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I. Abstract

Of the manufacturers producing animal vaccines in Taiwan today, one is publicly run while seven are privately owned. The products manufactured are mainly used to supply the domestic market. Domestically manufactured vaccines account for roughly one fifth of Taiwan’s entire usage volume. After the outbreak of the mouth and hoof disease in 1997, the number of pigs raised in Taiwan has substantially decreased. Moreover, entry into the WTO completely opens the market to the impact of imported meat products. In the future, there is still uncertainty in the domestic meat market, which affects the domestic animal vaccine market. Although domestically manufactured animal vaccines account for a very small share of the domestic market, there is still high potential for animal vaccines in overseas markets. Therefore, the domestic animal vaccine market is assessed to still have room for development.

Currently, the focus of consultation in the animal vaccine industry is to strengthen the research and development of new products. The main R&D direction is to use local animal vaccines, subunit vaccines and genetically engineered animal vaccines. In addition, collaboration between industry and academia should be enforced, fully implement the transfer of technology in order to enhance the production standard of Taiwan’s animal vaccine manufacturers, create market segmentation with the imported animal vaccines, and raise the market share of domestic and overseas markets.

II. Industry Definition and Scope

Animal vaccines refers to biological medicines used on animals to prevent specific pathogen free, including traditional dead virus vaccines (bacteria) or live virus vaccines (bacteria), toxoid vaccines, helminth vaccines, subunit vaccines and other vaccines manufactured through genetic engineering techniques.

III. Industry Overview

(1) Industry structure

1. Currently, manufacturing biological medicines for animals still employs conventional techniques, including utilizing animal, embryo and cell cultivation. Genetic engineering regrouping techniques in Taiwan is still in the initial development stage. Presently, there are not so many such types of products in the market.

2. Although there are seven animal vaccine manufacturers in the domestic animal vaccine industry, yet they are mostly small-scale enterprises. Due to the high overlap of the manufacturer’s products, competition within the industry is fierce, revenue is low, and price wars are often launched among the manufacturers as they fight for limited market share, resulting in low product profitability. The lack of high tech biological R&D talent among the manufacturers makes sustaining investment in new product R&D difficult.

3. Today, domestic animal vaccine manufacturers still use conventional vaccine production methods and sell these products mainly to the domestic market. However, foreign import products account for a large part of the domestic animal vaccine market. Manufacturing animal vaccines require the use of new biotech technology, yet most of the related technology is classified as industry secrets, hence manufacturers have very little ability in developing new products on their own.

4. After the outbreak of the mouth and hoof disease and entry into the WTO in 1997, Taiwan’s pork was banned from exporting to Japan. The impact caused by the opening of the domestic meat market has led to fewer domesticated animals, which in turn causes the shrinkage of the domestic animal vaccine market.

Domestic Animal Vaccine Manufacturers

Company Name Paid-in Capital (million) Main Products
Formosa Biomedical Inc. 125.0 hog cholera tissue culture vaccine, swine actinobacillus inactivated vaccine、newcastle disease and infectious bronchitis inactivated mixed vaccine
Kaohsiung Biological Product Co., Ltd. 72.0 swine atrophic rhinitis vaccine, tissue culture hog cholera quarantine, swine Japanese encephalitis virus vaccine
Ta Foong Veterinary Biological Laboratories Co., Ltd. 12.0 Lyophilized lapinized hog cholera vaccine, Newcastle disease infectious coryza inactivated mixed vaccine, newcastle disease infectious bronchitis live virus mixed vaccine
Biological Laboratories of
Kaohsiung County Farmer’s
Association
20.0 fowl cholera vaccine, Newcastle disease inactivated vaccine, fowl cholera vaccine
Tai Yang Pharmacy Co., Ltd. 15.0 lapinized hog cholera vaccine, Newcastle disease vaccine, fowl cholera vaccine
Animal Health Research Institute Council Of Agriculture Executive Yuan 4.8 lapinized hog cholera vaccine, pseudorabies (hog cholera) inactivated vaccine
United Biomedical Inc. (Asia) 8.47 Mouth and hoof vaccine, LHRH vaccines, animal birth control vaccine
Whole Asia Biological &
Chemical Co., LTD.
6.0 Animal biological medicine

