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PROVISIONAL VERSION PLEASE DO NOT CITE AND DISTRIBUTED WITHOUT CONSULTING AUTHOR 1 Globelics Academy The 7 th International PhD School on National System of Innovation and Economic Development TampereFinland, 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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Page 1: Academia: Developing Knowledge Transfer and the Innovation ... Shih-Hsin.pdf · biopharmaceutical knowledge is best conceived as occurring in collaborative networks that link firms,

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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)