower tiers,with co-payment incentives for patients to seek care at the lower tiers first.Figure 3:Status of medical institutions in Taiwan,2022Medical care institutions 23,578 Hospitals 480 Clinics 23,098 Phar

73、macies 8,665 Nursing institutions 1,593 General nursing homes 525 Psychiatric nursing homes 46 Home care practices 752 Post-natal nursing institutions 270 Blood donation institutions 18 Blood donation centres 4 Blood donation stations 14 Pathology institutions 11Source:Ministry of Health and Welfare

74、.Other medical institutions 5,611 Midwifery practices 24 Medical examination clinics 355 Medical care radiological clinics 47 Physical therapy practices 411 Occupational therapy practices 133 Mental counselling clinics 202 Psychotherapy clinics 114 Speech therapy centres 103 Dental technology centre

75、s 994 Hearing clinics 30 Home respiratory care practices 15 Optometry practices 3,144 Nutrition counselling institutions 3910|PwCs Guide to Taiwans health industries1.3.1 Hospitals and clinicsTaiwan had a total of 23,578 medical care institutions in 2022,comprising 480 hospitals and 23,098 clinics,t

76、he vast majority of which are contracted with the NHIA(see Table 1).Most of the hospitals(83%)and an even greater proportion of the health clinics(98%)are privately owned,and many are small in size.Western medicine,with its emphasis on diagnosis and treatment,is the predominant form of care,represen

77、ting 53%of all registered healthcare providers,followed by dental clinics(30%)and Chinese medicine institutions(17%).The overall number of hospitals has decreased in recent decades due to the closure or mergers of small district hospitals amid increasing competition from larger and better-resourced

78、regional hospitals and medical centres (see Figure 4).The existing facilities have grown in size and opened more beds to boost efficiency and revenuestotal hospital beds grew from 114,179 in 2000 to 139,441 in 2022,with two-thirds owned by private entities.Taiwan currently has 6.0 hospital beds per

79、1,000 population,higher than the OECD average of 4.3.The reason for the high level of private sector involvement in healthcare delivery is that the NHI was designed from the start to attract non-public investment,since the public health infrastructure was not capable of meeting the jump in demand tr

80、iggered by the schemes implementation in 1995.Private hospitals currently outnumber their public counterparts by more than five to one.Many are organised as foundations in order to enjoy the tax benefits afforded to not-for-profit medical institutions,although most of them behave as if they were for

81、-profit.In 2022,79%of 238 medical institutions that received more than NT$200m(US$7m)in NHI payments reported surpluses on medical-related income.Hospitals are mostly paid fee-for-service and also derive revenues from direct payments for non-NHI-covered services and goods,co-pays for outpatient serv

82、ices and co-insurance for inpatient services and registration fees collected at the time of service.Many also depend on non-medical business income(from food courts,parking lots,etc.)to balance fiscal gaps from shrinking NHI reimbursements.Competition for revenues under the NHIs global hospital budg

83、et system is intense.Hospitals are therefore under pressure to be more efficient,compete for patient volume and provide more services with higher margins;their business strategies include mergers,expanding market share and direct-to-consumer advertising.This heightened competition creates a supply-i

84、nduced demand for medical care services under the predominantly fee-for-service reimbursement system,which in turn contributes to the high utilisation of healthcare resources.As for primary care clinics,their total number grew from 17,413 in 2000 to 23,098 in 2022,consisting of 11,998 Western medici

85、ne clinics,6,969 dental clinics and 4,131 Chinese medicine clinics(see Figure 5).The increase has been supported by the governments efforts to reduce patient reliance on hospitals for the provision of primary care services,and the growing trend for cosmetic and aesthetic treatment services.Around 40

86、%of Taiwans doctors work as private practitioners in their own clinics and 80%-90%of clinics are solo practices.Table 1:Number of NHI-contracted hospitals and clinics,2022TotalWestern medicine hospitalsChinese medicine hospitalsDental hospitalsWestern medicine clinicsChinese medicine clinicsDental c

87、linicsMedical care institutions 23,5784754111,9984,1316,969Contracted hospitals and clinics 21,8604704110,6653,8816,839%of contracted health facilities 92.798.910010088.993.998.1Source:Ministry of Health and Welfare and National Health Insurance Administration.11PwCs Guide to Taiwans health industri

88、es|Figure 4:Number of hospitals and hospital beds in Taiwan,2003-2022Figure 5:Number of primary care clinics in Taiwan,2003-2022Source:Ministry of Health and Welfare.Source:Ministry of Health and Welfare.20,00025,00015,00010,0005,00006.05.85.65.45.25.07005003001002004006000No.of hospitalsPer 1,000 p

89、eople Western medicine clinics TCM clinics Dental clinics2003200520072009201120132015201720192021 Private hospitals Public hospitals Beds per 1,000 people2003200520072009201120132015201720192021No.of clinics12|PwCs Guide to Taiwans health industriesSource:Ministry of Health and Welfare.1.3.2 Doctors

90、 and nursesTaiwans healthcare system faces workforce challenges,exacerbated by limited NHI funding for hospitals.In 2022,Taiwan had 60,684 doctors(both Western and Chinese medicine)and 152,636 nurses,or 2.6 doctors and 6.6 nurses per 1,000 population(see Figure 6),both lower than the respective OECD

91、 averages of 3.7 and 9.2.That is partly because the number of health professionals in Taiwan is controlled by quotas,with medical school recruitment capped at 1,300 a year.Also,staff shortages have become an issue in recent years.Some 40%of Taiwans doctors practice in their own clinics and the rest

92、work in hospitals as employees;hospital-based physicians in all specialities also see patients on an outpatient basis.There is no shortage of registered doctors per se,only in certain specialties due to poor working conditions or where the rewards dont commensurate the workload,for example in emerge

93、ncy care,surgery and geriatrics.To prevent burnout,resident doctors are covered by the Labour Standards Act,since 2019,which restricts the hours they can work.While the overall number of registered nurses is rising,it is still not enough to meet the growing healthcare demands of an ageing population

94、,especially in Taiwans rural and remote regions.Moreover,an increasing number of nurses are leaving the profession due to long hours,low wages and stressful working conditions.As part of efforts to improve the workplace environment for nurses,the MOHW has endeavoured to implement various reforms aim

95、ed at facilitating retention and encouraging nurses who left their professional field to return.Most recently,in September 2023,the health ministry announced a broad incentive programme to add at least 67,000 nurses by 2030 to mitigate current shortages and meet future care demand.Key aspects includ

96、e the implementation of new standards for nurse-to-patient ratios in hospitals for different shifts,providing financial incentives and higher wages for working night shifts,and changing the frequency and structure of the national nursing exam.The plan will cost about NT$1.8bn(US$56m)annually to impl

97、ement over the next seven years.The shortage of medical professionals has largely been brought about by the design of the NHI schemeand in particular by its global budget system,which caps reimbursement levels for medical services.To contain costs,some hospital providers have sought to increase the

98、workloads of doctors,nurses and other medical staff.The resultant deterioration in working conditions,coupled with low levels of pay,has led to shortages of doctors in some specialities as well as nurses,and poses a sustainability challenge for the healthcare system.Figure 6:Number of doctors and nu

99、rses per capita in Taiwan,2003-202267543210Per 1,000 people Nurses Doctors200320052007200920112013201520172019202113PwCs Guide to Taiwans health industries|1.3.3 Digital healthcareTaiwans healthcare system is highly digitalised,making extensive use of health information technology to assist administ

100、ration,clinical care and public health.It is built around a credit-card-sized NHI smart card,which is issued to every insured person to access medical care.The IC-embedded card is used to identify the individual,store a brief medical history and bill the NHIA.The patient presents it each time when u

101、sing medical services,and the provider will then electronically submit a claim for reimbursement for the case-related charges.The patients health record is entirely electronic at every level of care.Contracted providers are required to report to the NHIA,on a 24-hour basis,on each patient visit and

102、service delivered,thus enabling the tracking of individual and aggregate service utilisation data in almost real time.This provides the NHIA with a good sense of healthcare expenditure at any point in time,and also enables it to identify and manage heavy users of services.The NHI claims data set con

103、stitutes the largest repository of peoples health information in Taiwan.In recent years,cloud computing technology has been increasingly applied to give the NHI card additional and more powerful functions,with the aim of reducing inefficiencies and improving the quality of medical care.For example,t

104、he NHI MediCloud system(see Figure 7)allows doctors to quickly retrieve a patients medical records from different hospitals and other health facilities to prevent any duplication of medications and tests,while a personalised cloud-based service,My Health Bank,enables patients to check their own heal

