I. Abstract

Taiwan's livestock biotechnology industry is in its initial development stage. There are 11 main companies within the industry. Aside from introducing new advanced technology from abroad, research facilities and industry fundamentals are still supported by 14 upstream and midstream research organizations, which provide rich development potential. 10 years later, mainstream development technology and products (such as germplasm preservation and artificial implanting technology, disease diagnosis and additive testing techniques, develop technology for biological additives and its by-products, molecular genetic and breeding technology, genetic transformation and cloning techniques, gene and protein technology, industry information and R&D promotion service and various products, etc.) have reached estimated annual production of NT$1.5 billion. Taiwan's livestock industry will use biotechnology as its basis to complete the industry's upgrading and transformation. However, in the short term (2003 ~ 2005), mid-term (2006 ~ 2008), and long-term (2009 ~ 2012) development periods, there are common objectives that the industry, government, academia, and research fields must achieve together, especially in the setting up of core facilities as well as the drafting and amendment of laws and regulations. This will help build the livestock industry's image, and make it a sustainable development industry that emphasizes production, living and the natural environment. In the future, due to the globalization of livestock biotech and product development, Taiwan will become a major country in the tropical animal biotech industry, which will help Taiwan build a strong, unshakable foundation for its medicine biotech industry.

II. Industry Definition and Scope

(1) Industry definition

1. Livestock

According to the ''Ranching Law'', livestock refers to cattle, sheep, horses, pigs, deer, rabbits, chicken, duck, geese, turkeys as well as other animals specified by the central governing agencies.

2. Livestock biotechnology

Science technology that utilizes the biological characteristics or procedures of microorganisms, plants and animals to resolve problems in the livestock industry and utilizes the DNA, cells, tissues, organs or other useful self produced products of livestock to help improve the quality of living of mankind.

(2) Industry scope

Based on the industry definition above, the scope of Taiwan's livestock biotech industry includes such activities as germplasm preservation and artificial implanting technology, genetic transformation and cloning techniques, molecular selection and breeding technology, gene and protein technology, disease diagnosis and additive testing techniques, develop technology for biological additives and its by-products, and R&D service and science promotion activities, etc. The industry's vision for development is to emphasize environmental protection, enhance production efficiency, improve the quality of living for mankind, and pursue the sustainable development of Taiwan's livestock industry.

III. Industry Overview

(1) Industry structure

1. Industry background that traditionally focuses on production

 (a) Pig farming industry

From a global perspective, China, the U.S. and the European Community are the main producing regions of pork. From 2000 to 2001, Taiwan produced about 910 thousand metric tons, accounting for roughly 1% of the world's total output. In terms of pork consumption, China, the European Community, and the U.S. still rank the top three. In terms of export volume, the European Community ranks number one, followed by Canada and the U.S. In 2001, Taiwan's import of pork was only 15 thousand metric tons, but after the mouth and hoof outbreak in 1997, no pork was exported.

In 2001, the number of pigs slaughtered in Taiwan was about 10 million heads. Although the pig farming industry as been impacted by Taiwan's entry into the WTO, however, there shouldn't be a drastic decrease in the number of pigs being raised in the near future, mainly because the quota control for pork imports has not yet been completely opened. Although the production cost for each pig in Taiwan is 1.2 ~ 1.7 times that of the U.S. and Europe, but the cost of importing pork plus the tax and transportation fees brings the cost to about the same level as the U.S. and Europe. If Taiwan can enhance the efficiency and lower distribution costs, then it will still be competitive. According to data released by Taiwan's Animal Technology Institute, the cost of raising pigs in 2001 was 3,800 dollars/hundred kilos, while the average auction price was 3,997 dollars/hundred kilos. This shows that pig farmers still have some profit to make. In the long run, efficiently operated pig farms can still remain in operations to supply local demands.

    (b) Herbivorous livestock

In the future, Taiwan's production of dairy milk should be around 340 thousand metric tons, but the cost of domestically produced dairy milk is almost twice that of the U.S. Hence, production could fall to less than 300 thousand metric tons before 2005. Currently, most consumers have difficulty accepting imported longlife milk. Therefore, domestic manufacturers still have a basic survival space, but in the long run, with the cost pressure and competitive prices of foreign products, the survival space will gradually shrink. Taiwan's beef production volume is very limited, accounting for only 8.16% of domestic demand. Today, beef from Australia account for the biggest share (about 50%) of the domestic market, followed by New Zealand (23 ~ 25%) and the U.S. (about 20%). Presently, domestically produced beef is about 80 dollars per kilo. Most beef is sold raw and has a specific consumer group, which is different from the consumers that buy imported refrigerated or frozen beef products.

