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Globelics Academy
The 7th International PhD School on National System of Innovation and Economic Development
Tampere‐Finland, 16 to 26 May, 2011
Industrialising Academia: Developing Knowledge Transfer and
the Biopharmaceutical Innovation System in Taiwan Presented By Shih-Hsin Chen PhD Student in Science and Technology Studies Institute for Science and Society/ School of Sociology and Social Policy University of Nottingham E-mail : [email protected] Supervisors: Prof. Paul Martin, Prof. Ian Forbes Abstract
Previous studies of biopharmaceutical and biotechnology innovation (Bartholomew, 1997, Mani, 2005, Chaturvedi, 2007) suggest that one of the key determinants of success is the flow of knowledge between actors within the innovation system. The production, transfer and use of biopharmaceutical knowledge is best conceived as occurring in collaborative networks that link firms, academic scientists, medical institutions, venture capitalists, and government agencies (Owen-Smith and Powell 2001a, 2001b, 2004; Powell and Owen-Smith, 1998). In particular, Owen-Smith and Powell (2001a) argue that commercialisation of biotechnology is driven by various factors such as the changing institutional mandates for universities, funding opportunities, and new research technologies. The aim of this study is to analyze the changing dynamic of collaboration between the key actors, including domestic and foreign organisations within the Taiwanese biopharmaceutical innovation systems, and the role that emerging institutions which specifically promoted biopharmaceutical innovation have played during the last decade. Empirically more than 50 semi-structured interviews were then conducted with the key actors involved in knowledge transfer and research collaborations, including academic scientists, company managers, policy makers, government officials, technology transfer officers in a variety of research institutes, as well as the major knowledge brokers in the field. In conclusion, the findings highlight the way in which the changing of role of institutions driven by the dynamic of technology policy, and the shifting boundaries between the public and private sectors are pushing research collaboration to become more profit-oriented with greater emphasis on market potential and the clinical development of new products. Key words : Innovation Systems, Biopharmaceutical Innovation in Taiwan, Knowledge Transfer
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Table of Content
Introduction ..................................................................................................................................... 3 1. Background and Conceptual Framework .................................................................................... 4 1.1 Innovation Systems ................................................................................................................. 5 1.2 The Evolution of Biopharmaceutical Innovation Systems...................................................... 6 1.2.1 National System of Biotechnology Innovation .................................................................. 6 1.2.2 Technology Transfer in a Biotechnology innovation system ............................................. 8
1.3 The Conceptual Framework .................................................................................................... 9 2. Methodology ............................................................................................................................. 10 3. The Empirical Study.................................................................................................................. 11 3.1 The Emerging Contours of the Taiwanese Biopharmaceutical Industry ............................... 11 3.2 The Institutional Evolution of the NBIS in Taiwan............................................................... 12 3.3 The Institutional Features affecting the knowledge Flow and Stock .................................... 14 3.3.1 Features Relating to the Stock of Knowledge in Research Institutions ........................... 14 3.3.2 Features Relating to the Flow of Knowledge between Research Institutions and Industry17 3.3.3 Features Relating to the Stock of Knowledge in Industry................................................ 19
3.4 Mapping Knowledge Transfer in the Taiwanese Biopharmaceutical Innovation System..... 20 4. Discussion ................................................................................................................................. 22 Conclusion..................................................................................................................................... 24 References ..................................................................................................................................... 25
Table 1 Data of Biopharmaceutical Industry in Taiwan ......................................................... 28 Fig. 1 Sectoral System of innovation of the Taiwan BioPharmaceutical Industry.................... 29
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Introduction
As an intensively knowledge-based sector, the biotechnology industry is an attractive starting point
for relatively small economies wanting to build high-value industries. In particular, those small
economies which lack natural resources and have a relative small domestic market need to establish
their own knowledge-intensive industry to overcome the weakness of their trading position. One of
the major applications of biotechnology is in the field of pharmaceuticals, with the rapid
development of ‘biopharmaceuticals’. To achieve technological innovations, the transfer and
integration of knowledge plays a key role among the actors involved in the biopharmaceutical
innovation system, including universities, research institutes, firms, and government organisations.
The existing literature on the biopharmaceutical industry and innovation systems (Bartholomew,
1997, Mani, 2005, Chaturvedi, 2007) suggests that one of the key issues is the transfer of knowledge
between firms and their partners. Hence, where firms receive knowledge from, and the way in which,
firms establish their interaction of knowledge transfer might be key factors in building a
biotechnology industry (Chaturvedi, 2005), in particular for an economy which is on its way to
developing biotechnology.
Taiwan was one of the first newly-industrialised countries noted for maintaining exceptionally high
growth rates and rapid industrialisation between the early 1960s and 1990s. In the 21st century, the
successful development of the information technology and semiconductor industry played a part in
transforming Taiwan into an advanced emerging economy, according to the definition by FTSE
groups (http://www.ftse.com/). In the past three decades the Taiwanese government has made efforts
to support and promote the biotechnology industry. As a result, there are around three hundred and
fifty companies in the Taiwanese biotechnology industry, most of them in the bio-agriculture or
bio-food areas. According to the information obtained from a manual search of the Taiwan
Biotechnology Directory, approximately twenty-five out of three hundred and fifty companies on the
list are indeed involved in biopharmaceutical research and development. However, it remains the
case that Taiwan lacks any biopharmaceutical innovation products that have successfully reached the
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market. Although the Taiwanese biopharmaceutical industry has already received direct government
investment, and has its own research and innovation, it still remains in the early start-up stage.