105、th records.Figure 7:NHI MediCloud systemFollowing the Covid-19 pandemic,the health authorities have strengthened their focus on digital solutions to expand healthcare access and improve patient outcomes.This includes the smarter integration of information,integrating clinical decision support inform

106、ation,real-time analysis and early risk prediction,and automated monitoring and remote support.Taiwans strong ICT industry is contributing to this healthcare transformation effort,with solutions ranging from wearable devices and mobile health applications to telehealth platforms,etc.As telemedicine(

107、i.e.,medical services via the Internet)became more widely used during the pandemic and is becoming a new normal for healthcare,the MOHW has progressively relaxed its rules on the provision of such services and expanded eligibility through a pilot programme,which started in 2021 and initially was onl

108、y available to people living in remote areas.Telemedicine coverage is being broadened to include more geographical areas and medical conditions so as to better meet the needs of an increasingly ageing population.Furthermore,the NHIA has opened up its huge database to enable the development of AI-bas

109、ed smart medical care.In 2019,it launched a pilot programme to allow hospitals,universities and research institutes to access NHI data to create AI and big data applications that facilitate medical treatments,healthcare management and disease prevention.Many AI applications have already been success

110、fully adopted by hospitals,which will help to improve the accuracy and quality of healthcare and push forward smart and precision medicine in Taiwan.Immunisation recordsNHI MediCloud SystemSource:National Health Insurance Administration.Medication recordsSurgical recordsExamination resultsExaminatio

111、n recordsDental servicesSpecific medicationsChinese medicine servicesAllergic substancesRehabilitation recordsDischarge summary14|PwCs Guide to Taiwans health industries1.4 Demand and utilisation trendsCoupled with rising incomes and advances in medical care technologies,the NHI has brought substant

112、ive improvements in public health since its inception almost 30 years ago.For instance,life expectancy rose from 74.5 years in 1995 to 79.8 in 2022,and infant mortality fell from 6.5 per 1,000 live births to 4.4 over the same period.Yet,Taiwan still lags behind several OECD countries on these and ot

113、her key health outcome indicators,notably cancer mortality and survival rates,which has been partly attributed to insufficient health investment.1.4.1 Chronic disease burdenTaiwans immunisation efforts have effectively controlled the spread of infectious diseases(including Covid),but the rising prev

114、alence of non-communicable chronic diseases(NCDs)among the population has become a major health challenge.In 2023,the ten leading causes of death in Taiwan represented 75%of all deaths and were mostly NCDs(see Figure 8).Cancer(primarily lung cancer)was the main cause of death for the 42nd consecutiv

115、e year,accounting for 25.8%of deaths,followed by heart disease(11.4%)and pneumonia(6.1%).The chronic disease burden has serious implications for Taiwans healthcare system,in terms of both the growing utilisation of medical resources and associated costs as well as the potentially higher demand for a

116、 larger health workforce.Furthermore,since demographic ageing is a key driver for the majority of chronic diseases,the projected rapid expansion of Taiwans elderly population in the coming years will place additional resource and cost pressures on the already strained NHI,and poses a major risk to i

117、ts long-term sustainability.The financial costs of treating chronic conditions like cancer are substantial.With the local incidence of cancer increasing year after year,NHI expenditure on cancer treatment jumped from NT$78.3bn(US$2.6bn)in 2014 to NT$139.9bn(US$4.5bn)in 2023,accounting for over 40%of

118、 all major illness insurance claims.The growing use of expensive targeted therapies is a major driver of cancer costs and increases in pharmaceutical expenditures,with spending on cancer drugs surging from NT$18bn to NT$39.4bn over the 2014-2023 period.Cancer treatment costs will continue to grow as

119、 around 120,000 new cases are added every year in Taiwan.As the NHI does not cover many of the newest and best treatments,forcing patients to either pay out of pocket or settle for a less effective but affordable option,there is growing pressure on the health authorities to increase funding for and

120、access to advanced cancer drugs.To address such concerns,the MOHW indicated in late 2023 that it intends to soon establish a NT$10bn(US$320m)cancer fund to be used for innovative treatments.Figure 8:Top ten leading causes of death in Taiwan,2023Source:Ministry of Health and Welfare.Kidney diseaseChr

121、onic lower respiratory diseaseAccidents(unintentional injuries)Covid-19HypertensionDiabetesCerebrovascular diseasePneumoniaHeart diseaseCancer25.8%11.4%8.1%6.0%5.7%4.4%4.3%3.4%3.0%2.8%15PwCs Guide to Taiwans health industries|1.4.2 Ageing demographicsTaiwans population of 23 million is steadily shri

122、nking due to a falling fertility rate(just 0.9 children per woman in 2022 versus a global average of 2.3)and longer life expectancy.Measures to encourage people to have more babies,such as stipends for new parents and more childcare and leave benefits,have had a negligible effect on lifting the birt

123、h rate.The number of newborns fell to a historic low of 135,571 in 2023,down by 30%from the 193,844 babies born in 2017,continuing a trend which is shaking up Taiwans demographic profile.Taiwan has one of the fastest-ageing populations in the world,next to Japan and South Korea.It has gone very quic

124、kly through the stages of an ageing society(in 1993)and an aged society(in 2018).The proportion of people aged 65 or older accounted for 18.3%of Taiwans population in 2023,which means nearly one out of every five people is a senior citizen.The latest official estimates project that Taiwan will becom

125、e a super-aged society in 2025,when the number of elderly people will exceed 20%of the total population(see Figure 9).NHIA statistics show that the higher an individuals age,the more spent per person on healthcare.The cost of hospitalisation for 50-64 years old is about twice that of the 35-49 age g

126、roup,and the cost for those over 65 years of age is three times that of the 35-49 category.Total health spending on patients aged 65 and over currently accounts for about 40%of annual NHI expenditure and this share can be expected to grow further in the coming years ahead,based on the projected sign

127、ificant increase in the size of Taiwans elderly population.In addition to driving medical costs higher,the ageing demographics will also lead to a smaller workforce and a reduced premium base,which will similarly threaten the long-term sustainability of Taiwans healthcare system.At the same time,the

128、 long-term care of the elderly population has become a highly salient social,personal and political issue in Taiwan,and will continue to be so for future generations.This will therefore necessitate the government having to increase expenditure on long-term care services and assistance for more elder

129、ly people.The MOHW plays an important role in long-term care through a set of programmes which are largely separate from the NHI.Its ten-year Long-term Care Plan 2.0,which launched in 2017,promotes ageing in place and provides various subsidies for elderly care facilities and services.The plan relie

130、s on public budget allocations and supplementary tax revenues,but the rapid growth of long-term care needs is placing heavy demands on fundingits annual budget surged from around NT$5bn(US$160m)in 2017 to NT$83bn(US$2.6bn)in 2023.Figure 9:Ageing population trend in Taiwan,1980-2070Source:National De

131、velopment Council,Population Projections for Taiwan:2022-2070.354045302520151050Population of population aged 65+(%)19801990200020102020203020402050206020707.1%AgeingsocietyAgedsocietySuper-agedsociety20.0%43.6%14.6%Projected16|PwCs Guide to Taiwans health industries1.4.3 Healthcare resource utilisa

132、tionAn ageing population and a growing chronic disease burden are the key drivers of demand for medical care in Taiwan.Excessive use of health resources is a problem,however,due to patients having relatively unrestricted access to providers and low cost-sharing.Hospitals provide both in-and out-pati

133、ent services and patients are free to choose specialists on an outpatient basis,with or without a referral.Coupled with the cultural belief by many Taiwanese that more healthcare is better,the demand side drives up the utilisation of health resources.Prior to the Covid disruption in 2020-2022,the an

134、nual total number of hospital outpatient visits increased from 106.4m in 2013 to 116.7m in 2019,and the average visit rate per person per year from 14.8 to 15.4 times over the same period(see Figure 10),more than double the OECD average of six doctor consultations per person.The high rate reflects t

135、he ease of access to providers and doctors as well as ageing demographics,as older people typically use more medical services and suffer from more serious chronic illnesses than other age groups.Since patients can visit any number of doctors without referral restrictions,this encourages doctor-and h

136、ospital-shopping,even for minor ailments.Taiwanese generally trust the quality of medical care provided at hospitals more than clinics,and this has led to overcrowding issues in many hospital outpatient departments,particularly at the larger hospitals.While this accessibility is convenient for patie

137、nts,the high volume of outpatient visit activity inevitably increases the workloads of doctors and limits the time that they can consult with each patient.As for inpatient care,the pre-Covid annual number of hospital cases increased from 2.8m in 2013 to 3.1m in 2019,while the average length of stay

138、declined from 9.2 to 8.4 days(see Figure 10),though still higher than the OECD average of 7.7 days.The growth in inpatient numbers has been driven by a combination of factors,including the lack of an effective patient referral mechanism(such as a primary care gatekeeper system)for specialist care an