    (c) Livestock industry

Meat and eggs have always been important parts of people's everyday diet in Taiwan. In 2001, Taiwan's meat production increased slightly to 720 thousand metric tons, of this, 630 thousand metric tons is chicken meat. In recent years, production costs have exceeded after tax profits. In 2000, for example, the cost of production was 3,216 dollars/hundred kilos, while the average selling price was 34 dollars/kilo. This amounts to an after tax loss of 23 dollars per hundred kilos. In addition, the impact of completely opening the market to imports due to the entry into the WTO has placed Taiwan's meat chicken farmers into the position of shutting down or consolidation. Production volume of chicken and duck eggs has remained steady during the past two years, with 7.7 billion chicken eggs and 540 million duck eggs. In 2000, the production cost of chicken eggs was roughly 20 dollars/kilo with an average selling price of only 22.5 dollars/kilo. Going forward, the industry is still faced with over production and low prices, and thus awaits facilitation by the government.

2. Current state of new rising livestock biotechnology

During the past three years, due to the government's strong backing to push forth the biotechnology industry, more than 200 biotech companies have already been established. Of this number, 47 are related with the livestock biotech industry. However, only 11 are companies related with R&D and manufacturing mainly livestock products.

Company Name Product Item
Charoen Pokphand Enterprise (Taiwan) Co., Ltd. Breeding techniques and animal feed additives
Biotech Co., Ltd. Biological additives and by-products
Genmont Biotech Inc. Genetic transformation animal manufactured products
Sun Max Biotechnology Co., Ltd. Collagen raw material and finished products
Dr. Chip Biotechnology Incorporation Animal disease diagnosis chip
Pacesetter Enterprise Co., Ltd. Molecular breeding labelled and bio-chip research
Taiwan Advance Bio-Pharmaceutical Inc. Diagnosis testing agents
Genmedika Biotechnology Corp. Diagnosis testing agents
Taiwan Salt Corporation Collagen products
Taiwan Sugar Corporation Collagen and by-products
Biotech Co., Ltd. Genetic transformation technology and products


(2) Current state of academic and research institution

Livestock biotech related academic and research institutions are the driving forces behind the industry's development, playing upstream and downstream roles in the development of the industry. The main research and service institutions include the following 14 organizations.

Research Institute Name Main Research Item
National Taiwan University Department of Animal Science Genetic transformation and animal cloning, gene technology, biological additives and by-products development
National Taiwan University Department of Veterinary Medicine Disease diagnosis and additive testing
National Chung Hsing University Department of Animal Science Gene technology, biological additives and by-product development, molecular breeding tagging
National Chung Hsing University Department of Veterinary Medicine Disease diagnosis technology, gene technology
National Chia Yi University Department of Animal Science Molecular breeding, germplasm preservation
National Chia Yi University Department of Veterinary Medicine Genetic transformation
National Pingtung University of Science & Technology Department of Animal Science Molecular breeding, artificial implanting technology
National Pingtung University of Science & Technology Department of Veterniary Medicine Disease diagnosis technology
Chinese Culture University Department of Animal Science Genetic breeding technology
Tunghai University Department of Animal Science Gene and protein technology, molecular breeding
Animal Health Research Institute, Council of Agriculture, Executive Yuan Disease diagnosis technology
Livestock Research Institute, Council of Agriculture, Executive Yuan Germplasm preservation and artificial implanting technology, genetic transformation and animal cloning technology, livestock database, R&D service and technology promotion
Animal Technology Institute Taiwan Germplasm preservation and artificial implanting technology, disease diagnosis and additive testing, biological additives and by-products, genetic transformation and animal cloning, gene and protein, biology information technology, R&D service and technology promotion
National Animal Industry Foundation Industry information, technology promotiona and service, industry alliances


IV. Market/Product Analysis

(1) Domestic market

1. Industry with tradition on production

During the recent three years (1999, 2000, 2001), the pig farming's annual production output has been 61.4, 52.0 and 46.3 billion NT dollars, ranking first among individual agriculture industries. In 2001, the output of the pig farming industry accounted for 13.1% of the total agricultural output. During the past three years, dairy milk's annual production output has production output has been 1.31, 1.12 and 0.94 billion NT dollars. been 7.2, 7.6 and 7.6 billion dollars while goat milk's annual In 2001, the livestock industry's production output was about 42.6 billion NT dollars, of which chicken meat represented 26.5 billion NT dollars and chicken eggs 10.4 billion NT dollars.