Previous studies of the biotechnology innovation system in Taiwan focused on conflicts between
government organisations (Wang, 2002) - mapping the scope of the biotechnology industry (Sun,
2005) and comparing the innovation networks in biotechnology and information technology, in order
to identify why similar policies can be successful in information technology, but unsuccessful in
biotechnology (Dodgson et al., 2008). However, there is the lack of an in-depth study which analyses
the interactions and knowledge transfers between actors in the biopharmaceutical innovation system.
This study will set firms as the central unit of analysis, in order to understand how knowledge is
diffused from universities to start-up firms, as well as how firms receive knowledge from external
organisations, including national and international collaborators. It takes Chaturvedi’s
biopharmaceutical innovation system framework as its starting point. It will emphasise identifying
the evolution of the biotechnology industry promotion and regulation policies, and summarise the
sectoral path of biotechnology development in Taiwan. Then, this study will map out the technology
transfer cases of all of the biopharmaceutical companies in Taiwan. The research will examine the
factors that influence knowledge flow in sector-specific actors within the biopharmaceutical
innovation system through in-depth interviews. It will also analyse the associations among
innovation, knowledge transfer, and commercialisation based on the theoretical framework of
innovation systems in order to explore the possibility for start-up firms to fit into the international
biopharmaceutical industry. The influences of the Act for the Development of Biotech and New
Pharmaceutical Industry on knowledge flow between and within academia and industry will also be
discussed.
1. Background and Conceptual Framework
Innovation systems involve the use of knowledge, diffusion, and creation (Carlsson et al., 2002).
Much of these researches have looked at comparisons between countries and industries. During the
last decade, several derivative concepts that take a systemic perspective on innovation have been
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established. Cooke (1992) created the concepts of “regional system of innovation”; Bo Carlsson et al.,
(1991) developed the approach of technological systems; Malerba et al. (Breschi & Malerba, 1997)
established the idea of a sectoral system of innovation. According to Edquist, “Adopting a
systems-of-innovation perspective would be a new assessment methodology for understanding
innovations in individual economies” (Edquist, 2001). Exploring the interactions among the various
actors would be a means of better understanding the changing dynamics of the biopharmaceutical
innovation system. This could also be the pathway to making appropriate recommendations for
improvements in future policy. Therefore, this study will adopt the innovation system approach as a
foundation to understanding the development of biopharmaceutical innovation in Taiwan, a small
emerging economy.
1.1 Innovation Systems
There are many similarities between regional and national innovation system viewpoints. Both
attempt the preferences of explaining geographical economies. The national innovation system
approach focuses on the patterns and determinants of innovation processes with respect to the
national perspectives. (Breschi et al., 1997). Nelson et al. focus on the analysis of institutions and the
ways that countries have organised their national innovation systems. The others, for instance,
Lundvall et al., concentrate on knowledge and the process of learning which stimulates the usage of
the term ‘knowledge economy’ in the studies of innovation and economic growth (Godin, 2007).
These concepts show the importance of governance among other factors (Andersen and Lundvall,
1997), such as the interactions between component and systems producers, upstream and
downstream firms, universities and industry, government agencies, universities, and industries
(Nelson and Rosenberg, 1993).
In contrast, the idea of technological systems has been used to analyse the way that a particular new
technology, such as biotechnology, influences a specific economy; whilst a sectoral innovation
approach examines the systemic processes relating to a particular set of technologies (Malerba 2005;
Lundvall, 2007). Malerba et al. (1997) established the theoretical framework of the sectoral
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innovation system based on an evolutionary theory of technology innovation, which highlights the
dynamics and transformation of knowledge production and adoption. According to Malerba’s
definition (2003), a sectoral system of innovation aims to provide an “integrated, multidimensional,
and dynamic view of innovation in sectors”. There are three major dimensions, which are (1)
knowledge (and the related boundaries), (2) actors and networks, and (3) institutions, that will affect
the generation and adoption of new technologies of innovation at the sector level (Malerba, 2005).
They applied the concepts of sectoral innovation systems for analysing five different sectoral systems
of innovation, including biotechnology and pharmaceutical, telecoms equipment and services,
chemicals, software, as well as machine tools (Malerba, 2005). Later, Mani applies Malerba’s
framework to analyse India’s pharmaceutical industry (Mani, 2005).
1.2 The Evolution of Biopharmaceutical Innovation
Systems
In the field of biotechnology, because of the feature of high dependence on the basic research, the
integration of basic and applied research that is required for innovation takes place largely between
firms and research institutions, rather than purely within firms. Therefore, linking these
national-level and firm-level features to biotechnology innovation to identify those dimensions
which are particularly salient to biotechnology, and for which cross-national variation has been
established in the literature.