139、d hospitalisation,more elderly and chronic cases and insufficient facilities for long-term care.Figure 10:Medical service volume of hospitals in Taiwan,2013-2022Source:Ministry of Health and Welfare and National Health Insurance Administration.20132014201520162017201820192022202120201201008060402002

140、0151050Million casesVisits/Days Number of outpatient visits Number of inpatient cases Average length of hospital stay(days)Average per capita outpatient visits17PwCs Guide to Taiwans health industries|Supply-induced demand for medical care is another significant driver of resource utilisation,as hos

141、pitals are incentivised to compete for patient and service volume in the outpatient setting,which is more profitable than providing inpatient services under the NHI reimbursement system.Payments to hospitals represented 36.9%of all personal healthcare spending in 2022,consisting of outpatient(22.9%)

142、and inpatient(14.0%)expenditure(see Figure 14).This underlines the dominant role played by hospitals in both outpatient and inpatient care.Efforts to reduce the moral hazard behaviour of both providers and patients have been stepped up in recent years,with a view to shifting some of the burden of pr

143、imary care away from large hospitals to clinics.These include measures designed to encourage more use of family doctors,partly through the imposition of higher co-pays on non-referrals to hospitals and specialist clinics.But opposition to changes that threaten patient choice is strong,while hospital

144、s are reluctant to relinquish their hold on the lucrative outpatient care business.The NHI scheme guarantees healthcare access to patients regardless of their financial means.But to optimise the use of resources and curb rising costs,all patients are required to co-pay for most services and medicati

145、ons,though some categories of patients are exempt.Co-payments include fixed fees for outpatient visits,which range from NT$50(about US$1.50)at local clinics to NT$750(US$25)at large hospitals(see Table 2),and 5%-30%of hospitalisation costs for inpatients,depending on the type of illness and the leng

146、th of hospital stay.Co-payment levels have been adjusted several times since the NHIs inception in a bid to reduce moral hazard behaviour and improve patient usage of resources,but the amounts remain modest by international standards.The latest adjustments,in July 2023,increased co-pays for outpatie

147、nt prescription drugs(from NT$200 to NT$300)and emergency care(from NT$550 to NT$750)at regional hospitals and medical centres.The hikes aim to encourage patients with stable,chronic conditions to use local clinics and free up emergency resources.Table 2:NHI co-payments for outpatient servicesInstit

148、ution class Basic co-payments(NT$)Type of institution Western medicine Outpatient careDentistry Traditional Chinese medicine Emergency careWith referral Without referral Medical centres 1704205050750Regional hospitals 1002405050400District hospitals 50805050150Clinics 50505050150Source:National Heal

149、th Insurance Administration.18|PwCs Guide to Taiwans health industries1.4.4 Medical tourism sectorMedical tourism is an additional driver of healthcare demand.Since 2007,the government has promoted the internationalisation of medical services as part of broader efforts to attract more tourists to Ta

150、iwan.Supported by the MOHW,the Taiwan Task Force on Medical Travel coordinates an alliance of 113 qualified hospitals and clinics to promote medical tourism to attract patients from all over the world.The focus is primarily on personalised healthcare services,including health check-ups,cosmetic surg

151、ery and serious disease treatment.Taiwan has emerged as a favourable destination for medical tourism due in large part to its competitive costs.Its quality of medical care is on a par with developed countries,but less expensive.For example,the local cost of heart bypass surgery or a hip replacement

152、is about one-fifth of similar procedures in the US.Its other advantages include an abundance of high-quality hospitals and doctors and advanced medical technology;Taiwan currently has five healthcare institutions that have been accredited by Joint Commission International.Taiwans medical tourism sec

153、tor grew steadily in the years before Covid disrupted international travel.The number of medical tourist visits to Taiwan jumped from 68,545 in 2008 to 381,496 in 2019(see Figure 11),with the majority coming from Southeast Asia countries(boosted by medical cooperation initiatives under the Taiwan go

154、vernments New Southbound Policy)and China.The total output value of international medical services expanded tenfold from NT$2bn(US$66m)in 2008 to NT$19bn(US$615m)in 2019,mostly for outpatient care.Taiwan closed its borders when the pandemic started to spread globally in early 2020,effectively bringi

155、ng a halt to medical tourism.Non-resident foreigners were prohibited from entering Taiwan for international medical services,except for special or emergency cases.All Covid entry restrictions were lifted in late 2022,allowing foreign and medical tourists unfettered access to the island after nearly

156、three years of strict border and quarantine controls.Medical tourism to Taiwan has since rebounded,though it is still short of pre-Covid levels.Figure 11:Medical tourism in Taiwan,2008-2022Source:Ministry of Health and Welfare,2021 Taiwan Health and Welfare Report.300,000400,000200,000100,0000201510

157、50Number of visitors servedNT$bn200820092010201120122013201420152016201720182019202020212022 Total number of medical tourists Output value19PwCs Guide to Taiwans health industries|1.5 National health expenditureTaiwans national health expenditure(NHE)has grown at an average annual rate of 5.9%since

158、1995(versus 4.5%for GDP),increasing sharply during Covid(see Figure 12).It expanded from NT$379bn(US$14bn)in 1995 to NT$1,695bn(US$57bn)in 2022,and per capita from NT$17,805(US$672)to NT$72,687(US$2,438).NHE as a share of GDP rose from 5.1%to 7.5%over the same period,though still lower than in other

159、 advanced Asian economies such as Japan(11.5%)and South Korea(9.7%),and also below the OECD average of 9.2%.A key reason for Taiwans relatively lower level of health spending is the monopsony power of the government,as the single buyer of and payer for healthcare services through the NHI,to set and

160、regulate service fees and impose a global budget system that caps expenditure.Another factor is the high efficiency of NHIs IT-driven system,which is characterised by administrative simplicity and low overhead costs.General administration expenses currently account for around 2%of total health spend

161、ing,which is among the lowest levels globally.On the other hand,some experts contend that Taiwans below-average health spending(as a percentage of GDP)in international comparisons is an indication of lagging investment in healthcare,and a key area where that can be seen is the insufficient funding f

162、or breakthrough drugs and treatments.A recent study by PwC for the Taipei-based International Research-Based Pharmaceutical Manufacturers Association,titled Invest in Healthcare:A Review of Healthcare Outcomes and Expenditures in Taiwan,examined this viewpoint in detail.The government has acknowledg

163、ed the need to increase overall health spending in view of Taiwans rapidly ageing society and growing chronic disease burden,though it still remains concerned about containing costs.As part of efforts to improve health financing,in 2023,the government allocated additional funding of NT$44bn(includin

164、g NT$20bn of excess tax revenues from a post-pandemic special budget)to replenish the NHI reserve fund,which is designed to keep the national health insurance system solvent when facing unanticipated deficits.Figure 12:National healthcare expenditure in Taiwan,1995-20221,7501,5001,2501,0007505002500

165、NT$bnNational health expenditure(NHE)NHE as%of GDP19951997199920012003200720052009201120132015201720192021786543210%Source:Ministry of Health and Welfare.20|PwCs Guide to Taiwans health industries1.5.1 Health spending flowsThe public sector accounted for 63%of national health expenditure in 2022,whi

166、ch was boosted by higher government spending to tackle the Covid crisis,compared with 37%from private sources(see Figure 13).The NHI represented the majority of total health spending at 44.5%,which comprised reimbursements to contracted healthcare service providers for the cost of care they provide.

