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Medical Service & Healthcare

Industry:
Analysis & Investment
Opportunities

Department of Investment Services,

Ministry of Economic Affairs


Table of Contents

I.  Global Trends in Medical Service & Healthcare

Industry Development...................................................... 1 

(I) Demands Incurred by Aging Society and Baby Bust.............................2


(II) Advanced technology & know-how.......................................................3
(III) Promising potential for healthcare market .............................................4 

II.  The Status of the Medical Service & Healthcare

Industry in Taiwan ........................................................... 6 

(I) Supply & Demand ..................................................................................6


(II) Analysia of a Gap in the Industry Supply Chain, Investment Niche, and
Prospective Foreign Investors................................................................7
(III) Major Supplier in Taiwan.......................................................................9 

III. Optimum Investment Items for Foreign Investors...... 13 

(I) Taiwan is the optimal choice ................................................................13


(II) Investment Niches and Suitable Investment Categories........................15 

IV.  Successful Examples of Cross-Border Strategic

Alliances and Foreign Investment in Taiwan............... 16 

(I) Tunstall Group Ltd. ..............................................................................16


(II) Moscow Aviation Institute (MAI) ........................................................17 

V.  Industrial Investment Incentives .................................. 19 


VI.  Industry-Academia Collaboration in Taiwan ......... 22 
I. Global Trends in Medical Service & Healthcare
Industry
The phenomenon of senior-citizen and few-children trend has been
dominating many countries throughout the world. With the increasing chronic
diseases, the upgrade of information & communications technology (ICT)
and rapid development of physical measuring technology, aiding kit
technology and commercialized medical care equipment and facilities, the
industry and markets of medical service and healthcare have been growing by
leaps and bounds. The medical service and healthcare industry includes two
major categories, healthcare services and care-oriented medical devices. In
some cases, healthcare foods are included as well. In addition, as the
prevalent laws and regulations state, the distant-diagnostic medical care
services are still prohibited; the medical care businesses focus on hospitals
and clinics.

Scope of healthcare industry

Source: Industrial Technology Research Institute (ITRI), consolidated by this study.

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(I) Demands Incurred by Aging Society and Baby Bust

The trend of senior-citizen and few-children represents the striking


features of families in developed countries today. According to the definition
of the World Health Organization (WHO), a country will be defined as the
“aging-oriented society” if the number of senior citizens aged over 65
accounts for 7% or more of the populations. A nation is defined as the “aging
society” if the senior citizens aged over 65 account for more than 14% of the
populations, “ultra-aging-oriented society” if the senior citizens aged over 65
account for over 21%.

Forecast of population in Taiwan, by distribution of ages


Unit: %

Source: Council of Economic Planning & Development (CEPD), Executive Yuan (the Cabinet) ,
2006/6

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Japan, a developed country, is a typical example of senior citizens aged
over 65 account for 21.2% of the total population, way above the criteria for
ultra-aging society (March 2007). Other developed countries like Germany
and Italy represent aging society as well. Only the United States is yet to
meet such criteria. The senior-citizen and few-children phenomenon hits
Taiwan fiercely as well. As the Council of Economic Planning &
Development (CEPD), Executive Yuan (the Cabinet) estimated that in June
2006, the population of the elders aged over 65 would be up to 2.29 million,
about 10% of total population. By 2025, the ratio of senior citizen is expected
to hit 19.8%. On the other hand, the birth rate in Taiwan stays at the lowest
level around the globe. The total number of population is expected to drop in
2019, leaving mounting burden to the youth on supporting senior citizens.

(II) Advanced technology & know-how

In the digital high-tech era of the 21st century, home lifestyle has
undergone substantial change compared with the previous days. For instance,
the high usage rate of wire and wireless broadband networks, improved
technology & know-how of physical measuring and technology for food
processing, rapid advancement of care-oriented medical care aids/devices
have brought medical service and healthcare industry into application to
speed up the market development.

The major categories covered in the improved technology & know-how


include: Wireless Broadband Technology, e.g., application of RFID, Zigbee,
WLAN and GPS. Wire networks include optical fiber transmission for
application to deliver high solution patient databases into application. Other
aspects include battery development, new model material development and
applicationl.