2. New livestock biotech industry

During the past decade, Taiwan's livestock biotech industry has made great progress, with significant results in the research and development stages. However, upstream, midstream, and downstream industries are still not effectively integrated and also lacks a driving force for R&D. Therefore, there isn't much transfer and utilization of research results from the researh institutions to the industry. The government's supplements is towards research institutions and livestock farmers (pig farmers, chicken farmers, cheese farmers, etc.) as well as large scale ranches. Research results are mainly supplementary and consultation. Since the introduction of the ''Science and Technology Basic Law'' on January 22, 1999, the Council of Agriculture has supported executive measures by aggressively implementing the policy of collaboaration between industry and academia as well as utilizing research results. However, these efforts have still not created any swift motivation. In addition, the Council of Agriculture has appropriated funding in order to support the National Science Council's ''National Technology Project on Agriculture Biotechnology,'' but the project's manpower and funding going into livestock biotech R&D is still insufficient. Results are still in the upstream research thesis and patent stage (Table 1). Only a handful of research institutions are conducting technical services, generating NT$70 ~ NT$80 million in industry commissioned and testing fees. As mentioned above, in the recent three years, 11 biotech companies have been set up that manufacturers mainly livestock biotech products. Related products such as biological additives and feed additives (including protein enzymes or DNA), collagen material and its finished products as well as gender selection technology of livestock (including water buffalos, Taiwan yellow cows, pigs, ducks, China geese, ostrichs and pigeons) has already created NT$2 million in market value.

V. Technical Analysis

(1) Current state of technology

The technology scope of Taiwan's livestock biotech industry lies mainly on the development of new breeds and reproducing techniques, enhancing the quality of meat and production efficiency as well as discovering new medicines and applications to improve the quality of living for mankind. The development of biotech has changed the face of Taiwan' livestock industry. This topic includes using molecular tagging for genetic improvement, utilizing PCR and antibiotics technology to improve the efficiency of disease diagnosing, utilizing genetic transformation and cloning technology to change the animal's breed and nature, utilizing genetic transformation to manufacture consumer and medical use proteins, conduct the gene and protein project to develop biological molecules with new charateristics. The objective is to hopefully obtain new innovative value.

During the past decade, livestock biotechnology has already been established within various research institutions (see attached table). If core manufacturing facilities related with the industry's development, law and regulation amendments, science promotion system (including technology assessment, technology transfer and innovation), industry infromation survey analysis and industry investment consultation, etc., can support the actions listed in the Executive Yuan's “Enforce Biotechnology Promotion Plan,” then the industry will have a bright and prosperous future.

(2) R&D trends

The long term development objective of the livestock biotech industry should be based upon the development background of the livestock industry (production output of roughly NT$100 billion). New production output that the livestock biotech industry can create is about NT$1.5 billion. Below are the industry's R&D trends and niche topics for the next 10 years:

1. Promotion of germplasm preservation and artificial implanting technology

Taiwan's rather abundant livestock products needs to use biotechnology (e.g. sperm and egg refrigeration, embroyo refrigeration, etc.) to fully perform the task of germplasm preservation. Furthermore, accelerate the speed of genetic improvement and reduce production costs. The direct output of this topic is NT$100 million.

2. Develop meat products that have high market added-value

Develop high quality pig, chicken, cattle, lamb, duck, and goose meat products that Taiwanese consumers like, which should be able to stand up against U.S. and European products. Strengthen the R&D of molecular breeding technology. Establish apparant gender traits fundamentals and reference livestock groups for the R&D of breeding tagging as well as utilize genetic transformation and cloning technology to control special livestock germplasm traits. This should not only reduce production costs but also obtain higher added value. The direct output for this topic is NT$200 million.

3. Utilize genetic transformation and cloning technology to genetically improve livestock

Currently, Taiwan's Animal Technology Institute is research and developing genetic transformation for various livestock animal (e.g. pigs, cattle, sheep, etc.) in order to help improve the animal's resistance to disease and heat, thereby producing new breeds. However, R&D manpower and funding are still not enough. In 2002, cattle, sheep and pigs were successfully cloned. This places Taiwan's genetic transformation and cloning technology of livestock among the advanced nations of the world. In the future, development will emphasize on making sure R&D results are transferred and utilized by the industry. Hence, a lot of effort is still needed to build up the environment and industry development strategies. The direct output for this topic is NT$200 million.