167、Households accounted for the next largest share at 31.4%,mostly out-of-pocket payments for doctor visits,hospitalisations and prescription drugs.NHI enrolment is mandatory for all citizens and foreign residents,and the programme is primarily financed by insurance premiums shared by the insured,emplo

168、yers and the government(see page 9 for more information).The National Health Insurance Act specifies that the annual funds to be allocated by the government to the NHI must be at least 36%of total premium revenues,otherwise it must use other budgets to make up any shortfall.Around 60%of government s

169、pending on healthcare is directed into the NHI programme in the form of subsidies.Figure 13:National healthcare expenditure by financial agents,2013-2022Source:Ministry of Health and Welfare.By end-use,personal healthcare represented the largest share of NHE at 82.7%in 2022,followed by general admin

170、istration and public health(10.6%)and capital formation(6.7%)(see Figure 14).Hospitals accounted for the majority of personal healthcare spending at 36.9%,comprising outpatient(22.9%)and inpatient(14.0%)care.The rest came from clinics(19.5%,including Western medicine 9.4%,dental 8.2%and Chinese medi

171、cine 1.9%),expenditure on medical articles,health goods and medical equipment(15.4%)and specialty care(10.9%).Figure 14:National healthcare expenditure by financial allocation,2022Source:Ministry of Health and Welfare.NT$bn1,2501,5001,0007505002500 NHI Government Households Others2013201420152016201

172、720182019202020212022Private sectorPublic sectorHospitals36.9%Clinics 19.5%General administration and public health10.6%Personal healthcare82.7%Medical articles,health goods and medical equipment15.4%Specialty institutions and other10.9%6.7%Capital formation21PwCs Guide to Taiwans health industries|

173、1.5.2 NHI financial statusIn 2022,the NHI had total income(on an accrual basis)of NT$766bn(about US$25.7bn),with the largest share accounted for by premium revenues at 97.7%.General premiums totalled NT$586bn(contributed collectively by beneficiaries,group insurance applicants and the government)and

174、 supplementary premiums were NT$73bn.Total NHI expenditure was NT$754bn(US$25.3bn),of which medical benefits accounted for 99.2%.The surplus of NT$11bn was deposited into the NHI reserve fund,which had a balance of NT$105bn(US$4bn).Throughout most of the NHIs history,growth in expenditure has outpac

175、ed its revenuesat an average increase of 6.2%per year in the most recent decade versus 4.1%,respectivelydriven by higher resource utilisation and medical costs(see Figure 15).The NHI began to experience financial deficits as early as 1998 and this has forced policymakers to pursue both cost-containm

176、ent measures and occasional hikes in NHI premium rates(in 2002,2010 and 2021)to help ensure that insurance revenues keep pace with rising healthcare costs.Healthcare system reforms in 2013,in particular the introduction of a new supplementary insurance premium,helped to financially stabilise the NHI

177、.Despite this,premium rates were lowered in 2016,which led to a shortfall in insurance revenues and contributed to annual deficits over the following four years.To balance the NHI budget,premium rates were raised in 2021,which,along with a NT$44bn(US$1.4bn)injection from special public budgets in 20

178、23,bolstered income and supported a return to annual surpluses over the past two years.Nevertheless,the NHI will continue to face financial pressure going forward due to rising healthcare demand and costs,leading to expectations of further premium rate increases in the near future.By law,the governm

179、ent can raise NHI rates when the safety reserve fund has less than one-month coverage of NHI expenditure.But this is a politically sensitive issue in Taiwan and so the government has been wary to take such action.All the same,more fundamental structural reforms will be required to ensure the long-te

180、rm sustainability of the NHI.Figure 15:NHI financial revenue and expenditure,1995-2022Source:Ministry of Health and Welfare.NT$bn600800700500400300200100-100019951999199720012003200720052009201120132015201720192021 Accumulated reserve fund balance NHI income NHI expenditure22|PwCs Guide to Taiwans h

181、ealth industries1.5.3 Cost-containment policiesBalancing the NHI budget is a persistent challenge for the government.Besides various initiatives to boost the revenue side,efforts to curb expenditure have also been pursued.These include a range of cost-containment measures designed to decrease both d

182、emand and supply.While patients incur co-payment to mitigate overuse or misuse of resources,policymakers are wary of imposing other additional costs on NHI users.Therefore,government efforts to bolster the NHI scheme have mainly focused on the cost(supply)side,as detailed below.Global budget payment

183、 systemThe NHIA phased in a global budget payment system between 1998 and 2003 to constrain the rapid growth of healthcare expenditure under the NHIs fee-for-service reimbursement mechanism,which tends to encourage quantity of care.Pre-determined,fixed annual budgets are set every year for five majo

184、r categories:hospitals,primary care clinics,dental care,Chinese medicine and dialysis.This in turn forces NHI-contracted providers to decide for themselves as to how to use their limited funds to satisfy the medical care needs of their patients.The budgeting process involves annual negotiations on N

185、HI expenditure for each of the five sectoral areas (see Figure 16).Six months before the start of each fiscal year,the MOHW proposes general parameters for the global budget to the Executive Yuan(Cabinet).Once approved,the multi-stakeholder NHI Committee meets in the autumn to discuss and set the fi

186、nal global budget and how it will be allocated.Each sectoral budget is then split between six geographic regions based on their share of total spending and number of beneficiaries.Healthcare providers are reimbursed by the NHIA through a mixture of fee-for-service and other payment methods using a f

187、loating point-value scale.This unit is convertible to New Taiwan Dollars(NT$)and the rate changes quarterly to align overall expenditure with pre-determined budgets.For example,if medical institutions only focus on increasing the volume of medical services delivered or drugs prescribed,this will ent

188、ail a lower point value and lower payments to providers.Consequently,many are not fully reimbursed for their services.Since the implementation of the global budget payment system,the gap between medical demand and the budgetary shortfall has long been borne by medical institutions.Recently,this has

189、led to calls from healthcare provider associations for the NHI to shift to an expenditure target system with a service volume target and fixed point value to payment ratio.In May 2024,preliminary discussions were held about a proposed draft bill that would require any over-budget expenditure to be c

190、overed by the public pursenot medical institutions.Figure 16:Decision-making process for annual NHI global budgetMOHWPropose general parameters for the global budget(January-April)Executive YuanApprove the global budget parameters(May-June)NHI CommitteeNegotiate and allocate global budget(August-Dec

191、ember)Estimate budget based on actual spendingReview by NationalDevelopment CouncilAllocate expenditure based on approved budget1.Target sector growth rates2.Details of budget increases3.Revise relevant formulae4.Consult NHI committee1.Payers willingness to pay2.Financial considerationsSource:Nation

192、al Health Insurance Administration.23PwCs Guide to Taiwans health industries|Alternative reimbursement payment modelsThe NHIA has also pursued different approaches to pay providers as part of efforts to contain healthcare costs.Reimbursement is generally on a fee-for-service basis,which accounts for

193、 around three-quarters of hospital payments,but the financial incentives inherent in this method tend to drive up supply-induced healthcare demand.Therefore,the NHIA has adopted some other payment mechanisms,based on the characteristics of different types of medical care,to encourage more efficient

194、and cost-conscious behaviour by all providers.The diversified payment methods include pay-for-performance,capitation and bundled payments for certain episodes of care,as well as a Taiwanese version of diagnosis-related groups(TW-DRGs)which caps hospital reimbursements for specific services at define

195、d levels.The NHIA phased in the TW-DRG payment model in 2010 and 2014,but uptake has been slow owing to resistance from providers.Around 400 DRGs have been implemented to date and the related costs account for about about 20%of overall inpatient medical expenses.The TW-DRG system seeks to standardis

196、e operating procedures and to enhance the quality of care and efficiency,but doctors are concerned that it forces them to perform under a fixed budget with little flexibility.For example,they claim it discourages the treatment of complex patient cases,since hospitals are required to absorb losses re

197、lated to inefficient treatments.On the other hand,the NHIA maintains the system has helped to spur a decline in hospital stay length and readmission rates,as well as in the average use of medical resources.Annual drug price adjustmentsTotal spending on pharmaceuticals accounted for 18.2%of current h

198、ealth expenditure in 2022,higher than the OECD average of 15.2%,and represented the third largest health-spending component after outpatient and inpatient care.Medication costs reimbursed by the NHI amounted to NT$231.6(US$7.8bn)in 2022,or 28.6%of its annual budget,having more than doubled in size s

199、ince 1995.As part of its cost-containment efforts,the NHIA seeks to control this escalating drug expenditure by imposing direct controls on reimbursement prices.It has been using a drug expenditure target(DET)mechanism since 2013 to adjust pharmaceutical prices.Under the DET,the NHIA sets an annual

200、target for NHI drug spending based on prior year expenditure and a negotiated growth rate.If actual expenditure exceeds the amount allocated,the excess will be adjusted in the following year through a drug price cut.There have been drug price cuts nearly every year due to overspending (see Table 3),

201、which has led some global pharma companies to withdraw certain drugs from the Taiwan market.Besides the primary objective of generating cost savings,the DET price cuts are also aimed at narrowing the gap between drug procurement and reimbursement prices from which hospitals profit.Most hospitals in

202、Taiwan operate in-house pharmacies and these are allowed to buy medicines at discounted rates while charging for dispensing them at NHI reimbursement prices,which are often significantly higher.Accordingly,pharmaceutical companies have claimed that this so-called drug price black-hole serves to arti

203、ficially inflate NHI drug costs.Table 3:NHI drug price reductions under DET mechanism,2013-2023 2013 2014 2015 2016 2017 2018 2019 2020 2021-22 2023 Target expenditure(NT$bn)138.0 142.6 147.5 154.8 151.1 156.0 162.3 170.2 N/A N/A Overspend amount(NT$bn)5.7 8.2 3.2 5.7 7.4 5.8 4.0 7.5 8.2 5.5 No.of d

