UMC's John Hsuan eyes biotech market across straits

Meridigen Biotech Co chairman John Hsuan (left), poses with his son and general manager Yogi CY Hsuan at the company in this undated file photo. [Photo provided to chinadaily.com.cn]

Taiwan's high-tech guru John Hsuan aims for significant growth in the Chinese mainland market in order to make the biotech industry the next pride of Taiwan.

The honorary vice chairman of the United Microelectronics Corp, one of Taiwan's leading high-tech companies, has high expectations for biotechnology — known as the industry of the future. He is optimistic about its potential in the mainland vast market.

A staff member at Meridigen Biotech performs the stem cell freezing procedure in the company's lab in this undated file photo. [Photo provided to chinadaily.com.cn]

Hsuan, one of the few Taiwan pioneers exploring Chinese mainland biotech market, set up Meridigen Biotech Co in 2010, a stem-cell drug company helmed by his son Yogi CY Hsuan. The drugs, according to the Hsuans, provide "very effective cures." Clinical tests will start next year.

John Hsuan has brought a litany of biotech firms along as Meridigen wades into the mainland market. He established a collaborative consortium called Hukui Biotechnology Corp, through which Taiwan firms can exchange experience and learn about doing business in the Chinese mainland.

In an interview with The China Post, John and Yogi Hsuan talked about biotech's development outlook in Taiwan and the Chinese mainland.

The Chinese mainland faces an aging population, but without top-notch medical services, there are concerns about how the elderly will be cared for in years to come.

This undated file photo shows Meridigen Biotech's stem cell bank in Wugu, new Taipei city. It's the No 1 stem cell bank in Taiwan, according to the company. [Photo provided to chinadaily.com.cn]

On the other hand, Taiwan, with its top medical services ranking in Asia and ranking of No 3 in the world, can offer better medical service in the area of talent training, system integration and better hospitals, said Yogi CY Hsuan.

John Hsuan pointed out that as human longevity increases, the health industry is set to undergo a rapid pace of development. A good product, wherever it originates, will be endorsed by any government, he said.

Hsuan pointed to a clear distinction between the biotech industry and Taiwan's relatively robust electronics and IT industry. He said that the latter developed in Taiwan by riding on existing momentum. The Western world established the industry standard long ago, and Taiwan is just a link in the supply chain.

The biotech industry, however, represents a "fresh start." Taiwan is not behind in the field. If Taiwan can take the right path, it will go head-to-head with others over time, he said.

He called on the local goverment in Taiwan to loosen regulations if Taiwan is to achieve the same kind of success and global standing its high-tech industry has gained in the past two decades.

John Hsuan speaks with The China Post in an interview at the company's headquarters in August. [Photo provided to chinadaily.com.cn]

The following are edited excerpts from the interview.

Why do you believe biotechnology has good potential? What are its advantages compared with emerging technologies like the internet of things and big data?

JH: Taiwan's small and medium-sized businesses are known for their efficiency and fast adaptation. However, in order to upgrade, we cannot simply perform contract work for big companies, which could slash the work as they restructure. As such, Taiwan businesses must obtain good control over the technology, the brand and the market.

As biotechnology progresses from pure science to the current biological database, the industry is in fact on the cusp of "a new beginning." We are not too far behind in know-how.

What biotech products/services have the best commercial opportunities in the mainland market?

JH: The Chinese mainland is a big market, and Taiwan holds medical expertise in the area of health management and biotechnology.

Drugs, medical instruments, dietary supplements, and hospital management all have potential. However, no company can do all of them, and also, no one can serve the entire market in the mainland.

To me, products that are new, good, important and absent in the Chinese mainland have the highest potential. We welcome firms that have this kind of product/service to join us as we explore the mainland market.

What is your strategy for making inroads into the Chinese mainland's biotech industry?

JH: To make it in the Chinese mainland, first of all, firms must be familiar with local rules and the certification processes. You can't operate without a license. Second, they need good distribution channels.

Our strategy is to bring good companies with us. The first arrivals may face greater difficulty, but the second ones will have it easier, while the third wave will have developed some expertise.