1.2.1 National System of Biotechnology Innovation
Based on those characteristics of biotechnology and the theory of a national innovation system,
Bartholomew (1997) proposed a conceptual framework, NBIS (National Biotechnology Innovation
System), which drew on the main features of the national institutional context. In this framework, the
factors which may affect the flow and stocks of scientific knowledge in the specific research
institutions or firms are indicated. Bartholomew applied this framework to analyse the system of
biotechnology innovation in four developed industrial countries, including the US, the UK, Japan,
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and Germany. She explored this by looking at international technology cooperation, the adaptation of
institutional forms, and the cross-border interdependence within the global system, using a
comparative analysis. Later, Chaturvedi adapted Bartholomew’s NBIS framework for analysing the
system of biopharmaceutical innovation (BIS) in India and Singapore (Chaturvedi, 2005;2007). In
his framework, Chaturvedi added the concept of a sectoral path of biotechnology development, and a
sectoral institutional context including the factors of linkage with foreign research institutions, as
well as the demand from foreign product services. This enhancement of Bartholomew’s framework
therefore emphasises the influences of international linkages on the movement of knowledge. This
framework conceptualised biotechnology innovation as a product of the accumulation of scientific
knowledge between firms and research institutions rather than the knowledge diffused between firms
(Bartholomew 1997). In this way, this study will emphasise the technology transfer between
institutions and firms, accordingly.
Chaturvedi’s framework of biopharmaceutical innovation system
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1.2.2 Technology Transfer in a Biotechnology innovation system
Previous studies of biopharmaceutical and biotechnology innovation (Bartholomew, 1997; Mani,
2005; Chaturvedi, 2007) suggest that one of the key determinants of success is the flow of
knowledge between the actors within the innovation system. Owen-Smith and Powell have identified
that in the field of biotechnology, the production, transfer and use of knowledge is best conceived as
occurring in collaborative networks that link firms, academic scientists, medical institutions, venture
capitalists, and government agencies (Owen-Smith and Powell, 2004; Powell and Owen-Smith, 1998;
Owen-Smith and Powell, 2001b). In particular, they argue that commercialisation of biotechnology is
driven by various factors such as the changing institutional mandates for universities, funding
opportunities, and new research technologies (Owen-Smith and Powell, 2001a) .
More recently, Vallas and Kleinman, (2007) concluded that the interaction between universities and
industry is changing and is now marked by a pattern of ‘asymmetrical convergence’. Asymmetrical
convergence is defined as the normative codes and practices of industry and the academy empirically
combined, yielding structures of knowledge production that assume novel and contradictory forms
(Kleinman and Vallas, 2001). Similar concepts known as ‘academic capitalism’ have also been
discussed in Slaughter’s work, referring to the cultivation of entrepreneurialism, encompassing
grantsmanship, and the development of research programmes and technology transfer (Slaughter and
Rhoades 2004). The codes and practices from academia migrate to industry and vice versa, in
particular in the field of biotechnology. For example, university management is encouraged to adopt
practices from the private sector and place greater emphasis on entrepreneurship, as well as
generating revenue streams from technology transfer, while firms encourage their scientists to
publish their work in prestigious peer-reviewed journals.
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1.3 The Conceptual Framework
In previous studies of biotechnology industry policies in emerging economies, the interactions
between domestic actors with foreign agencies, such as alliances and technology cross-licences that
are more important than the domestic knowledge flows and networks (Mani, 2005; Chaturvedi,
2007). It is conceived that for the sectoral innovation system, national and regional/local boundaries
consequent to numerous degrees depend on the various characteristics of specific sectors. For
example, in the case of some traditional industries and information technologies, a sectoral system is
highly localised, whilst in some of the cases such as biotechnology and pharmaceutical, the relevant
geographical boundaries are relatively global (Malerba, 2003). This study will therefore map the
network of actors and institutions in the Taiwanese biopharmaceutical innovation system through
analysis of the knowledge transfer resources of firms in the field of biopharmaceuticals. In addition,
this study will review the changing dynamic of policy in regard to knowledge transfer through
cross-referencing the BIS framework which was proposed by Chaturvedi.
The aim of this study is to analyse the changing dynamic of collaboration between the key actors,
including domestic and foreign organisations within the Taiwanese biopharmaceutical innovation
systems, and the role that emerging institutions which have specifically promoted biopharmaceutical
innovation have played during the last decade. In particular, the study will focus on the flow of
knowledge which was created by domestic public research organisations to investigate and indentify:
(1) the pattern of linkages between academia and industry in the Taiwanese biopharmaceutical
innovation system, including foreign organisations; (2) the changing boundary between academic
research and industrial development; (3) the evolving history of factors that shape the interactions
between academia and industry, and (4) the main features affecting the knowledge exchange ( flow
or stock in and between the research institutes and firms).
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2. Methodology
This study begins with a descriptive analysis of eight R & D-based biopharmaceutical companies in
Taiwan (as shown in Table 1). It will offer a preliminary description of the size, age, and the patent
capacity of the main R & D-based Taiwanese biopharmaceutical companies. This analysis of
descriptive statistics using several proprietary databases, including the US Patent and Trademarks
Office's (USPTO) database, the Taiwanese Patent and Trademarks Office's (TPTO) database, and the
European Patent Office's (EPO) database, to explore the patent ownerships of major Taiwanese
biopharmaceutical research firms. It has collected the statistical data of firms from government
official statistic databases. The official statistical data of government investments towards basic
research would also be indicated as the preliminary description of knowledge regimes of academia in
the field of biopharmaceutical research. However, most of the companies who license in the patent
implementation rights, their names would not been shown in the data base as an assignee. Therefore,
the descriptive statistic analysis may express the scope of the major firm in the industry, but it may
not show the pattern of linkages, the changing boundary between academia and industry, and the
evolving history of factors that shape the interactions in the Taiwanese biopharmaceutical innovation
system. In this way, this study follows the statistic data by a large group of elite interviews with the
key actors involved in technology transfer, including academic scientists, company managers, policy
makers, government officials and technology transfer officers in a variety of research institutes, as
well as the major knowledge brokers in the field. The selection of interviewees followed a review of
media stories, official publications, as well as snowball sampling methods to construct a census of
almost all of the biopharmaceutical companies that are conducting biopharmaceutical products
research and development in Taiwan. Interviews were semi-structured and ranged between 45 and
120 minutes in length. In particular, for those companies who have licensed core technology from
domestic research institutes, the author traced the original academic inventors to enable having an
in-depth understanding of the context of knowledge flow and stock in the Taiwanese
biopharmaceutical innovation system. This study may therefore be understood as part of larger
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efforts to trace the growing interdependence of the institutional domain. In the following analysis,
this study focuses on two interrelated dimensions of knowledge transfer: the organisational structures,
and policy impacts which influence the commercialisation of scientific research. The questions were
set concerning the ways in which the institutional code and knowledge production in the research
institutes and commercial entities have changed in the past decade, and the policy impacts upon their
decision-making in regards to knowledge transfer.