204、rugs reduced in price 7,583 6,821 7,392 7,331 7,476 7,470 7,237 6,645 5,475 4,551 Average price reduction(%)3.9 5.3 2.1 3.5 4.6 3.5 2.3 4.1 2.1 2.8 Effective date of price cutMay 2014 Jul 2014Apr.2015 Apr.2016 Apr.2017 Apr.2018Apr.2019 Oct.2020Jan.2022 Apr.2023 Apr.2024 Source:National Health Insura

205、nce Administration.24|PwCs Guide to Taiwans health industries1.5.4 Private health insurancePrivate health insurance in Taiwan consists mostly of policies that supplement NHI coverage.Generally,these are disease-specific cash indemnity policies,or riders to non-medical policies like life or car insur

206、ance.They mostly offer one-time,event-trigger insurance payments for certain health occurrences,such as cancer or hospitalisation for surgery.Private health insurance policies do not cover medical services that are covered by the NHI,nor do they buy faster access to any type of care or more choice o

207、f medical specialists or hospitals.Taiwans health insurance sector is small but expanding.Premium income from both life and non-life health insurance grew at a ten-year CAGR of 4.0%to reach NT$438bn(US$14.1bn)in 2023,accounting for 18%of total insurance industry premiums(see Figure 17).Individual an

208、d group health insurance products with fixed payment terms dominate the line of business,representing 99%of all health insurance premium income.The rest mostly comes from yearly renewable health insurance plans marketed by property and casualty insurers.Despite universal access to healthcare and med

209、ical services through the NHI,private households currently foot 31.4%of total health spending on an out-of-pocket basis,up from 22.3%in 1995.The increase in cost-shifting to patients,due to the mounting strain on the NHI budget,will impose a growing financial burden on households.This,together with

210、higher insurance awareness resulting from the Covid pandemic,may lead to more demand for private insurance to protect patients against downside risks and to drive better care decisions.Indeed,the NHIA is actively considering to leverage commercial health insurance in order to expand its long-term fu

211、nding sources and offer an additional layer of medical protection to NHI insured persons.In January 2024,it initiated a comprehensive study through the National Health Research Institutes to create a model for supplemental health insurance.The aim is to investigate the potential role of private heal

212、th insurance within the NHI framework,with a specific focus on exploring partnerships between the NHI and private health insurers.Figure 17:Premium income from health insurance in Taiwan,2014-2023Source:Taiwan Insurance Institute.2014201520162017201820192023202220212020100200300400500020101505NT$bn%

213、Life-Health Non-life-Health Share of all insurance premiums25PwCs Guide to Taiwans health industries|26|PwCs Guide to Taiwans health industriesTaiwans biomedical industryPage2.Biomedical industry292.1 Industry scope and size292.2 Policy support and trends312.3 Biomedical ecosystem332.4 Biomedical cl

214、uster network342.5 International collaborations353.Biotechnology sector373.1 Regulatory environment383.2 Conducting clinical trials393.3 Business environment424.Pharmaceuticals sector434.1 Regulatory environment444.2 Registration and approval454.3 Reimbursement and pricing474.4 Business environment4

215、95.Medical devices sector515.1 Regulatory environment525.2 Registration and approval535.3 Reimbursement and pricing545.4 Business environment5527PwCs Guide to Taiwans health industries|28|PwCs Guide to Taiwans health industries2.Biomedical industryThe term biomedical refers to the field of biology a

216、nd medicine,particularly when it comes to scientific research and development,which seeks to understand and treat health-related issues.The biomedical industry,in turn,consists of businesses that provide various healthcare and medical products and services.It has a focus on innovation to create high

217、 additive value by integrating technologies from different fields,as reflected in the growing trend towards more personalised healthcare solutions such as precision health and smart healthcare.2.1 Industry scope and sizeTaiwans biomedical industry comprises five sectors:applied biotechnology,pharmac

218、euticals,medical devices,health and wellness and digital health,according to the Ministry of Economic Affairs(see Figure 18).The latter two sectors were added to the industry scope in 2018 and 2023,respectively.Health and wellness includes health promotion products(such as sports and fitness equipme

219、nt,etc.)and well-being products and services(mainly for the elderly),while digital health comprises a wide range of healthcare applications and technologies.Figure 18:Scope of Taiwans biomedical industryBiotechnologyPharmaceuticalsMedical devicesHealth and wellnessDigital healthAgriculture FoodContr

220、act servicesEnvironmental biotechnologySpecialty chemicalsSmall molecules drugs BiologicsActive pharmaceutical ingredients Traditional Chinese medicineDiagnosis and monitoringSurgery and treatmentIn-vitro diagnosticsDisease prevention and health promotionOther devicesHealth promotion productsWell-be

221、ing products and servicesDigital preventionDigital diagnosisDigital treatmentTelemedicineMedical information systemsSource:Industrial Development Administration,2023 Biotechnology Industry in Taiwan White Paper.The biomedical industry generated total revenues of NT$701bn(US$25bn)in 2022,down 1.6%com

222、pared to 2021 due to a drop-off in demand for pandemic-related products,according to the latest annual industry report from the Industrial Development Administration of the Ministry of Economic Affairs(see Figure 19).Health and wellness was the largest industry sector in terms of revenue with a shar

223、e of 32.4%,followed by the medical devices(27.7%),applied biotechnology(19.1%),pharmaceuticals(13.7%)and digital health(7.2%)sectors.Figure 19:Taiwans biomedical industry by revenue,2013-2022Source:Industrial Development Administration,2023 Biotechnology Industry in Taiwan White Paper.20132014201520

224、162017201820192020202220214003005006007002001000NT$billion Applied biotechnology Pharmaceuticals Medical devices Health and wellness Digital health29PwCs Guide to Taiwans health industries|The revenue data has been somewhat skewed in recent years by the inclusion of the health and wellness and digit

225、al health sectors in an enlarged industry scope.Due to the limited availability of detailed data for these two broadly-defined fields,our industry analysis will be confined to the applied biotechnology,pharmaceuticals and medical devices sectors.Together,these three account for around 60%of the biom

226、edical industrys overall revenues and represented a total market size of NT$600bn(US$20.2bn)in 2022(see Table 4 and Figure 20).Table 4:Status of Taiwans biomedical industry,2013-2022*Unit:NT$billion2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Total revenue 276.9 288.6 298.6 315.0 325.0 344.2 36

227、5.3 395.6 453.8 423.9-Applied biotechnology 78.2 82.2 88.4 94.0 98.6 104.7 110.6 114.2 125.8 133.9-Pharmaceuticals 82.4 83.2 77.2 79.5 80.1 80.3 85.5 89.0 91.7 96.1-Medical devices 116.3 123.2 133.0 141.5 146.3 159.2 169.2 192.4 236.3 193.9 Total exports 118.2 125.2 141.6 155.2 157.6 170.8 184.8 201

228、.0 230.9 199.2-Applied biotechnology 29.9 31.2 34.3 37.7 41.1 45.2 49.7 51.7 51.5 50.5-Pharmaceuticals 19.6 19.7 26.1 31.4 29.2 30.1 31.0 32.2 33.3 40.3-Medical devices 68.7 74.3 81.2 86.1 87.3 95.5 104.1 117.1 146.1 108.4 Total imports 210.7 217.1 226.2 253.7 271.2 286.3 314.3 320.7 334.5 375.5-App

229、lied biotechnology 49.5 50.0 51.9 53.4 54.4 56.3 57.7 56.5 55.9 57.0-Pharmaceuticals 99.2 99.9 102.1 126.7 142.2 151.0 168.0 168.1 181.8 217.6-Medical devices 62.0 67.2 72.2 73.6 74.6 79.0 88.6 96.1 96.8 100.9 Total market size 369.4 380.5 383.2 413.5 438.6 459.7 494.8 515.3 557.4 600.2-Applied biot

230、echnology 97.8 101.0 106.0 109.7 111.9 115.8 118.6 119.0 130.2 140.4-Pharmaceuticals 162.0 163.4 153.2 174.8 193.1 201.2 222.5 224.9 240.2 273.4-Medical devices 109.6 116.1 124.0 129.0 133.6 142.7 153.7 171.4 187.0 186.4*Excluding the health and wellness and digital health sectors.Source:Industrial

231、Development Administration,2023 Biotechnology Industry in Taiwan White Paper.Figure 20:Market size of Taiwans biomedical industry,2013-2022*Excluding the health and wellness and digital health sectors.Source:Industrial Development Administration,2023 Biotechnology Industry in Taiwan White Paper.2013

232、2014201520162017201820192020202220214003005006002001000NT$billion Applied biotechnology Pharmaceuticals Medical devices30|PwCs Guide to Taiwans health industries2.2 Policy support and trendsStrong policy support from the government has helped create a favourable investment environment for the growth