(2) Marketing channels

Marketing of domestic animal vaccines is generally carried out by each regional agent, which is directly commissioned by the manufacturers. The vaccines are then sold directly to the ranches. Meanwhile, imported vaccines are handled by one main agent, who then supplies the regional agents, and then directly sells to the ranches.

IV. Market/Product Analysis

(1) Global market

The global animal health and nutrition market value is at around US$14 – 17 billion, which includes animal medicines, biological additives and animal feed additives. Biological additives includes vaccines and testing agents, accounts for roughly 14 – 16% of the total market and is growing at a slow trend. The global animal vaccine market was US$1.7 billion in 1992 and has reached US$2.4 billion in 1997, representing an average growth rate of 8.0%. Currently, potential animal vaccine markets are in the developing nations, which have a higher annual growth rate of 14%. Countries in Asia are mostly developing nation, i.e. the number of pigs in the Asian region is more than 30 times the number of pigs in Taiwan. The volume of other domesticated animals such as chicken and cattle are also very significant.

(2) Domestic market

After the outbreak of the mouth and hoof disease in Taiwan, the number of pigs raised was about 7 million, along with 200 thousand heads of cattle and 400 thousand heads of sheep. Roughly 700 thousand metric tons of meat was produced a year. Today, the total animal vaccine market is worth about 1.6 billion dollars. Domestic products are steady at around 300 million dollars. Of this, vaccines for domestic animals represent over 95%. Due to the mouth and hoof epidemic, the number of pigs raised has drastically decreased and coupled with the entrance into the WTO, the domestic market will be greatly impacted as meat products will be allowed to be imported. In the near future, there are still many factors affecting the domestic meat market. However, since domestically manufactured animal vaccines represent only a small share of the domestic market and can be developed for overseas markets as well, therefore, the domestic animal vaccine industry still has room for development.

V. Technical Analysis

(1) Current technical status

Vaccines are used to prevent disease. Not only does it prevent animals from becoming ill, but at the same time can also reduce the amount of medication used. It is a must for both economic animals and the raising of pet animals. Traditional vaccines can be categorized as: live virus or killed virus vaccines. The manufacturing principle for dead or inactivated vaccines as well as toxoid uses various methods to reduce the toxicity of the antigen, but still can stimulate the functions of the antibodies. As new biotechnology develops, safer, cheaper, and better vaccines might be produced. However, traditional vaccines still accounts for more than 90% of the market.

Since animal vaccine R&D technology requires high tech biological techniques, it combines the specialized fields of immunology, molecular biology and genetic engineering. Today, the 7 domestic animal vaccine manufacturers lack biotech talents, thereby unable to independently R&D biotech developed animal vaccines. However, academic institutions in Taiwan, e.g. National Taiwan University, National Chung Hsing University, National Pingtung University of Science & Technology's Department of Veterinary Medicine, as well as research institutions, e.g. Academia Sinica, Animal Health Research Institute and animal technology research units, are rich with high tech and technical talents. If they could be used for animal vaccine R&D, they would become a research team with very large potentials.

(2) R&D trend

The animal vaccines being used today are largely manufactured through traditional methods. However, the effectiveness and safety of vaccines manufactured through traditional methods has its technical limits, especially when developing polyvalent vaccine. Therefore, the future trend in animal vaccine R&D will be to replace traditional pathogen mass cultivation techniques with DNA engineering. Performming the usable and effecting of paroxysm and protect neutralizing antibody of the gene fragments cloning of the pathogen, and make the subunit vaccine, or use the usable DNA fragment as the immunogenicity to vaccinate directly into the animal's DNA vaccine, or using nontoxic live virus to implant again into one fragment of effecting paroxysm neutralizing antibody of other pathogen, and in the hope that the vaccine will be even more convenient and effective.