3. The Empirical Study
3.1 The Emerging Contours of the Taiwanese
Biopharmaceutical Industry
There are more than 350 biotechnology companies in Taiwan1. However, only around 25 of these are
involved in the field of biopharmaceuticals, and only eight companies concentrate purely on
biopharmaceutical R & D. In 2009, the revenue of these biopharmaceutical companies was less than
NT 400 million (£8 million). In addition, most of the biopharmaceutical companies in Taiwan raised
less than NT 1 billion (£20 million) of paid-up capital and most of had less than 50 members of staff.
The data of the purely biopharmaceutical R & D companies and the two vaccine companies are
presented in Table 1. These companies are relatively young, most of them being established after
2000. Five companies in Table 1 reported no revenue in 2008. Although three of the companies in
Table 1 are shown as having revenue, the revenues were relative low (revenues are all less than their
capital, no more than £5 million, and these revenue are mainly coming from other businesses beyond
biopharmaceutical innovation. In spite of one vaccine manufacturing company, Adimmune, which
was established in 1965, all of the other companies in Table 1 have been established for less than 15
years.
In terms of intellectual property, two of the companies, TaiMed and Pharma Engine, do not have any
patents because their licences in core technology come from foreign companies. Ab Genomics’s 1 Biotechnology Industry White Paper states that until 2008, the biotech firms in Taiwan have reached 1,184 totally; 320 of them are in the emerging biotechnology industry.
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patent amounts put it in the first place among ten companies, as it is the only company so far whose
core technology comes from its in-house research and development. In contrast to Ab Genomics,
most of the other biopharmaceutical companies in Table 1 deal with added later stage
biopharmaceutical product development rather than creative research. All of the firms have one or
two ongoing biopharmaceutical products. Overall, it is claimed that Taiwanese biotech firms are far
too small in terms of capitalisation, too immature, and specialised in limited niches, due to the lack
of mechanisms to integrate interdisciplinary efforts, inadequate institutional arrangements and the
dichotomy between the academic and industrial sectors (Sun,2005).
3.2 The Institutional Evolution of the NBIS in Taiwan
The Taiwanese biopharmaceutical innovation system can be mapped out as shown in fig. 1. The
system consists of academia research organisations, government departments, technology generating
sectors, and private sectors. One of the Science and Technology Advisory Groups (STAG) coordinate
the development of the biopharmaceutical industry in accordance with a policy determined by the
different government departments. These government departments have conflicts between their roles
and duties. While making decisions, NSC’s (National Science Council’s) main purpose is technology
improvement, while MOEA (Ministry of Economic Affairs) prioritises the proposal which can
promote economic growth in the short term. Similar conflicts happen between non-government
research organisations supported by the specific departments. In addition, when reviewing the
previous policies proposed by the government officials who are responsible for biopharmaceutical
promotion, we may find that government still uses the traditional financial subsidies and the
stimulating measurements used for traditional manufacturing industry as their main promotion
policies.
The Taiwanese government started to emphasise the development of the biotechnology industry in
the early 1980s, and has implemented numerous polices to promote and support the
biopharmaceutical sector since 1982. Since the promulgation of the ‘Biotechnology Industry
Promotion Program’ based on the conclusions of Executive Yuan’s No. 2443 meeting in August 1994,
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the government in Taiwan aggressively supported and promoted the biotechnology industry,
including executing key plans, encouraging the private sector to invest in biotechnology, promoting
international collaboration and investment, constructing government science parks, and improving
biotechnology-related regulations. By March 2008, the Taiwanese government’s direct investment in
the biotechnology industry had reached NT 12.7 billion (equal to £254 million) over the past three
decades. Compared to some of the other industries, biotechnology is one of the few industries which
receives capital investment directly from government. However, the policy targeted a broad
definition of biotechnology. Until 2007, the Taiwan government started to shift its attention and
concentrated its policy focus on biopharmaceutical innovation, because officials consider that the
biomedical field is associated with human well-being and would provide a substantial potential
payoff rate if successfully commercialised. The most important policy is The Biotech and New
Pharmaceutical Development Act which was promulgated in 2007. Through this statute, the
government favoured the biopharmaceutical sectors by providing tax reductions, technical assistance,
measures for encouraging the investment of the Venture Capital in biotechnology, as well as
inventors of technology. The Act has attempted to lower the financial barriers and enhance
knowledge flow and technology transfer by reducing the restrictions on researchers who work in
academia and are willing to be involved in the entrepreneurial process within the biopharmaceutical
industry.