233、 and development of Taiwans biomedical industry.A wide range of measures has been implemented in recent decadesincluding special legislation and preferential tax incentivesas part of strategic initiatives to encourage biomedical R&D and investment.The governments biomedical industry policy has evolv

234、ed over time,as outlined below,but it remains centred on driving forward Taiwans next generation of industrial growth.Biomedical Industry Innovation ProgrammeIn 2016,the government included the biomedical industry in its 5+2 Innovative Industries Plan,which sought to advance the transformation of Ta

235、iwans industrial base toward higher value-added activities.It launched a related development initiative,called the Biomedical Industry Innovation Programme(BIIP),which initially focused on the applied biotechnology,pharmaceuticals,medical devices and health and wellness sectors.The overarching goal

236、of the initiative was to establish Taiwan as hub for biomedical R&D in the Asia Pacific region.Based on the theme of creating local,global and future links,the BIIP aimed to raise the biomedical industrys output value and competitive capabilities through four action areas:establishing a comprehensiv

237、e ecosystem;integrating innovation clusters;connecting to global markets;and promoting key specialty industries.The plans targets for 2025 called for an industry output value of more than NT$1 trillion(US31bn),the development and international marketing of 20 new drugs and the introduction of 80 hig

238、h-value medical devices to global markets.Precision Health Strategy Development ProgrammeThe BIIP laid the foundation for the next-phase promotion of precision health,with a particular focus on precision medicine,regenerative medicine and digital health(see Figure 21).In 2019,the government proposed

239、 the Taiwan Precision Health Initiative(TMI),which is a large-scale genetic study being conducted jointly by leading research institute Academia Sinica and a group of medical centres.The TMI aims to identify genetic risk factors that lead to common diseases in Taiwan and match them with the most eff

240、ective medical treatments and drugs.Since 2020,the government has promoted precision health and medical technology as a component of its Six Core Strategic Industries initiative,which builds on the 5+2 Plan.Its Precision Health Strategy Development Programme seeks to establish Taiwan as a global lea

241、der in precision health and the development of high-tech solutions to epidemics like Covid.The objective is to leverage Taiwans digital infrastructure to accelerate the integration of technology and medical data to drive the development of personalised precision health services.Figure 21:Current bio

242、medical focus areas in TaiwanSource:Biotechnology and Pharmaceutical Industries Promotion Office.Other strategic biotech and pharmaceutical productsContract development&manufacturing organizations(CDMOs)Innovative technology platforms dedicated to the biotech and pharmaceutical industryDigital medic

243、ineRegenerative medicinePrecision medicineNew drug&new dosage formsHigh-risk medical devices31PwCs Guide to Taiwans health industries|With the advent of innovative precision and digital health solutions,opportunities are being created worldwide to transform patient care and improve healthcare servic

244、e delivery.In Taiwan,the government has sought to take advantage of the global trends in precision health and medical technology,by designating them as priority areas for promotion and development,to provide a new direction for the growth of the local biomedical industry.Accelerating shift towards p

245、recision healthPrecision health is a growing area of interest for healthcare systems around the world,as it has the potential to significantly improve patient care by tailoring treatments that address individual variability in genes,environment and lifestyle for each personparticularly regarding onc

246、ology.Taiwans precision health policy aims to ensure health maintenance,disease prevention,diagnostics,therapeutics and long-term care for people of all agesIn addition to the Precision Health Strategy Development Programme,which seeks to establish Taiwan as a global leader in the precision health f

247、ield,the Ministry of Health and Welfare has set a roadmap for a precision healthcare system by 2030.Key tasks include the establishment of a large-scale gene bank,the promotion of new-born genomic sequencing and the development of new reimbursement strategies for precision medicine.Taiwan has also i

248、mproved its regulatory environment to encourage the development of precision medicine initiatives.The principal law covering biomedical innovation,the Act for the Development of Biotech and Pharmaceutical Industry,has been amended in recent years to extend R&D tax breaks to emerging biomedical field

249、s including precision health and regenerative medicine,which are regarded as key areas for future growth.Taiwans massive NHI research database and strong R&D capabilities make it an attractive location for development of precision medicine applications,with the local technology and biomedical indust

250、ries converging to produce personalised solutions and treatments.Taiwans efforts to develop its precision medicine offerings are also attracting international attention,as reflected by a growing number of collaborative arrangements.Growing demand for new medical technologiesAnother significant marke

251、t trend is digital health,which is an innovative,ever-changing area in healthcare.It encompasses a wide range of digital tools that can improve healthcare,enable lifestyle changes and create operational efficiencies.These cover areas such as mobile medicine,medical health information,wearable device

252、s,telehealth and telemedicine,personalised medicine and other IT apps in the health and medical fields.In Taiwan,the government has designated medical technology as a priority sector for development.Taiwan is well placed to lead the development of innovative products and solutions across the whole d

253、igital-health ecosystem,thanks to its established strengths in the information and communications technology industry and manufacturing,as well as having one of the top healthcare systems and largest medical databases in the world.Taiwan also provides certain incentives to facilitate the development

254、 of new digital health products and services.The Act for the Development of Biotech and Pharmaceutical Industry provides R&D tax breaks to qualified companies for investments in high-risk medical devices.In addition,the Ministry of Economic Affairs offers investment subsidies to start-up enterprises

255、 to encourage development of cutting-edge medical AI solutions.A growing number of Taiwans renowned technology companies are diversifying into the biomedical industry,with the aim of transforming not only Taiwans own healthcare system,but also the worlds.The focus is on integrating digital health te

256、chnologies with the latest medical applications to enable connected and smart healthcare.This development is expected to have a synergistic growth impact on Taiwans biomedical industry.32|PwCs Guide to Taiwans health industries2.3 Biomedical ecosystemA long period of strong government backing and in

257、vestment has laid a solid foundation for a comprehensive biomedical ecosystem in Taiwan,which spans the entire value chain of the industry,from pre-clinical and clinical research in drug discovery and development to manufacturing and marketing(see Figure 22).Much of the industrys activity takes plac

258、e in bio clusters close to universities,research institutes and large hospitals.Figure 22:Taiwans biomedical ecosystemTechnology researchProduct developmentClinical trialsManufacturing and salesUniversitiesResearch institutes Company R&D STP/IncubatorsCRO servicesPre-clinical testingBio parksVenture

259、 capitalHospitalsOverseas collaborationOwn productionCDMOsSource:PwC Taiwan.State-sponsored research institutes and universities help to nurture biomedical talent as well as technological innovation.The key bodies include Academia Sinica,Development Center for Biotechnology,National Health Research

260、Institutes,Industrial Technology Research Institute and a number of universities,in particular National Taiwan University,China Medical University,Taipei Medical University and National Yang Ming University.These organisations have spawned and encouraged a large number of start-ups that mainly focus

261、 on early-stage commercialisation of academic research,many of which are housed in government-funded incubators and science parks.At the other end of the ecosystems spectrum are established biomedical companies,which produce biopharmaceutical and medical device products either for themselves or unde

262、r contract to other firms.In between the biomedical start-ups and commercial manufacturers are companies and organisations offering support services related to contract research and development,pre-clinical testing and clinical trials,among others.Taiwan thus has all the necessary elements to enable

263、 companies to collaborate both domestically and internationally across all parts of the biomedical industry from research and development through to production.33PwCs Guide to Taiwans health industries|2.4 Biomedical cluster networkTaiwan has an inter-connected network of biomedical hubs from north

264、to south of the island,centred around science and research parks,which support value creation and export growth across the industry(see Figure 23).Manufacturers of new drugs,medical devices and biologics are clustered in northern Taiwan,with pharmaceutical and medical device companies mostly grouped

265、 in the central region,and companies producing active pharmaceutical ingredients,medical implants and minimally invasive surgical instruments in the south.Figure 23:Biomedical industry clusters in TaiwanFocusAgricultural biotechnologyChinese herbal medicineAnimal and plant medicineBio clustersPingtu

266、ng Agricultural Biotechnology ParkFocusHi-tech medical devicesActive pharmaceutical ingredientsBio clustersSouthern Taiwan Science ParkSouthern Region Industrial ParkFocusMedical devicesProduction of pharmaceuticalsBio clustersCentral Taiwan Science ParkCentral Region Industrial ParkFocusHi-tech med

267、ical devicesSmart machineryBiologicsBio clustersHsinchu Biomedical Science ParkHsinchu industrial ParkFocusNew drugsPrecision medicineClinical trialsBio clustersNational Biotechnology Research ParkNangang Software ParkTaipei Bio ClusterSource:Biotechnology and Pharmaceutical Industries Promotion Off

