Biomed Industry CEOs Discuss International Business Opportunities

Report Series on Biomedical Enterprise CEO Roundtable Meetings: Seizing Cross-Border Opportunities in Medical Electronics—How to Enter the International Market?

Medical electronics has emerged as a burgeoning sector within healthcare industry. With Taiwan's strong foundation in both healthcare and electronics industries, leveraging cross-domain advantages is crucial to seize international business opportunities. During third roundtable conference organized by Epoch Foundation for Biomedical Enterprises, chaired by Li Chung-hsi, Chairman of the Taiwan Bio-industry Development Association, several key figures from the industry were invited to discuss strategies for development of Taiwan's medical electronics sector. Among them were Wang Zhihong, Co-founder of Meisui Technology; Chen Qihong, Chairman of BenQ's medical equipment division; Zhang Jiayuan, Chief Technology Officer of Quanta Computer; Chao Jerome, Chairman of Huede Healthtech Co., Ltd.; and Fan Longsheng, Chief Technology Officer of CrystalQi Biotechnology. They engaged in fervent discussions regarding the development strategies for Taiwan's medical electronics industry.

In recent years, the most emerging field in healthcare industry is undoubtedly "medical electronics," with its broad applications spanning medical imaging, therapy, diagnostics, and health monitoring. It helps meet healthcare needs of rapidly urbanizing populations worldwide.

According to market research firm MarketsandMarkets, global medical electronics market is projected to reach $56.5 billion by 2020, with a compound annual growth rate (CAGR) of approximately 5.5% from 2014 to 2020.

With a focus on industries such as eHealth, mHealth, and dHealth, medical electronics has become a crucial trend in healthcare cross-border integration. In this wave, Taiwan's longstanding ICT infrastructure and medical expertise have fueled vigorous development of medical electronics industry.

Third roundtable conference for biomedical enterprise CEOs, organized by Epoch Foundation, specifically delved into burgeoning field of medical electronics and explored strategies for development of Taiwan's medical electronics industry.

Regulations, Topic Selection, Clinical Needs There's a wealth of know-how in medical electronics entrepreneurship

MedicusTek co-founder Wang Zhihong emphasizes that medical industry is different from consumer electronics. In initial stages of product development, it's crucial to involve end-users (medical personnel) and select topics that align with market needs.

Wang Zhihong, who also serves as Director of Center for Health Policy and Outcomes Research at Stanford University School of Medicine, co-founded MedicusTek in 2011 with classmates from Massachusetts Institute of Technology and former engineers from ASUS. They developed smart mattresses using big data, focusing on preventable medical events such as falls and pressure ulcers. Their entry point was ward monitoring system and Internet of Things (IoT) market.

Wang Zhihong uses current situation in the United States as an example, pointing out that when designing medical electronic products, attention should be paid to differences in regulations and culture across different regions. With Taiwan having a significant number of former international students abroad, they could serve as bridges for Taiwan in overseas markets, evaluating risk management and whether business models are suitable for future international markets.

He emphasizes paramount importance of business model, stating, "The current mindset of Taiwan's medical industry still focuses mainly on hardware sales through OEM, aiming solely to reduce costs." He points out that focus of entrepreneurship should be on gradually transitioning business model towards data and knowledge aspects, creating different values and developing high-value products.

Wang Zhihong also notes differences between health and diagnostic product markets. While some margin of error may be acceptable for medical electronics used solely for behavior change monitoring, it is unacceptable for diagnostic purposes. "For example, in designing heart detection, every noise is critical and cannot be arbitrarily filtered out. If diagnosis result relates to medication, it must be very accurate.

Focusing on development of artificial retinas, Fan Longsheng, Chief Technology Officer of CrystalQi Biotechnology, points out that while Taiwan has a solid foundation in both healthcare and electronics, selection of topics for medical electronics entrepreneurship must return to the essence of the problem. "The prerequisite is to deeply understand the essence of the problem, identify bottlenecks, propose solutions, and then look back at market niches and IP layouts." He gives an example, stating that detecting heart sounds is not difficult; the key lies in interpreting the diagnosis, which can be achieved by developing reliable algorithms linked to big data.