On the other hand, in academia, it was a prohibition against faculty collaboration with commercial
entities, and cultural predispositions against academic involvement with commerce (Owen-Smith et
al., 2001). “In late 1990s, Academic Sinica, the most prestigious research institutes in Taiwan did not
own any patents; when Dr. Yuan-Tseh Lee took over the position of the president. At that time, the
scholars in academia did not have the concept of intellectual property” (interview, knowledge broker
No.12). Until 1999, because of the enforcement of Science and Technology Basic Law, the
ownership of research outcome belonged to the research institutes rather than the government. After
2002, the universities started to establish their on-site incubation centres because of the
encouragement from the Ministry of Education. In other words, the Taiwanese universities adopted
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the US setting, which is likely to foster more free-flowing relations with industrial partners, more
interested in technology transfer, and more involvement in the commercial development of research
at the beginning of 21st century.
The legal framework used to prohibit public funded researchers collaborating with commercial
entities, and cultural predispositions were also used to prohibit academic involvement with the
commercialisation process. Since 2005, because of the climate of promoting competitiveness in
knowledge intensive industries, regulations and policy implementations developed following
suggestions of the BioTaiwan Committee (BTC). They have shifted to encourage academia industry
collaboration and knowledge transfer. In recent years, the research institutes have even changed their
inner evaluation KPI from focusing on academic publications to counting their patents and
successful technology transfers based on the government policies. The research institutes also
encouraged scientists to collaborate with firms and participating technology transfer processes.
3.3 The Institutional Features affecting the knowledge
Flow and Stock
The most salient observations relate to the lack of any in-depth study that analyses practical
interactions in which knowledge transfer between actors in the Taiwanese biopharmaceutical
innovation system takes place, which is also reflected at the national, sectoral, and systemic levels. In
this section, this study will discuss the overall factors influencing the knowledge flow and stock in
the Taiwanese biopharmaceutical innovation system according to the BIS model which was proposed
by Bartholomew and modified by Chaturvedi.
3.3.1 Features Relating to the Stock of Knowledge in Research
Institutions
National Tradition of Scientific Education
According to Mani (2006), in each sectoral system, specific institutions deeply affect the rate of
technological change, the organisation of innovative activity and performance. As Porter (1990) and
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Bartholomew (1997) note, specialised human resources are created by investment in themselves, and
are reinforced (or not) by social institutions or governments. In Taiwan, there are a total of 112
universities and 36 colleges. In total, there are 3,362 research institutes, and 4,477 undergraduate
departments. Around 315 thousand gradates are produced every year, around three thousand of
whom are awarded PhDs. There are 184 biotechnology related departments/research institutes, which
produce five thousand five hundred graduates in the field of biotechnology every year. Around two
hundred of those graduates are awarded PhDs. Comparing the amount of graduates in the field of
biotechnology towards the total number of graduates each year, it stands at 1.8% of the total amount.
The low level of available human capital, therefore, acts as a structural limitation on the
biotechnology industry. However, because of the immature of the employment environment in this
sector, quite a few graduates’ education does not fit them for a certain job.
National Funding of Basic Research
Because of the long research cycles in biotechnology, and the enormous cost of laboratory equipment
and materials, long-term government support of fundamental research in the biological sciences is a
critical factor affecting a country's stock of scientific knowledge related to biotechnology (Mowery
and Rosenberg 1993; Shan and Hamilton 1991; Bartholomew 1997). According to the Year Book of
Science and Technology, in 2008 a comparison of the investment funding of the National Science
Council (NSC) for bioscience towards the whole of the natural sciences, in terms of manpower, the
amount of projects, and the budget, we see that the National Science Council invests a quarter of the
research resources in the biosciences. Compared with other basic research field in Taiwan, it is
relative high. In addition, the NSC invested in another category of life science research, totally 6,851
manpower and NT 8.58 billion. For the applied biotechnology and pharmaceutical research, there
was another NT 0.7 billion investment by the government in 2008. In total, there were NT 10 billion
dollars (£ 0.2 billion; $ 0.34 billion) national funding for biotech-related basic research. However, in
the same year, Pfizer invested $7.9 billion, and GSK invested £3.5 billion of R & D budget. “Our
national funding of basic research is less than the R & D investment of any international
Pharmaceutical company around the world” said one of the venture directors and two scientists.
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The 2008 NSC Invested Funding, Manpower and Amount of Projects in Biotech
Manpower (Researchers) Budget (Million NT)
Amount of Projects
Biological Science 676 794 530
Biotechnology 157 274.6 123
Sum of Bioscience 833 1068.6 653
Total of Natural Science
3377 4388.5 2577
Percentage 24.7 % 24.35% 25.34% Source: The Year Book of Science and Technology 2010
Linkages with Foreign Research Institutions
The research institutions seek to learn from foreign research in various degrees other countries. This
phenomenon reflects differences in the historical development of the country's educational institutions
(Bartholomew 1997). Taiwan is a catching-up emerging economy, so it has a stronger pattern of
borrowing and adapting knowledge from other countries (Westney., 1993; Bartholomew 1997), in
particular adapting from the US and Japan, because most of the leading scientists were trained in the US,
and because Taiwan used to be a colony of Japan before 1945. “Our Biotech and New Pharmaceutical
Development Act has adopted the spirit of the Bayh–Dole Act of the United States (the University and
Small Business Patent Procedures Act)” (Interview, Scientist 3). In addition, during the interviews, most
of the so-called leading researchers in the research institutes mentioned their experiences of inheritance
from the institutional systems from the US to Taiwan. Some of them recognise their better
Source: The Year Book of Science and Technology 2010
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understanding of the US institutional system rather than the institutional systems in any other countries,
including Taiwan.