268、ice.In the north,the leading biomedical clusters are the National Biotechnology Research Park in Nangang,the Neihu Technology Park and the Hsinchu Biomedical Science Park.The cluster sites in Nangang and Neihu,in particular,specialise in innovative biotechnology and pharmaceuticals and new medical d

269、evices because of their strong R&D capabilities.The Hsinchu Biomedical Science Park,which is adjacent to the technology-focused Hsinchu Science Park,focuses on medical equipment,in-vitro testing and biological preparations.The central region on the west coast is home to Taiwans precision machinery a

270、nd tooling hub,which in recent years has benefited from the growth of robotics,smart applications and value-added data services.Biomedical businesses at the Central Taiwan Science Park in Taichung collaborate with engineering companies to develop precision machining for medical devices and instrumen

271、ts,such as minimally invasive medical materials and smart assistive devices.The manufacturing of pharmaceutical products is another focus area in central Taiwan.In the southern part of Taiwan,the primary focus is the production of active pharmaceutical ingredients,with biomedical firms also leveragi

272、ng the areas strong metal processing capabilities to develop minimally invasive surgical instruments for dentistry and orthopaedics at the Southern Taiwan Science Park.In addition,based on Taiwans strengths in the agricultural field,the Pingtung Agricultural Biotechnology Park at the bottom of the i

273、sland focuses on development of functional foods,Chinese medicines,animal vaccines and animal breeding.34|PwCs Guide to Taiwans health industries2.5 International collaborationsAs innovation does not come cheaply or quickly,there is a growing recognition of the value and importance of collaboration

274、across the biomedical ecosystem.Companies globally are increasingly adopting a collaborative,multi-stakeholder approach to conducting R&D and innovation activities.They are partnering with research institutes,healthcare facilities and others to tackle scientific and technological challenges,generate

275、 greater efficiencies in R&D,and accelerate the development and delivery of new and innovative treatments for patients.As momentum accelerates in Taiwans biomedical industry,international companies are showing high interest in collaboration and investment opportunities across the whole value chain,l

276、ooking to take advantage of the agility of local firms when it comes to identifying market niches with potential for more innovation.Similarly,Taiwanese research institutes and biomedical businesses seek collaborations with overseas counterparts and multinationals to speed up the development of thei

277、r innovations and expand their market reach internationally.The most common forms of collaboration in Taiwans biomedical industry include the following:R&D and manufacturing collaboration,such as biopharmaceutical outsourcing to CROs(Contract Research Organisations),CMOs(Contract Manufacturing Organ

278、isations),CDMOs(Contract Development and Manufacturing Organisations)and other types of partnering arrangements and strategic alliances.Licensing and distribution agreements,such as for the in-licensing and out-licensing of research and development assets,process development know-how and certain man

279、ufacturing and distribution rights.Direct investments,including equity stakes,joint ventures and mergers and acquisitions(M&A).Biomedical M&A in Taiwan has largely been small-scale to date and primarily driven by local consolidation and overseas expansion plans to reduce reliance on a small domestic

280、 market,with a particular focus on contract development and manufacturing organisations as potential merger targets.At the same time,the industry is attracting increasing international investor interest,thanks to its strong positioning in the Asian clinical trials market,as well as the governments l

281、ongstanding policy support for the industrys growth and development.Furthermore,the government,academia and industry associations play an important role in promoting Taiwans biomedical industry to international audiences through conferences,exhibitions and other eventsin particular,the BIO Asia-Taiw

282、an expo,which is one of the largest annual biomedical gatherings in Asia.They also help to foster and facilitate international collaborations with local research institutes and others,especially in the areas of biomedical R&D and talent training,as part of broader efforts to drive industry innovatio

283、n and future growth.35PwCs Guide to Taiwans health industries|36|PwCs Guide to Taiwans health industries3.Biotechnology sectorBiotechnology,or biotech in short,involves the use and manipulation of living organisms to develop or make commercial products and services,mainly for use in agriculture,food

284、 science and medicine.Taiwans applied biotechnology sector comprises five sub-sectors which include:agriculture biotechnology,food biotechnology,contract services for new drug development,environmental biotechnology and bio-based specialty chemicals.Strong government commitment has helped drive the

285、expansion of Taiwans biotechnology sector since the mid-2000s.A key milestone was the passage of the 2007 Act for the Development of Biotech and Pharmaceutical Industry,which laid the foundation for future growth.Two years later,the government at that time launched a Diamond Action Plan for Biotech

286、Take-off to strengthen the sectors basic structure,while the second phase of the industry development plan,which started in 2013,focused on growing the capabilities of its value chain.The current government,which has been in power since 2016,continues to actively support and promote biotechnology as

287、 a priority sector for industrial development.In that year,it launched the Biomedical Industry Innovation Programme,with the goal of making Taiwan a regional hub for biomedical R&D.Four years later,the government introduced a Precision Health Strategy Development Programme as part of further efforts

288、 to build up Taiwan as an international leader in precision health and the development of new biomedical products.Taiwans biotechnology sector has almost tripled in market size since 2007 to reach NT$140bn(US$4.7bn)in 2022(see Table 5),with the primary focus on development of new drugs and biologics

289、.Although the sectors scale is still relatively small,its upward growth momentum is strong and expected to continue.Key drivers will be further policy and investment support and the maturation of companies drug pipelines and service offerings.Table 5:Status of Taiwans applied biotechnology sector,20

290、13-2022Unit:NT$billion2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Revenue 78.2 82.2 88.4 94.0 98.6 104.7 110.6 114.2 125.8 133.9 No.of companies 490 500 510 525 557 596 626 651 671 684 Personnel 17,540 18,340 19,259 20,219 21,432 22,718 23,854 24,570 24,447 25,669 Export value 29.9 31.2 34.3 3

291、7.7 41.1 45.2 49.7 51.7 51.5 50.5 Import value 49.5 50.0 51.9 53.4 54.4 56.3 57.7 56.5 55.9 57.0 Import:Export 62:38 62:38 61:39 60:40 58:42 57:43 55:45 55:45 59:41 62:38 Domestic market size 97.8 101.0 106.0 109.7 111.9 115.8 118.6 119.0 130.2 140.4 Source:Industrial Development Administration,2023

292、 Biotechnology Industry in Taiwan White Paper.37PwCs Guide to Taiwans health industries|3.1 Regulatory environmentThe Taiwan Food and Drug Administration(TFDA),under the Ministry of Health and Welfare(MOHW),is the government body responsible for the enforcement of laws and regulations related to foo

293、d,cosmetics,medicines and medical devices,in addition to the issuance of all related licences,permits and authorisations.It has established a comprehensive lifecycle management system for drug-related products(see Figure 24)which is largely in line with international standards and practicesto effect

294、ively control their safety efficacy and quality.Figure 24:Medicinal products management frameworkPre-clinical testingClinical trialListing applicationProductionMarketingProduct developmentGLP:Good Laboratory PracticeGCP:Good Clinical PracticeIRB:Institutional Review BoardGMP:Good Manufacturing Pract

295、iceGTP:Good Tissue PracticeADR:Adverse Drug/Device ReactionsGPvP:Good Pharmacovigilance PracticeGPP:Good Pharmacy PracticeApprovalPost Marketing Change ControlGood LaboratoryPractice(GLP)Good ClinicalPractice(GCP)TFDA/InstitutionalReview Board(TFDA/IRB)ADR&defective product reportingGood Distributio

296、n Practice(GDP)Good Pharmacy Practice(GPP)Good Pharmacovigilance Practice(GPvP)Regulations Goveming the Trace and Track System for Medicinal ProductsPharmaceutical Care/Safety Medication EducationGeneral/Case-Specific ConsultationGood Manufacturing Practice(GMP)/Good Tissue Practice(GTP)Risk Evaluat

297、ion&Mitigation Strategies(REMS)/Risk Management Plan(RMP)Production Source ControlProduct Risk ControlPre-marketing reviewPost-marketsurveillanceSource:Taiwan Food and Drug Administration.The TFDA conducts reviews,audits and inspections at the various stages of the drug lifecycle to monitor and ensu

298、re compliance with operating practices.The MOHW-backed Center for Drug Evaluation(CDE)assists the TFDA to conduct technical reviews of applications for clinical trials,new drugs and medical devices.Its main role is to improve the quality and speed of clinical trials as well as drug and device approv

299、al processes.The CDE also establishes regulations for new therapy treatments and ensures the transparency of review processes.The principal governing law for the biotechnology sector is the 2007 Act for the Development of Biotech and Pharmaceutical Industry.The law has been amended in recent years t

300、o expand the R&D tax breaks available to qualified companies for investments in new and emerging biomedical technologies,including precision medicine,regenerative medicine and digital health.Furthermore,the Fundamental Science and Technology Act was revised in 2017 to facilitate the flow of biotechn