4. Develop fast inspection and testing of major contagious disease sources and multi-functional immune testing products for additives

Development of fast DNA inspection and testing for major contagious disease sources (e.g. mouth and hoof disease and blue ear disease, etc.) and animal feed additives (e.g. antibiotics and agonist) in addition to protein/antibodic chip or sensor solution are important biotech topics. If multifunctional, fast, economical and convenient inspection and testing products can be developed, it will have a significant contribution to disease inspection and prevention as well as meat product safety. The direct output for this topic is NT$50 million.

5. Use innovative gene and protein technology to develop meat and medical products

The DNA chain of humans and many economic crops have already been decoded. The focus of Taiwan's ranching industry (e.g. pigs, chicken) have both global and local characteristics. The government should utilize Taiwan's ranching industry field to support biological medicine research topics (e.g. pig's early embroyo growth and rebirth of the liver system, etc.) The direct output for this topic is NT$200 million. Using innovative functional genes and proteins technology to cut into life science's top niche point to expand the positive affect of knowledge property created through biotechnology. This can help fundamentally resolve the industry's problems and applications. The direct output for this topic is NT$200 million.

6. Utilize genetic transformation and animal cloning to produce high value protein

Utilize genetic transformation and the cloning of cattle, sheep and pigs as biological reactors to produce proteins for medical, research, consumption and environmental protection industry use. This has the advantage of high volume, high activity and low costs. Taiwan already has the platform for these two technologies. Currently, Taiwan's Animal Technology Institute is conducting a special science and technology project from the Ministry of Economic Affairs. Once it links up with the maturing medical inspection system and routine mass production operations, it will produce relatively large benefits to the biotechnology field. This should be very beneficial to Taiwan's R&D team. The direct output for this topic is NT$200 million.

7. Develop heterogeneity organ transplant

As the tissues and organs (e.g. heart, liver, etc.) of pigs and their hemodynamic are similar to humans, the medical field has recognized that they are good suppliers or replacement of such organs. Taiwan's Animal Technology Institute's research on heterogeneity organ transplanting has already found five different anti-rejection genetic transformation produced by pigs. Currently, it is carrying out animal clinical testing. Moreover, the collaboration between industry, academia, and research organizations on cell engineering, tissue engineering and artifical organs (e.g. man made liver, etc.), is also undergoing product development through technology transfer and international collaboration. Results should be enormous in the future. The direct output for this topic is NT$200 million.

8. Devlopment and utilization of livestock products

The skin of pigs can be developed into pig skin dressing, pig skin substrate, human skin replacement and collagen. These technologies are already mature in Taiwan. Furthermore, when using pig blood purifying immunity protein as immunity increasing additives, it can enhance the added value of the livestock product, which is beneficial to the conversion and upgrading of the livestock industry. The direct output for this topic is NT$100 million.

9. Develop biological additives and health food products

Using microorganisms (e.g. bacillus subtilis, lactobacillus and polymorphus) and genetic engineering to improve the milk and other body fluids (e.g. blood, sperm) from transformed animals can be used to improve animal's immunity, stimulate growth, or can be directly used by humans as functional foods and beautifying products. The direct output for this topic is NT$200 million.

10.Establishment and development of technology promotion system

Aside from the technology and product development as the core for establishing the biotechnology industry, the setting up of a technology promotion system is also a necessary support measure in the development of the industry. For example, the supply and servicing of various R&D instruments, facilities, and equipment; strategic research, registration, and maintenance of technology knowledge rights; importing of high technology and delegation business; facilitating high tech livestock companies and investing in operational strategic research; cultivating talent and supporting international collaboration and exchange projects, all need to be integrated so that the strength of the livestock biotech industry's upstream, midstream, and downstream sectors can be effectively displayed. The direct output for this topic is NT$50 million.

VI. Composite Analysis

(1) SWOT analysis

The competitiveness of Taiwan's livestock biotech industry, based on its strengths, weaknesses, opportunities, and threats are analyzed as follows:

Strength Weakness

* Has already accumulated a lot of research results

* Has already established a rather certain industry development platform

* Has strong and cooperative livestock technology R&D team

* In the next three years (up to 2005), expected to complete environment and facilities of livestock biotech industry's upstream (e.g. gene/biological information) and midstream (e.g. biology safety inspection technology platform and hardware facilities) development

* Difficult to raise overall production output

* Small size of Taiwan, located in the subtropical area, hot and humid summers, big affect on the development of the livestock industry