Through this collaborative learning platform, Taiwan firms may even have greater knowledge of conducting business locally than their mainland counterparts.

We are working with a couple of mainland cities first, before replicating the experience in other parts of the country.

Dongguan in South China's Guangdong province is the first. We have drafted a development plan with the local government. Now six Taiwan firms have moved into the city; our goal is to bring the number to 20.

What is Meridigen doing in the Chinese mainland and what are its strengths?

Yogi Hsuan: The core of Meridigen is stem cell research, and our emphasis is on developing drugs tailored for newborns suffering from respiratory failure or cerebral palsy.

The drug has "miraculous" capability. It can cure the paralyzed and alleviate conditions of multiple organ failure. Meridigen is Taiwan's top stem cell storage facility right now.

We plan to start clinical trials next year on drugs made of placenta or umbilical cord. Meridigen will be the first company in the world to do so. We will go through the FDA in the US and Taiwan. Testing will also be carried out in the Chinese mainland, before the new drug is distributed to every part of the country.

What goals have you established for different phases of development?

JH: The idea is to sow the seed in the first year, grow flowers in the second year, and reap fruits in the third, before ultimately planting a forest in five years.

Having strong roots is the first step, and developing into a forest means rapidly replicating successful experience elsewhere. As a drug development company, Meridigen will spend more time on research and development at the start, but once the work bears fruit, the market is very large.

Will Meridigen and other biotech companies face the challenge of the "red supply chain"?

JH: I never thought there was such a thing as the red supply chain, and this is even more true for the biotech sector. Companies try to make good use of existing supply chains. If you are part of the supply chain, you should hone your strengths instead of rejecting other participants in the supply chain.

The biotech industry at the moment stands at a new beginning and there are opportunities for Taiwan. How to improve ourselves and utilize opportunities in the Chinese mainland is the most important.

Do you think a company similar to UMC's status will emerge in Taiwan's biotech industry?

JH: We have invested a lot of money and effort, with input from many engineers, to establish a new foundry. This is similar to our investment in drug research and development. The value of good drugs will not be less than that of other types of products.

We've seen too many successful stem cell related applications. They were done privately without legal oversight. If we can operate with efficiency, under the proper framework of science, lower the cost and provide the service to the public en mass, it could be the next pride of Taiwan.

I had to learn from others in the semiconductor industry and UMC was a part of the supply chain. But with the stem cell business, there is no one to learn from, and Taiwan actually possesses good technical knowledge. The two have different starting lines.

Biotech medicine is listed by the new government as one the five innovative industries for focus development. What is the implication for Meridigen?

Proper regulations must come first. With outdated laws, we can't expect to manufacture drugs that are ahead of the curve on the global stage.

As such, the government must be "perceptive" of new technologies and industry opportunities before it can write the laws that enable the next big thing to emerge in Taiwan.

Meridigen is a case in point. We see the opportunity, but have to go through the FDA in the US. We can't develop it in Taiwan.

Also, resources should be allocated to those with potential, instead of distributing them to everybody.

CV

John Hsuan

Age: 64

Career (since 2010):

Chairman of Meridigen Biotech

John Hsuan has dedicated more than 30 years to the growth and innovation of Taiwan's semiconductor industry, co-founded hundreds of companies, including dozens which have been successfully listed and OTC.

He is currently serving as chairman of a number of venture capital firms and biotech companies, while acting as the president of Trans Regional Biotechnology Association, in order to promote cross-Straits exchanges and development of the biotechnology industry for his blog.

Education:

Graduated from National Chiao Tung University, and was awarded the distinguished alumnus and honorary doctorate in 2001

Yogi C.Y. Hsuan

Age: 39

Career (since 2010):

General manager of Meridigen Biotech

General Manager, Meribank Biotech Co, Ltd (Present)

General Manager, Vital First Management Company (Present)

General Manager, BioLite, Inc

Licensed acupuncturist, CA, USA

Education:

Shanghai Jiao Tong University, MD of Medicine

Five branches University, California Graduate School of Traditional Chinese Medicine, Bachelor of Acupuncture

Southern Methodist University, Bachelor of Electrical Engineering