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(III) Promising potential for healthcare market
1. Remote medical care services market in rapid growth

There are no complete statistical databases to verify the markets. But


some data have proven market growth at a fast pace. Take the global remote
medical care services market development for example. The market scale
amounted for US$850 million in 2006 and is expected to reach US$3.25
billion by 2010. The compound growth rate during 2006-2010 is believed to
rise to 39.8%. The key part contained in the services is managerial services
provided through information systems. The market was estimated to grow
from US$638 million in 2006 in the single item estimate to US$2.06 billion
by 2010.

Scale of remote medical care services of the world


Unit:US$1 million

Source: Juniper Research, consolidated by this study. 2008/1

2. Huge market scale of medical care services market

According to the official report by Ministry of Health, Labour and


Welfare, Japan’s, medical care services market was in a size of 5.66 trillion

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yen(approximately US$53.8 billion) in 2005. The major categories covered
in the care services include welfare kits for rental and for sale, healthcare,
rehabilitation, repair. In line with the gradual rise in the number of senior
citizens in Japan, the market size would reach 6 trillion yen in 2007.

The medical care services markets have been developing for years in the
United States and the Western Europe. All those countries are noted for their
huge scale of welfare system and aging society markets of medical care
services.

Scale of medical care industry in Japan


Unit: 100 million yen

60,000 55,221 56,582


50,653
50,000 46,261
40,884
40,000
32,291
30,000

20,000

10,000

0
2000 2001 2002 2003 2004 2005

Source: Juniper Research, consolidated by this study. 2008/1

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II. The Status of the Medical Service & Healthcare
Industry

(I) Supply & Demand

As estimated by IEK of Industrial Technology Research Institute (ITRI),


the markets of care-oriented medical devices and healthcare services in
Taiwan were in the scale of NT$92 billion in 2006, increase to NT$106.5
billion in 2007. The markets include the output value of healthcare services
of NT$54 billion, NT$28.35 billion on aids among care-oriented medical
devices, home care consumables and medicated furniture amounted to,
NT$11.55 billion, and monitoring medical devices, NT$12.6 billion. The
total output value by 2015 is estimated to increase to NT$416.5 billion.

Estimate of Taiwan’s medical service and healthcare industry by output value

Unit: NTD100 million

Source: IEK, Consolidated by this study. 2008/1

In an attempt to fulfill users’ maximum satisfaction, the suppliers often


introduce ICT technology to home care to satisfy the chronic patients’ needs
for care in the aging society. Through such efforts to care for chronic disease

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patients, they try to achieve the goals of reducing the costs for both inpatient
and outpatient cares.

Healthcare services can also be conducted by means of remote care. The


major care services include measuring and transmitting physical signals,
assessment and instructions of medication, life of remote area support and
services, provision of home healthcare information, positioning, report on
abnormalities and emergency rescue, reports on safety and security, search of
missing senior citizens, medication advice and reminder and dosage control.

Before we estimate the scale of medical care service industry, we are


normally required to ascertain the contents of required services before we
come to the amount of per capital continual expenditure which is to be
multiplied by the number of the target service population to come to the size
of the local markets. It might differ from the care-oriented medical devices.
In service industry, we normally calculate the size of the local markets which
are known as the output value of service industry. Such services will not be
exported until they attain to certain strength. Other than the services to the
local markets, to export medical care devices is the main goal. It, therefore,
calls for different approaches to estimate the output values.

(II) Analysis of a Gap in the Industry Supply Chain, Investment


Niche, and Prospective Foreign Investor

Taiwan’s care-oriented medical device industry primarily focuses on


development of home medical care devices, welfare devices or medicare
products, including aids, monitoring devices and home medicare products.
With significant efforts in years, Taiwan’s manufacturers have advanced
toward the products on the mid –and- high levels as the main target for export.
The related products include digital blood pressure meters, electric scooters,
ear thermometers, electric thermometers and respiratory first aid kits among

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others. In the future, such devices will be further developed for intellectual
and integrated functions.