CrystalQi has developed spherical ICs that serve as neural interfaces, achieving a resolution of 4,000 pixels in artificial retinas, potentially providing patients with a visual acuity of 0.2, the highest in the industry. Currently, the only FDA-approved Second Sight product has a resolution of only 60 pixels.

"We consider the retina as an extension of brain, developing an interface platform for electronic systems to interact with brain's neural system." In addition to core technologies such as sensors and IC design, CrystalQi closely collaborates with ophthalmology department of National Taiwan University Hospital. They are currently in small-scale production and are expected to enter clinical trials next year.

Fan also points out that with aging population and increasing severity of global macular degeneration, ophthalmic medical electronics will be a major focus in the future.

ICT companies entering the medical electronics sector are integrating and sharing resources within the industry.

In recent years, BenQ's healthcare equipment division, which transitioned from ICT, has made significant strides in medical field. Chairman Chen Qihong noted that the group entered manufacturing sector in Suzhou, China, in 1992, which allowed them to establish connections in local healthcare industry. Since 2008, they have established two hospitals (BenQ Nanjing and BenQ Suzhou), with a cumulative post-tax profit turning positive after 8 years of development.

"Owning hospitals not only allows independent clinical execution and enhances brand image but also enables us to be closer to end-users and design products that truly meet clinical needs." BenQ went public at the end of last year. Chen Qihong pointed out that this is the result of BenQ's entry into upstream medical market since 2010, aiming to become a leader in China's private hospitals and promote medical exchanges across Taiwan Strait.

Currently, over 3,000 hospitals in China use BenQ products, and Chinese market accounts for 50% of BenQ's revenue in nearly 40 international markets. Chen further emphasized that operational strategy prioritizes cultivating markets in populous countries like China and India, establishing brand recognition, stabilizing their position, and then expanding into the US and European markets.

Chen Qihong observed that Taiwanese medical equipment manufacturers are generally smaller in scale. By combining resources of more than 500 small and medium-sized enterprises, BenQ and similar groups can provide channels to expand the industry's scale. "Through this model, we hope Taiwan can transition from ICT technology to a medical technology industry cluster, making Taiwan the go-to destination for international medical procurement."

As an ICT giant, Quanta Computer's Chief Technology Officer, Zhang Jiayuan, points out that Quanta has developed its core design and manufacturing capabilities into cloud computing and IoT applications. In 2010, the company formulated a future development vision to integrate Cloud, Client, and Connectivity (3C), officially transitioning from hardware design and manufacturing to people-centric, integrated solutions research and development. They focus on creating more comprehensive value and gradually enter eHealthcare and smart medical applications.

Zhang highlights that Quanta employs strategic alliances to open up medical channels and integrates core capabilities to enter various application fields, aiming to solve information and communication issues in smart healthcare domain using ICT methods.

With rise of big data and smart hospitals, Zhang notes that "almost all IT industries want to enter healthcare." To expand cooperation opportunities, Quanta has structured solutions for telemedicine and smart hospitals, covering smart healthcare needs from home to medical institutions. They have also collaborated with hospitals in countries like Canada and strategically partnered with Cisco for the Greater China market.

"The core of both solutions is cloud-based solutions," Zhang further explains. Currently, the focus is on combining ICT technology with know-how and demands of key medical institutions worldwide to develop innovative application systems.

Zhang Jiayuan stated that while Quanta Computer has not yet achieved disruptive innovation in medical electronics, it has taken a step forward from pure ICT systems. By utilizing cloud computing platforms, different algorithms can process large amounts of data in parallel on high-performance computing platforms to create intelligent applications and services. "Algorithms represent a significant niche, and integrating data analysis in applications can generate unique innovative value," he said.

Telemedicine emphasizes policy and service models.

Chao Jerome, Chairman of Huede Healthtech Co., Ltd., which develops care platform technology through mobile streaming and information management, emphasized omnipresence of telemedicine. He described it as, "As long as a doctor is not by your side, it's considered telemedicine."

Huede has developed clinical care management systems, emergency medical rescue systems, and hospital logistics management systems. Chao mentioned that last year, Huede ventured into critical care, selecting clinical respiratory monitoring due to its relatively low competition after evaluating various fields. However, he also noted, "There is a vast amount of big data in respiratory care. ICT should look ahead two steps instead of following existing hot topics."