301、ology talent between academia and the private sector.More recently,in June 2024,the Legislative Yuan passed new legislation that will facilitate the development of regenerative medicine.The Regenerative Medicine Act and the Regenerative Medicine Product Act establish a comprehensive framework for th

302、e management of regenerative medicine treatment and provide protection to patients.The new laws will give a boost to the biotechnology sector by helping expedite a wider application of research results to clinical medicine as well as speeding up approvals of regenerative medicinal products.38|PwCs G

303、uide to Taiwans health industries3.2 Conducting clinical trialsDrug development is a long and costly sequential process,from discovery and clinical development to approval and marketing.In Taiwan,for studies involving human subjects,clinical trials of investigational new drugs(INDs)conducted for mar

304、keting approval,as well as post-marketing studies on approved drug products,are mainly regulated by the Pharmaceutical Affairs Act and Good Clinical Practice(GCP)Guidelines for Medicinal Products,which closely mirror the global GCP standards set by the International Conference of Harmonization.Taiwa

305、n first implemented a clinical trial system in 1993 and the quality of trials has steadily improved over the years,boosted by a number of initiatives to improve R&D capabilities and simplify trial processes.For instance,the Taiwan Clinical Trial Consortium(TCTC)works with clinical trial sponsors to

306、advance patient care and provide on-site clinical trial coordination services.The TCTC brings together 12 disease-specific clinical trial consortia,all of which are Asian prevalent,involving over 280 clinical trial doctors and principal investigators.Taiwan is regarded as a favourable international

307、site for clinical trials of new drugs.The 2019 Biotechnology Competitiveness and Investment Survey by Pugatch Consilium ranked Taiwan second among 17 fast-growing emerging biomedical markets,behind Singapore,for its investment attractiveness.However,international drugmakers contend some gaps still n

308、eed to be closed for Taiwan to compete with mature markets,such as resolving drug approval delays and introducing greater predictability and holistic approaches for market access.Research and clinical trials infrastructureResearch institutes have played an important role in Taiwans economic developm

309、ent down the years,and nine currently focus on the biomedical industry.The main one is the Development Center for Biotechnology(DCB),which has successfully fostered the development of a complete biotech infrastructure and value chain,as well as a diverse array of applications for use by the private

310、sector.It specialises in the development of biologics and small molecule drugs,botanical drugs as well as the technologies required for pre-clinical testing.The opening of the National Biotechnology Research Park(NBRP)in the Nangang District of Taipei City in 2018 marked a key milestone for industry

311、,as it integrated local R&D and start-up incubation capabilities,focusing all pre-clinical trial activity in a single location.The park houses the TFDA,DCB,National Laboratory Animal Center,Academia Sinica research centre,BioHub Taiwan incubation base and private firms.The NBRP has helped increase t

312、he scale and scope of local R&D and attracted multinationals to conduct research in Taiwan.This institutional support infrastructure for clinical research is integral to Taiwans attractiveness as a site for clinical trials.Another positive factor is the availability of high quality,GCP-compliant cli

313、nical trial centres.At present,25 medical centres and 143 hospitals are qualified to conduct clinical trials in Taiwan.Centres of excellence for clinical trials have been set up at leading research hospitals to enhance Taiwans capacity to conduct early-stage clinical trials.Moreover,the MOHW has fun

314、ded new clinical trial centres at certain hospitals.39PwCs Guide to Taiwans health industries|Clinical trial review and approval processClinical trials of new drugs typically proceed through four phases and require prior approvals from both the TFDA and the relevant Institutional Review Board(IRB)(s

315、ee Figure 25).Taiwan has a central IRB system consisting of nine main IRBs and 35 collaborative IRBs,which are formally designated to review and monitor clinical trials involving human subjects.In practice,a clinical trial application for TFDA approval is usually made by the sponsor or contract rese

316、arch organisation,and the IRB one is filed in the name of the principal investigator.Figure 25:Standard review process for IND applicationsTFDAAssessment ReportIRBHospital,Sponsor,CROTFDA decisionAdvisory CommitteeEthnic concerns,complex trial design,etc.Hospital,Sponsor,CROConsult with AC experts i

317、f neededIntegrated Medicinal Products Review Office(iMPRO)Administrative SectionTechnical SectionCMCPharm/ToxPK/PDClinicalStatisticsSource:Taiwan Drug and Food Administration.Once a sponsor submits a clinical trial application to the TFDA,the supporting dossier is assessed.If required,a review meeti

318、ng will be held with the TFDA,which may request supplementary documents.The standard review time for an IND application is 45 calendar days,while that for fast-track pathways for regional and global trials is 15 days.For cases where a multinational protocol has been approved by at least one of ten r

319、eference markets,the TFDA will conduct an administrative review without requiring a technical evaluation from the CDE.The TFDA made enhancements in 2017 to its review processes for clinical trial protocols,which were aimed at helping accelerate the development of new drugs and facilitating earlier p

320、atient access to innovative treatments.The measures included the introduction of a new 30-day fast-track review mechanism for clinical trials involving cell and gene therapies,the streamlining of the regulatory review process for first-in-human clinical trials and refining the review process for cli

321、nical trial protocol amendments based on degree of changes.The number of clinical trials conducted in Taiwan has increased steadily in recent years(see Figures 26 and 27).The TFDA handles 300-400 new IND applications every year,mostly for multi-regional,multi-centre Phase II and III trials.Because o

322、f the high quality,speed and relatively low cost of conducting clinical trials in Taiwan,most of the major global pharmaceutical firms have set up local clinical trial offices,which mainly focus on Phase III global multi-centre studies.Even so,Taiwan faces stiff challenges from several regional comp

323、etitors.40|PwCs Guide to Taiwans health industriesFigure 26:IND applications in Taiwan by clinical trial type,2014-2023Figure 27:IND applications in Taiwan by study phases,2014-2023Source:Taiwan Food and Drug Administration.Source:Taiwan Food and Drug Administration.201420152016201720182019202020232

324、02120222014201520162017201820192020202320212022350400300250200150100500Number of applications350400300250200150100500Number of applications Taiwan single centre Taiwan multiple centre Multi-regional multi-centre Phase I Phase II Phase III Phase IV/Others41PwCs Guide to Taiwans health industries|3.3

325、Business environmentTaiwans biotechnology sector is small in scale and has a fragmented structure.Around 680 enterprises are classified as biotech companies and their combined revenue totalled NT$134bn(US$4.5bn)in 2022.Due to Taiwans small market size,local drug developers often work with CROs and p

326、harma multinationals to develop high-end drugs and expand overseas.Their traditional business model has been to acquire or in-license an early-stage drug candidate,perform R&D to add value and then out-license the compound to a larger company.A number of local biotech companies are at the forefront

327、of breakthrough drugs,delivery systems and diagnostics,with some having established a niche in the development of new cancer drugs.Also,given Taiwans difficulty in procuring Covid vaccines from abroad during the pandemic,local research institutes and firms have developed their own vaccines.This has

328、been beneficial to the wider biotechnology sector,as the government has stepped up policy support for it in recognition of healthcare vulnerabilities and supply chain weaknesses.As funding is a persistent challenge for both biotechnology start-ups and development-stage companies,the government has e

329、ncouraged the creation of small and medium biotechnology venture capital funds to provide financing.The state-run National Development Fund also provides significant funding support by investing in biotechnology companies and biotechnology-related venture capital firms.Moreover,initial public offeri

330、ng(IPO)rules have been relaxed in recent years to make it easier for biotechnology firms to raise funds through listings.As a result,the number of listed biotechnology and medical care companies in Taiwan has risen steadily(see Figure 28)to reach 130 in 2022including 25 from the biotechnology sector

331、,54 from the pharmaceuticals sector and 51 from the medical devices sectorwith a combined market cap of NT$1,256bn(US$42bn).As Taiwans biotechnology sector is in the late incubation stage,the maturation of companies clinical pipelines and the approval of new drugs has attracted growing investor atte

332、ntion and given a boost to biomedical stocks.Figure 28:Market value of listed biomedical stocks in Taiwan,2013-2022Source:Industrial Development Administration,2023 Biotechnology Industry in Taiwan White Paper.20132014201520162017201820192022202120201400120010008006004002000140120100806040200NT$bill

333、ionNo.of companies Biotech market capitalisation Number of listed biotech companies42|PwCs Guide to Taiwans health industries4.Pharmaceuticals sectorTaiwans pharmaceuticals sector covers a broad range of drug-related products,including small-molecule drugs,biologics,active pharmaceutical ingredients(APIs)and Chinese herbal medicine.The domestic market grew at a five-year CAGR of 7.2%to reach NT$27