3.3.2 Features Relating to the Flow of Knowledge between
Research Institutions and Industry
Degree of Commercial Orientation of Research Institutions
In most societies, research institutions and firms have profoundly different missions. The goal of
research institutes is to create and disseminate knowledge, whereas the purposes of firms are to
maximise the wealth of owners and shareholders (Nelson 1991). According to Bartholomew (1997) “A
greater commercial orientation in a nation's research institutions translates into a smaller cultural
distance between the worlds of academia and industry, which in turn facilitates the flow of knowledge
between the two communities.” The phenomenon of institutional boundaries shifting has been noted by
Owen-Smith and Powell (2001), and Murray (2006), and has been termed ‘asymmetrical convergence’
by Kleinman et al. (2007). In the last 10 years, the universities in Taiwan have established on-site
incubation centres, a response to encouraging policies of the Ministry of Education. “The technology
transfer has been booming since the policy implementation of encouragement of establishing incubation
centres in the universities” (Interview, Knowledge Broker 13).
Labour Mobility
The norms and practices of a nation's research institutions affect the degree to which scientists move
between academia and industry (Bartholomew 1997). However, entrepreneurship implies taking the risk.
Prior to 2000, because of the legal regulations prohibiting faculty collaboration with commercial
entities, labour mobility in the biopharmaceutical innovation system was inhibited. Because of the
enforcement of the Biotech and New Pharmaceutical Development Act, the government research
organisation’s researchers were given privileges for being a founder, operations director, or technical
advisor if they contributed major technology to that company. However, there are still some grey areas
with regard to these issues. Even though the regulations were changed, labour mobility is still low
because of peer pressure in some of the organisations. In addition, there was a well-known criminal
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investigation case against an academic researcher transfer, whose orphan-drug innovation, for a
company that was invested in by his relatives. Although finally that case was downgraded to a
non-prosecutorial disposition, it has depressed the mobility of actors in the biotechnology innovation
system as plenty of my interviewees mentioned the influences of this case during the interview.
Availability of Venture Capital
“Venture Capital is the most important subject which can be interacted with start-up companies.”
(Interview, Fund Manager 1). Start-up companies in biotechnology, funded by venture capital, serve a
particularly important role in diffusing scientific knowledge from research institutions to industry
(Bartholomew, 1997). However, “because of the lack of investment incentives, the availability of
Biotech Venture Capital in Taiwan is extremely trifling and limited. In Taiwan , the era of Venture
Capital has come to the end ” (Interview, Fund Manager 3).
National Technology Policy
Consistent with the above arguments, national technology policy evolved dramatically after 2000.
However, “the infrastructure, such as the technology transfer offices and the government programmes
for technology diffusion are still immature” said one of the professors who has conducted biomedical
research for more than 30 years. Although most of the researchers are aware of the changes in national
technology policy in recent years, a conservative culture was already embedded during their technology
training process. Some of scientists said that they do not become involved in the technology transfer
process because their duty is concentrating on scientific research. Furthermore, because of peer pressure,
a few scientists acting as consultants and those who have intensive cooperation with the industry
requested the companies keep their relationship confidential. “We remove the information of Scientific
Advisory Board from our webpage at the request of our consultants.” (Interview, Firm Representative 8)
Collaboration of Firms with Research Institutions
Countries vary in the extent to which firms collaborate with research institutions, reflecting differences
in the commercial orientation of academia, and/or differences in government programmes for
technology diffusion (Kenney 1986; Bartholomew 1997). “In Taiwan, all of the successful biotech
companies have established good cooperation and interactions with academia”, (Interview, Firm
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Representative 10). According to Fig 2, while becoming involved with technology transfer from the
domestic research institutes, all of the companies established bilateral interactions with the technology
inventor. However, one of the representatives of an international biopharmaceutical company
mentioned that they “hope academia would be able to advance the timing of starting interactions with
companies. It is better to start when the scholar has the preliminary ideas of innovation rather than
starting interaction with firm representatives through the presentation when the research design and the
outcomes have lost flexibility. It may be too late to make sure the innovation would fit the needs of the
industry” (Interview, Firm Representative 24).
3.3.3 Features Relating to the Stock of Knowledge in Industry
Technological Accumulation in Related Sectors
Biopharmaceutical is not an industrial sector in the traditional fashion, but rather a set of production
techniques with application across a broad range of industrial sectors. The most significant related
sectors are the pharmaceutical, traditional herb medicine, and the regenerative medicine. In Taiwan, in
addition to the ten pure biopharmaceutical companies, recently more and more chemical pharmaceutical
companies, herb medicine companies, and generic pharmaceutical companies have moved into
biopharmaceutical R & D. It is not only because of the associations of their technologies and
development experiences, but also because of the accumulations of interpersonal connections. For
example, the Health Bank branched into vaccine development because of their “connections with the
gynaecologist obstetrician when conducting the business of cord blood banking”. (Interview, Firm
Representative 19)
Inter‐firm Collaboration
Inter-firm collaboration can be advantageous as an R & D strategy because it allows partnering firms
"to realise economies of 'synergies' as a result of pooling resources, production rationalization, risk
reduction, and utilisation of assets to the efficient scale and scope" (Bartholomew 1997). In the
biopharmaceutical innovation system in Taiwan, the firms have intensive interactions. Some of firms
come from the same conglomerate so that those affiliates have intimate cooperation and mutual support.