In addition, the R&D of animal vaccine formulation include vaccines, adjuvant, and formulation. Development work on these three can no longer be separated. Therefore, how to enhance the immunity of adjuvant and the R&D of formulation should be listed as an important R&D item in the future. Going forward, how to enhance adjuvant during vaccine R&D, especially enhancing the vaccine's effectiveness, is actually the most important task at hand. This must rely on improving the formula for adjuvant and adding biological adjuvant in order to strengthen the vaccine's effectiveness. In addition, in terms of mircosphere (microcapsule) coating technique, how to stabilize the vaccine's effectiveness and how to make the application of formulation even more convenient are the main topics for research. The goal is to R&D a direct oral form formulation, which will reduce the operation costs of the pig farms.

R&D emphasis includes:

1. Research on genetic engineering technology, develop genetic vaccines and subunit vaccine.

2. R&D of local animal vaccines.

3. Polyvalent gene recombination vaccines.

4. Mircosphere (microcapsule) oral vaccines.

5. Animal vaccine formulation and biological adjuvant.

6. Creating mass production techniques for animal vaccines.

(3) Domestic human resources analysis

1. R&D headcount roughly 67 persons

(a) About 27 persons from the Animal Health Research Institute, Council of Agriculture, Executive Yuan.

(b) About 10 persons from the Animal Technology Institute Taiwan.

(c) About 30 persons from schools and other institutions.

2. Manufacturing headcount (including manufacturing and management) totaling 188 persons.

(a) 27 persons from the Animal Health Research Institute, Council of Agriculture, Executive Yuan.

(b) 21 persons at the Ta Foong Chemical & Pharmaceutical Co.

(c) 13 persons at the Tai Yang Pharmacy Co., Ltd.

(d) 60 persons at the Taiwan Biological Medicine Corp. (TBMC)

(e) 18 persons at the Whole Asia Biological & Chemical Co., LTD.

(f) 32 persons at the Kaohsiung Biological Product Co., Ltd.

(g) 17 persons at the Biological Laboratories of Kaohsiung County Farmer's Association

VI. Composite Analysis

(1) Industry competition analysis

1. Advantages of investing in Taiwan

(a) Location. Taiwan already has a stable market demand and the sales experience and system in Taiwan is more suitable for similar cultures in Southeast Asia and China, which is beneficial to entering the world's most potential market.

(b) Each year, the government provides millions of dollars in the funding of animal vaccine related research carried out by research and academic institutions. This not only has laid a solid technical foundation, but also helps cultivate new talent, which supports industry development.

(c) Upstream and downstream industry structure is complete. By aggressively expanding the Southeast Asia and China markets, it points out the market direction for vaccine manufacturers. Vaccine manufacturing is technology intensive and must have strong R&D and innovation as its basis. The research results and the talents cultivated through the years by the academic and research fields are one of the advantages for investing in Taiwan.

(d) Other benefits include preferential loans, tax breaks, as well as protection of foreign investor's knowledge property rights.

2. The animal health product industry can be analyzed according to its strength, weakness, opportunity, and threats to identify the strengths and weaknesses of the domestic industry along with the opportunities and threats currently faced by the market.

(a) Strength

The GMP sign of quality has been widely received by domestic manufacturers. Moreover, in recent years, many talented researchers have been cultivated while schools and research institutions have also begun to carry out related R&D projects. Manufacturers should fully utilize these talent and technical resources.

(b) Weakness

As the domestic industry lacks the ability to carry out independent R&D, there has been very little improvement on the production and types of vaccines. Furthermore, operations are more conservative, leading to low export percentage. In addition, due to the limited market size, domestic manufacturers still run their businesses like traditional corner stores – producing lots of products but of small volume. As a result, facility utilization is low, unit costs are high, which hinders market competitiveness.