After six months of close discussion with Changhua Christian Hospital, Huede ultimately focused on clinical information system for emergency room ICU ventilators. This system allows for monitoring of all ventilators in emergency room and incorporates parameters such as medication settings to assist physicians in determining recovery time.

Chao Jerome pointed out that daily cost of one ICU bed exceeds 20,000 New Taiwan Dollars, and hospital digitization by incorporating clinical monitoring systems can help improve cost-effectiveness. However, clinical information systems currently lack support from national health insurance and require hospitals to actively introduce and implement them.

He further illustrated with an example of Huede that there are three major entry points for ICT integration in healthcare: ensuring patient safety to avoid medical disputes, enhancing hospital information transparency to facilitate communication between medical staff and patients, and improving medical efficiency and care quality.

In addition to medical equipment and other products, services are also an important business model in telemedicine industry. Lee Chung-Hsi, Chairman of Taiwan Bio-industry Development Association, observed that current issue with telecare in Taiwan lies in blurred distinction between "welfare" and "industry."

"When Taiwan government focuses on number of users of telecare rather than manufacturers, they tend to take matters into their own hands. In long run, this makes it easy for the government to dominate the market. However, government policies have limited budgets and low efficiency. There is minimal replacement of outdated hardware and software, which does not aid in industry development," he pointed out. Therefore, he suggested integrating resources from hospitals, testing centers, and long-term care centers and introducing corporate resources to sustain care.

Chang Chia-Yuan pointed out that if the government only develops telecare from a charitable welfare perspective, businesses will not sustainably operate. On the contrary, developed countries like Europe and the United States, facing increasingly severe aging issues, actively seek out companies and technologies to develop telecare platforms.

He cited an example of Ontario Telemedicine Network (OTN), an independent company supported by government of Ontario, Canada, which was established to coordinate private sector medical resources. From this perspective, nations should actively play a role in facilitating cross-sector collaboration between private entities.

Lee Chung-Hsi believes that the field of medical electronics encompasses instruments, systems, sequencing, and more. While there isn't a single successful path for medical electronics companies in terms of technology, services, or product orientation, when accumulated on a certain foundation, they can be integrated into more valuable systems. "Algorithms, usage habits, and value creation are not things that a single company can solve," he emphasized.

Lee Chung-Hsi, drawing from his experience founding Stelic Institute & Co., highlighted promising potential of applying genomic big data in healthcare. However, he emphasized the complexity of medical decision-making systems, which require integrating information from symptoms, tests, medication analyses, insurance reimbursement methods, and governmental healthcare policies. This complexity presents an opportunity for IT to facilitate cross-domain integration.

Lee Chung-Hsi further emphasized that the greatest impact of cross-domain collaboration lies in introducing new concepts and business models capable of changing existing healthcare paradigms.

"To compete globally, we must connect with international partners," added Zhang Jiayuan. He suggested that Taiwan's industries should adopt an international market mindset, striving to bring Taiwan into global markets. Lee Chung-Hsi agreed, likening the process to a relay race between Taiwan and international community.

Regarding the role of Taiwan government in this endeavor, Lee Chung-Hsi stated that regulations should facilitate industry development while considering patient welfare. Zhang Jiayuan believed that the government should shift from a regulatory role to one of facilitation, not only overseeing but also assisting industries in expanding beyond Taiwanese market.

Lee Chung-Hsi expressed a desire for amendments to Biotech and New Pharmaceutical Development Act to broaden its scope beyond new drugs to encompass new medical technologies such as cell therapy, gene therapy, precision medical diagnostics, and medical device. "Expanding regulatory support beyond new drugs, which carry high risks, will contribute to the overall development of medical industry."

Wang Zhihong recommended that the government establish clear rules and policies for industry-academia collaboration, encouraging cooperation between professors, physicians, and businesses while promoting transparency in collaboration. "The government should consider how to facilitate industry-academia collaboration without exposing investors to excessive risks."

(This article was published in August 2016 issue of "Global Biotech Monthly Magazine.")