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Apart from the firms that have their overseas parent companies, such as Optimer and UBI, these kinds
of company have technological cooperation with their parent companies. In addition, some of those
interviewed said that they would discuss the strategy for overcoming the technology bottleneck with
other professionals working in the same field.
Utilisation of Foreign Technology
Cross-border R & D alliances contain an additional benefit for firms beyond those gained from
domestic collaboration. The cross-border collaboration can thus provide biotechnology firms access to
the stocks of knowledge created by other national systems of biotechnology innovation (Bartholomew
1997). In Taiwan, due to the lack of large scale biopharmaceutical manufacturing facilities, firms have
to establish cross-border alliances with international CROs. In addition, firms have technical exchange
with overseas companies. Sometimes, this is the first step of their alliance or technology transfer.
3.4 Mapping Knowledge Transfer in the Taiwanese
Biopharmaceutical Innovation System
This session aims to chart the technology resources of all of the ongoing biopharmaceutical innovation
according to the individual cases. In accordance with data shown on Table 1, the author conducted
interviews with all of the representatives of those companies to map the knowledge flow of the core
biopharmaceutical products relating to these companies (as shown in fig. 2). The author wished to
categorise the various resources of the Taiwanese firms obtained their core under-developing
technologies, and identify the current development of these core technologies of firms in the field of
biopharmaceutical innovation. Table 1 does not include the statistic data of firms categorised in the
second group, namely, Pharmaceutical companies branched into biopharmaceutical R & D, because
there is no current revenue coming from the ongoing biopharmaceutical innovations in these companies.
The official statistical data of those companies, including the number of staff, the capital size and the
patent ownership are not specific to the biopharmaceutical innovation. The chart also maps out the
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vaccine technology transfer routes in regard to the Taiwanese companies which involve in the vaccine R
& D.
The Source of Knowledge
When interviewing firms’ representatives, most of them said that they don’t have obvious preference
when looking for licensing partners. But one of the firms’ manager said that “my company prefers the
domestic collaboration because it is an interactive process rather than buyout. Collaborating with a
domestic scholar would avoid the inconvenience of distance.” (Interview, Firm Representative 13)
Different from other emerging economies studied in the existing literature, more than half of the
ongoing biopharmaceutical R & D developments in Taiwan were licensed from the domestic research
institutes but stay at an early stage.
The Development of Technology
As of May 2011, no product has reached the global market incubated from the biopharmaceutical
innovation system in Taiwan. When reviewing the current progress of the product development, most of
the firms in Taiwan stopped before phase II clinical trial because “all of the Taiwanese
biopharmaceutical companies do not have capital for conducting phase III research in the global
market” (Interview, Government Official 3; Interview, firm representative 7). After obtaining the
technology from academia, for most of the cases on the chart show that the technology is currently
under development in the firms; only two cases have already transferred to other firms. These two cases
are: 1) the case of Antibody-168, which is the only case where a Taiwanese firm has developed the
technology within their firm and successfully licensed their outcome to the international big
pharmaceutical company (Boehringer Ingelheim). 2) The case of CLEC5A originally created by
Academic Sinica, and because of the concerns relating to management issues, now has transferred twice
between various companies within the same business group.
The Type of Collaboration
The biopharmaceutical innovation system was booming dramatically after 2000. There were several
domestic technology transfer cases initiated by the academic industry bridging office, according to the
policy supports. For example, the case of αvβ3 received plenty of assistance during the process of
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knowledge transfer. Until today, most of the biopharmaceutical innovations still stay at the earlier stages
(discovery) because the R & D of a biopharmaceutical product takes more than 10 years, and most of
the technology transfer cases occurred after 2005. Most of the firms begin their collaboration with
inventors in academia prior to making the decision of transferring the knowledge from academia. Some
of the companies would offer research grants to the scientists who worked on the technology that may
fit in the development plan of their companies, for receiving the first right of refusal when the
technology would be ready to transfer. On the map, when evolving in the technology transfer
collaboration with domestic research institutes, it would usually be bilateral or multilateral cooperation.
Whereas, while licensing out the core technology from foreign institutions, the firms would consider it
as purely trade of implementation rights, so that the firms take the leading role in this case.
4. Discussion The Pattern of Linkages between Academia and Industry
Generally speaking, the Taiwanese biopharmaceutical innovation system remains immature. There are
approximately 25 firms involved in biopharmaceutical R & D in Taiwan, most of which are new
start-up companies with less than 30 million dollars in capital. Almost all of the firms place an
emphasis on R & D, even though they have a lack of manufacturing ability, and mainly focus on the
development process from the pre-clinical to phase II of the clinical trial. Some companies rely heavily
on their foreign parent companies, and their core technologies and a part of financial support are mainly
received from parent companies, especially in the US. In the last five years, a few licensing cases were
built between domestic research institutions and firms. Some firms have started to collaborate with
well-known academic research institutes, which help to promote the prestige of firms.