* Upstream, midstream, and downstream still unable to efficiently integrate

* Still lacking R&D talent, driving forces (funding and vitality) still not enough

* Regulatory and supporting action bottlenecks still hindering the transfer of R&D results, lacking industry development talents, no venture capital appearing for livestock biotechnology

* Insufficient regulations and knowledge property protection

Opportunity Threat

* Completely opening the market after 2005, crisis may become opportunity

* Heavy investment by the government into the biotech industry, livestock biotech production value will rise and risk will be lower

* World leader of R&D in genetic transformation and animal cloning technology

* Develop into subtropical livestock high tech R&D and innovation center, forming a different segment from advanced nations

* Market will completely open up after entering the WTO, the survival space of domestic traditional industries will be squeezed in face of global competition

* Large amount of capital is needed to develop biotechnology, the U.S. can easily capture market share due to its leadership in biotechnology and rich venture capital

* U.S. and European nations hold knowledge rights, industry development time short, needs to pay a price

* Competition threat from China


(2) Current development bottlenecks

1. Lacking industry information to draft quick and effective counter strategies; unable to get a hold of the changes and trends of the world's livestock biotech industry.

2. Lacking specialized institutions to carefully assess the technical value of the patent obtained, and to commercialize it.

3. Lacking R&D funding to provide long-term support for potential organizations or projects and fully track their performance.

VII. Current State of Industry Policy

(1) Traditional production oriented industry

In order to counter Taiwan's entry into the WTO, the Council of Agriculture drafted policies in August 2001 for the livestock industry's entry into the WTO. The following is the current state of thelivestock industry's policies.

1. Establish a pig farming industry the is environmentally acceptable and with global competitiveness.

2. Enhance the quality of domestically produced meat, enforce the brand certification system, continue to strengthen health inspection of slaughter houses and medicine residue monitoring system, provide consumers with safe and hygienic meat products.

3. Remove and monitor major contagious diseases of pigs, fully implement the destroying of all pigs infected by hog cholera and the mouth and hoof disease.

4. The future development of the dairy cow industry will still be on fresh milk, and will continue to enhance quality, reduce costs, as well as strengthen global competitiveness.

5. Produce hygienic, safe, and good tasting local brand black swine, chicken meat, and chicken eggs; promote black swine, meishan swine, distribution alliance of the local chicken industry, achieveing goal of more than 40% electric slaughtering, building a competitive local chicken industry.

(2) Newly rising high tech livestock biotech industry

1. Using biotechnology to develop products that meet local consumption habits, using knowledge rights as the core branding to sustainably develop the high tech livestock industry.

2. Using birth technology to improve artificial conception and embroyo movement efficiency, rapid reduction of production costs, enhance effectiveness.

3. Using functional genes and protein technology to discover new economical biological molecules to expand biotechnology's top niche point in the livestock industry, resolve application problems through knowledge rights.

4. Using genetic transformation and animal cloning technology to develop new breeds of livestock and high added value consumer use medical products (such as medical use protein, cell and tissue engineering products, artificial organs and other by-products).

5. Aggressively cultivate high tech livestock industry management and R&D talents, create innovation forming center (including technology transfer and authorized offices) to form innovation teams, speeden the establishment of the high tech livestock industry.

(3) Industry consultation strategy

1. Request the Council of Agriculture to set up technology plans for development direction and fields, form promotion team and form common objectives through systematic discussions to ensure the industry's development direction and emphasis.

2. Plan execution programs based on the development direction, integrate the Council of Agriculture's internal resources, fully implement technological plans, produce innovative results according to plan, and improve existing or set up new promotion systems.

3. Ensure Council of Agriculture's internal and external support actions, such as establishing national agricultural technology research institutes and agricultural technology projects that are integrating, key, product development oriented, and can encourage the industry.

4. Should enforce the industry upgrade program is adapted for the encouragement of agricultural biotechnology, proactively integrate and plan the success model for high tech agriculture enterprises, push for the forming of the industry.

Therefore, in the short term (2003 ~ 2005), mid term (2006 ~ 2008) and long term (2009 ~ 2012) development stages, the industry, government, academia, and research fields must work together to achieve these goals, especially the building of core facilities as well as drafting and amendment of regulations should support these industry development goals. If these goals can be achieved, then the livestock biotech industry can rebuild its image and become a sustainable industry that emphasizes production, living and the natural environment. In the future, the globalization of livestock biotechnology and product development will allow Taiwan to become a major country in subtropical animal biotechnology, which will also create an unshakable industry foundation for Taiwan's medical biotechnolgy industry.

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