(c) Opportunity

In recent years, the economies in the Asia Pacific and China areas have grown rapidly. Demand for meat products has risen and the ranching industry has swiftly developed. A number of multinational companies have also entered the market. Today, the ranching industry is moving toward intensive operation management, so vaccines will become even more important.

 (d) Threat

As the opening of imported agricultural products will affect the future development of Taiwan's ranching industry, coupled with the problem of environmental pollution, the goal of domestic meat product production is to achieve self-sufficiency. Thus, domesticated animals farming will significantly shrink. This will also threaten the vaccine market. Meanwhile, large manufacturers will become attracted to the Asia Pacific market and will soon enter this market, thereby creating even more intense competition.

3. SWOT analysis

Strength Weakness

* The industry already has a solid foundation

* Full control of domestic and potential market demands

* Government's emphasis and consultation

* Plenty of biotech research talents

* Limited domestic market, fierce market competition

* Most domestic manufacturers use traditional methods to produce vaccines, making it difficult to compete with advanced imported products

* Many products produced but of small volume, low facility utilization

Opportunity Threat

* Development of the ranching industry within the Asia Pacific region

* Demand from the China market

* Business diversification and vertical integration

* Still room for development in the domestic market

* R&D local vaccines can create market segmentation with imported products

* Impacted by the trend in economic liberalization and globalization

 

* Stronger industry competitiveness within the U.S. and European nations

 

4.Other advantagess

(a) Location advantage

Taiwan already has stable market demand, which can guarantee success during the initial investment stage and can replace existing imported vaccines. Investing in Taiwan can grow market share in the local market. Utilizing Taiwan's sales experience to expand into neighboring China and Asia Pacific markets, which have similar cultural background, will help gain entry into the world's most potential market.

(b) Technology, production and management talent advantage

After years of hard work by the Council of Agriculture and the Industrial Development Bureau, manufacturing in Taiwan all meet GMP regulations. By investing in Taiwan, the quality of products can achieve international standard under the government's consulting services and assistance. Moreover, the government invests millions of dollars each year on research institutions for animal vaccine related research. This not only has laid down a solid technical foundation, but also cultivates many outstanding talents, which can support the industry's development.

(c) Industry structure advantage

Taiwan's aquacultural farming already has very good fundamentals, providing good market opportunities and currently developing southward. Meanwhile, the medicine manufacturing for humans and animals is now growing while the Southeast Asian and China markets are being aggressively exploited. The development of meat products, ranching, and animal feed related industries no doubt have pointed out a market for vaccine manufacturers. Vaccine manufacturing is technology intensive and must have strong R&D and innovation as its basis. The research results and the talents cultivated through the years by the academic and research fields are one of the advantages for investing in Taiwan.

(d) Related investment incentive advantage

Presently, the animal vaccine industry has already been clearly listed as part of the ''Biotech Industry Promotion Program'' led by the Executive Yuan's Technology Advisory Group, as well as the Industrial Development Bureau's ''Asia Pacific Biotech Product Manufacturing Center'' and the National Science Council's ''Tainan Science Park Agricultural Biotech Specialized Area'' projects. In view of all the projects, investing in Taiwan has the following incentives:

 A. Aside from Yuan Lin Technology and Industrial Area has set up a ''Biotech Industry Specialized Area,'' which provides common mass production facilities, manufacturers that set up operations in the National Science Council's Science Park can apply for patent rights or know-how circulation funds, with a maximum of 25% of total investment amount to encourage the upgrading of the industry's technology. Some biotech manufacturers have set up operations in the Hsinchu and Tainan Technology Parks.

 B. Encourage research and development: R&D expenses can be used to deduct income tax. Equipment and machinery used for R&D are exempt from import taxes, while donated R&D facilities are also tax deductible.

