Taiwan's pharmaceutical market is calculated to have reached a value of around TWD129bn (US$4.10bn) in 2010. Through to 2015 and 2020, respectively, BMI is forecasting local currency compound annual growth rates (CAGRs) of 3.89% and 4.09% respectively for combined sales of prescription drugs and over-the-counter (OTC) medicines. As the Taiwanese dollar strengthens, CAGRs expressed in US dollars will be higher, at 4.90% and 4.60%, respectively. However, the market is relatively mature, and - as the government foots over 60% of the total healthcare spend - downward pressures on pharmaceutical prices can be expected, while inflation also remains subdued. In the meantime, the OTC sub-sector will remain underdeveloped, due to relatively generous reimbursement.
The above outlook explains why Taiwan is a moderately attractive pharmaceutical market in Asia Pacific. In our proprietary Pharmaceuticals & Healthcare Business Environment Ratings (BER), the country again ranks 7th out of the 17 countries surveyed regionally. Even though Taiwan has a relatively favourable operational risk profile, over the medium term, we expect the country to slip down the ranking system, due to improvements in the reward profile of nascent markets. While market access in Taiwan is comparatively straightforward, pricing pressures will continue to increase, especially as patented drugs account for nearly two thirds of Taiwan's pharmaceutical market in terms of sales values.
However, budgetary constraints are leading the authorities to make more prudent reimbursement decisions. In fact, in early 2011, Taiwan quashed rumours relating to access to free cocktail therapy for AIDS patients. The government will not totally scrap the policy, but the health department plans to make modifications in 2011, including passing some financial responsibility for the treatment onto the majority of the patients, with more vulnerable groups to be exempt from charges. Similarly, more affluent citizens will be required to pay extra in insurance premiums.
In the meantime, the healthcare industry in Taiwan is reaching saturation point and suffering from a downturn. This is evident from declining profit margins, the closure of hospitals, the oversupply of medical professionals and various economic indexes, the Liberty Times reported. The Department of Health has suggested that the decline of the healthcare industry could be halted with the development of the health tourism industry, targeting the international and Chinese markets. Many Taiwan-based enterprises are already looking to develop collaborations with Chinese companies to serve the latter's growing medical market. Nevertheless, Taiwan is expected to post 4.3% real GDP growth in 2011, on the back of both solid domestic economic momentum and a stronger growth outlook for both China and the US, which should provide a foundation for the steady development of its pharmaceutical market, downplaying the severity of government cost-cutting policies.
The above outlook explains why Taiwan is a moderately attractive pharmaceutical market in Asia Pacific. In our proprietary Pharmaceuticals & Healthcare Business Environment Ratings (BER), the country again ranks 7th out of the 17 countries surveyed regionally. Even though Taiwan has a relatively favourable operational risk profile, over the medium term, we expect the country to slip down the ranking system, due to improvements in the reward profile of nascent markets. While market access in Taiwan is comparatively straightforward, pricing pressures will continue to increase, especially as patented drugs account for nearly two thirds of Taiwan's pharmaceutical market in terms of sales values.
However, budgetary constraints are leading the authorities to make more prudent reimbursement decisions. In fact, in early 2011, Taiwan quashed rumours relating to access to free cocktail therapy for AIDS patients. The government will not totally scrap the policy, but the health department plans to make modifications in 2011, including passing some financial responsibility for the treatment onto the majority of the patients, with more vulnerable groups to be exempt from charges. Similarly, more affluent citizens will be required to pay extra in insurance premiums.
In the meantime, the healthcare industry in Taiwan is reaching saturation point and suffering from a downturn. This is evident from declining profit margins, the closure of hospitals, the oversupply of medical professionals and various economic indexes, the Liberty Times reported. The Department of Health has suggested that the decline of the healthcare industry could be halted with the development of the health tourism industry, targeting the international and Chinese markets. Many Taiwan-based enterprises are already looking to develop collaborations with Chinese companies to serve the latter's growing medical market. Nevertheless, Taiwan is expected to post 4.3% real GDP growth in 2011, on the back of both solid domestic economic momentum and a stronger growth outlook for both China and the US, which should provide a foundation for the steady development of its pharmaceutical market, downplaying the severity of government cost-cutting policies.
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