In Search of an Innovative State: The Development of the Biopharmaceutical Industry in Taiwan, South Korea and China

Abstract

Recent developments in the biopharmaceutical industry in Taiwan, South Korea and China bear witness to the transformation of these states in nurturing an innovation‐based industry. This article argues that the segmentation of the value chain of the biopharmaceutical industry has provided industrializing countries with a window of opportunity. These East Asian states have modified their former catching‐up approaches by establishing a more effective institutional platform that can attract knowledge‐creation players to the industry. Through case studies, the authors show that the Taiwan state's promotion of the biopharmaceutical industry has been based on an incremental approach; existing state policies have been modified to cope with the demands of the industry, which has resulted in the continuation of its SME‐based industrial structure. The methods of the Korean state have been more radical, in that the policies that previously favoured the chaebols have gradually been reoriented toward the promotion of smaller, science‐based firms that now co‐exist alongside the chaebols. Finally, the Chinese state and local governments have sought to promote this innovation‐based industry by building biotech parks. This approach has resulted in a boom in new science firms, which have become increasingly isolated from the flourishing domestic SOE‐led market.

Ever‐transient FDI and ever‐polarizing regional development: Revisiting conventional theories of regional development in the context of China, Southeast and South Asia

“…Moreover, because most MNEs seek to use FDIs as a way of making production more efficient or cost-effective, rising labor costs, real estate prices, renminbi appreciation, and increasingly complicated international political relationships have, invariably, motivated a large number of multinational corporations to move their flexible manufacturing bases elsewhere. Having said that, some Chinese technology firms-such as Tencent, Alibaba, Baidu, Xiaomi, Lenovo, and Huawei-have risen to become top-tier global firms by acquiring technical know-how from previous FDI, while also, successfully exploiting their own indigenous capabilities (Ma, 2017) and transforming China into an innovative state and platform builder that is connected with global value chains (Wang, Chen, & Tsai, 2012).…”

Biopharmaceutical Innovation System in China: System Evolution and Policy Transitions (Pre-1990s-2010s)

“…This initiative served to fund targeted programmes in universities and public research institutes. 27 However, the government gradually noticed that merely allocating funding to academic institutions did not speed up industrial development. Therefore, since 2006, the State Development and Reform Commission introduced 'The Pharmaceutical Industry Eleventh Five Development Guidance' to position the biopharmaceutical industry as one of the nation's 6 key industries.…”

“…This policy shift positioned firms rather than universities as the key leaders in developing biopharmaceuticals in China. 27 The evolution of policies specific to biopharmaceutical in China is summarized as Table 1 below. In addition, the government adopted an industrial park policy to develop the biopharmaceutical industry.…”