The Changing Boundary between Academic and Industrial
The subjective and objective factors involved in building the cooperation bridge between the academia
and industry in the Taiwanese biopharmaceutical innovation system have been examined. The evolving
institutions show that academic assessment criteria have been adopted as the industry evaluation
standards. For instance, some of the leading universities recognise patent ownership, and successful
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technology transfer is now regarded as one of the performance indicators for its staff and faculties.
These universities consider patent ownership as a form of publication which can be counted in the
promotion process. The National Science Council has added “commercialisation potential” to their
funding support selection criteria in terms of the consensus of promotion of technology transfer. Some
of the firms try to start R & D cooperation with academia by transferring from the generic
manufacturing companies or the pure commercial agents into an R & D-based biopharmaceutical
company. Because of the hierarchy (the asymmetrical power of decision making and resource allocation)
in academia, and that most of the recent leading scholars in the academia were trained in the United
States, the domestically trained scientists are at a disadvantage in terms of funding received and
influence over research agenda-setting in some of the circumstances. The institutional environment
increasingly adapts itself to the pattern set by the US, no matter whether it is suitable to the situation or
not. Because of adopting the institutional setting from the US, academia in the Taiwanese
biopharmaceutical innovation system shifts closer to industry. In fact, industry also hopes that academic
research may have further marketing concepts so that innovation from academia may fit better to the
needs of industry. This validates what Kleinman (2007) refers to as “asymmetrical convergence”.
The main features and the evolving history of factors affecting the knowledge exchange between academia and industry
There is greater emphasis on market potential and the clinical development of new products. The
factors influencing the knowledge stock have strengthened gradually; the factors relating to knowledge
flow have not developed as well. The Act for the Development of Biotech and New Pharmaceutical
Industry try to achieve most of the purposes through tax reduction, therefore, most of my interviews (no
matter whether they are leading scientists or firm representatives) consider it as a tax reduction bill,
rather than realising it has also tried to stimulate knowledge transfer though allowing technology
innovators being the consultants, members of an advisory board, or funders to promote the knowledge
transfers and the cohesion between academia and industry. It concludes by reviewing features of the
Taiwanese biopharmaceutical industry and relevant government promotion policy. Although the
government has made numerous interventions to support the biotechnology industry over the past three
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decades, concrete policy and capital investment came towards the end of this period, particularly for
biopharmaceuticals.
Conclusion
In conclusion, the findings highlight the way in which the changing of the role of institutions driven by
the dynamic of technology policy, the asymmetries of power between actors, and the shifting
boundaries between the public and private sectors are pushing research collaboration to become more
profit-oriented with greater emphasis on market potential and the clinical development of new products.
Although the domestic companies have increased their collaborations with research institutions, the
management strategies and the enterprise cultures have not changed as dramatically as academic
practice. Comparing the policy evolutions and increasing cases of domestic technology transfer cases in
the last decade, we may conclude that the technology transfer of biopharmaceutical innovation has not
really matured, but has made a good start. However, because of the low success rate of
biopharmaceutical innovations reach the market, the current amount of ongoing projects is insufficient
to have one product achieving the market in the near future. In other words, the knowledge base has
been gradually reinforced, but more incentives are needed to stimulate the technology transfer and to
speed up the process of product development in the system.
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Table 1 Data of Biopharmaceutical Industry in Taiwan
ID Capital
(NT Million)
Numbers
of Staff
Bio
Staff
Years
(Established)
Taiwan
Patents
US
Patents
EU
Patents
BRD 1 340 10 10 8
(2002.6)
3 0 0
BRD 2 100 20 20 10
(2001.2)
1 0 0
BRD 3 605 52 52 10
(2000.6)
18
16P, 2U
2 0
BRD 4 630 17 12 9
(2002.8)
0 0 0
BRD 5 600.5 35 35 11
(1999.12)
2 0 0
BRD 6 193.06 8 8 3
(2007.9)
0 0 0
BRD 7 170 25 25 10
(2000.10)
0 0 2
VC 2 944.95 180 180 46
(1965.12)
3 0 0
VC 3 847 289 40 12
(1998.10)
0 1 0
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Fig. 1 Sectoral System of innovation of the Taiwan BioPharmaceutical Industry
Policy and Strategic Direction National Science Council (NSC), Ministry of Economic Affairs
Licensing of firms for Safety to manufacture Department of Health (DOH) Overall Policy Framework :
Science and Technology Advisory Groups (STAG) of Executive Yuan Biotechnology & Pharmaceutical Industries Program Office, MOEA
Human Resource Development The Executive Yuan approved the “Technology Professional Training and Application Program”, include strategies to enhance the education of college technology personnel, to strengthen the training of industrial technology personnel, to bring back overseas technology professionals, to propel professional interflows and application, and to construct superior environment.
Technology Generating Sector Research Institutes (NGO) Development Center for Biotechnology (Funded by MOEA) Industrial Technology Research Institute (Funded by MOEA) National Health Research Institute (Funded by DOH) Center for Drug Evaluation (Funded by DOH) Contract Research Organisations primarily in the private sector.
Manufacturing and Development Private Sector (about 25)
The Intellectual Property Rights Regime International Intellectual Property Rights Treaties
Academic Research : National Science Council, Academic Sinica,
Source: Own Compilation ; Adopted & Amended from Mani (2005)