 C. Enjoy preferential lending measures. Can apply for various government funds to participate in investment with maximum up to 49% of the paid-in capital.

 D. Tax benefits include: Factories that are set up within the science parks can enjoy 5 years exemption of business taxes. In addition, imported machiery, raw material, etc. are also exempt of import and merchandise taxes while export products are exempt of sales taxes and merchandise taxes.

 E. Protect knowledge property rights of foreign investors and enjoy 100% of the company's stock equity.

(2) Development bottlenecks in current stage

1. Industry bottlenecks

(a) Lack of R&D funding invested by the industry, willingness not high.

 (b) Biotech research talent lacking within the industry. Although there is a lot of talent within the academic research institutions, however, collaboration between the industry and academia is insufficient.

 (c) Current products within the industry lack competitiveness in the global markets.

 (d) The domestic ranching industry still not yet recovered, overseas markets still waiting to be developed.

2. Key technical bottlenecks

(a) Massive cell cultivation and fermentation techniques.

(b) Gene recombination and transgenic engineering techniques.

(c) Protein purification and synthesizing techniques.

(d) DNA or subunit vaccine manufacturing techniques.

(e) Vaccines formulation and adjuvant manufacturing techniques.

VII. Current State of Industry Policies

(1) Future development direction

1. In line with the Ministry of Economic Affairs Industrial Development Bureau's animal vaccine industry advancement policy direction, deregulating animal medicine control laws and encourage Taiwan's animal vaccine manufacturers to develop overseas markets in order to exploit exporting opportunities.

2. Strengthen R&D for safe, effective animal vaccines. Fully apply R&D results to help upgrade the industry.

3. Enforce the implementation of GMP to enhance the quality of animal vaccines.

4. Enforce R&D of genetic reformation technology.

5. Talent training and recruitment.

(2) Consultation strategy

1. Plan for manufacturers to apply online animal vaccines that are to be exported, making it easier for manufacturers to export their products. In addition, support the amendment of the animal medicine control law and simplify the approval process for the exporting of animal medicines.

2. Strengthen the collaboration system between industry and academia. Utilize the talents and facilities in the schools and research institutions, use the government's research project funding as the main driving force for the R&D of mid and upstream animal vaccines. Then transfer the technology to the industry for mass production and commercialization.

3. Enforce the implementation of GMP standards for domestically manufactured animal vaccines in order to sustain the quality of the animal vaccines and to build up confidence among Taiwan's farming industry to use domestically manufactured animal vaccines.

4. Strengthen R&D for new animal vaccine products. Local animal vaccines, subunit vaccines, and genetically engineered animal vaccines are the direction of R&D. Create market segmentation with imported animal vaccines and boost market share in both domestic and overseas markets.

5. Bring in actual agricultural biotech related product R&D experience, production and marketing, management and legal talent from advanced nations. Accelerate the training of domestic animal vaccine R&D talent as well as industry technology leaders to strengthen the R&D of animal vaccines and cultivate new talents.

(3) Review of current policies

1. Today, manufacturers must apply to the Central governing agencies when exporting animal vaccines. Vaccines can only be exported after obtaining permission for exporting. In order to encourage manufacturers to export their products, plans to set up an online reporting system is under way. This will help simplify the exporting process and deregulate present animal medicine control laws.

2. Currently, the set up standards for establishing animal vaccine manufacturing plants and GMP standards have not been amended sing 1972 and 1990. In order to support the development of the growing biotech industry as well as maintain the manufacturing quality of animal vaccines, regulations should be loosened and link up with international laws and meet the industry's future development.

Today, most of the animal vaccine industry manufactures vaccines through traditional manufacturing methods. In the future, collaboration should be strengthened between academia and the industry, as well as implementation of technology transfer to accelerate the transformation of the industry.

 
Copyright 2007 Maintain By | Biotechnology Industry Study Centre, | Taiwan Institute of Economic Research |