Representative products manufactured in Taiwan 2007


Output value
Descriptions of Outputs Market share
Key manufacturers (million U. S.
products (thousand sets) of the world
Dollars)
Microlife, H&L, 7,500
Digital blood
Superior Medicine, (including made 220 46%
pressure meters
etc. in China)
Pihsiang, Merits Co.
Electric scooters 175 161 38%
Ltd., KYMCO, etc.
3,020
Ear thermometers Radiant, AviTA, etc. (including made 127 35%
in China)
30,000
Electric Microlife, Jiewei,
(including made 58 65%
thermometers Actherm, etc.
in China)
Respiratory first aid
Galemed, etc. 2,600 55 35%
kits
Blood sugar testing
ApexBio - 35 -
sheets/meters
Source: Taiwan Medical and Pharmaceutical Industry Technology and Development Center,
consolidated by this study, 2008/1

Taiwan has a great potential in medical service and healthcare industry,


including land, building, facilities, software (human resources, consultance,
service/management system). As for the niches on service industry, the aiding
kits for rental, intelligent medical monitoring service, repairing service
facilities, visiting care, daily service, room service, dietary / transportation
service, emergency notice service, day-time care, short-term care,
information provision service are all included. As for the investment
opportunities on facility provision, interior design, environment monitoring,

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medical facilities, safety and security system have the potential for
development.

The niches for investment on managerial services include financial


consulting, human resource management, facility management, land agency,
and marketing service. Besides, medical service and healthcare industry can
expand its business to Long Stay industry, providing services to the target
customers, the elders aged from 55 to 65.With the focus of health
management, life care and senior citizens’ recreation, not only foreign senior
citizens will possibly be attracted to live in Taiwan, but Taiwan can become
the center of providing integrated healthcare service in the Eastern Asia as
well.

With the era of aging society approaching, demands on medical service


and healthcare industry have escalated quickly. The best way for local
medical device manufacturers to connect to the global market lies in
cooperating with foreign potential companies through strategic alliances. The
foreign companies in medical service system include Card Guard on medical
facilities and monitoring service in Israel, P2P. on medical care system
development in Canada, Anritsu on medical information system development
in the United States, etc.

(III) Major Supplier in Taiwan

In Taiwan, the “Ten-year Project to Set up Long-term Care System” was


officially approved by the Executive Yuan (the Cabinet) in September 2006
as the flagship program. In the ensuing month, i.e., October 2006, the
Executive Yuan officially classified the healthcare as the newly emerged
industry for more development. In an attempt to speed up the development,
the Department of Industrial Technology, Ministry of Economic Affairs

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launched in 2006 the Senior Citizen U-Care Flagship Program. In 2007, it
further launched the Healthcare Innovating Service Program which was
newly added with life and entertainment innovation services and operating
programs, chronic disease management services, setup and planning of the
business operation systems. In the Healthcare Innovating Service Program
which is to be implemented in 2008, since then, lots of new contents
including safety and security protection systems, remote care services,
transportation, housing, recreation, wealth management education were
added in order to make the overall planning framework better and to meet the
substantial needs.

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Development of medical service and healthcare industry engineered by the
Ministry of Economic Affairs

Source: Department of Industrial Technology, Ministry of Economic Affairs

Among the government authorities, the units bestowed with the


responsibility to carry out the services in this Chapter include Ministry of
Economic Affairs, Ministry of the Interior, and Department of Health. In
2006, Department of Industrial Technology, Ministry of Economic Affairs
was in charge of implementation of medical service and healthcare services.
The results achieved through its promoting efforts include those enumerated
below: large-scale hospitals such as Chang Gung Memorial Hospital, Tian’s
Memorial Hospital, Missioncare Inc., Chia-Yi Christian Hospital, as well as

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Far Eastone Telecommunications Co, Ltd., Taiwan Secom Co., Ltd., RPTI
Interrnation Ltd. and a few others have teamed up with one another to set up
relevant service networks.

Fruits in implementation of the annual programs in medical service and healthcare


industry
Engineered by Program titles Co-sponsors
Chang Gung Memorial Superior Senior Citizen Medicare ---
Hospital Care Innovation Program
Taiwan Secom Co., Ltd. Healthcare Services Program for Chia-Yi Christian Hospital, Maya
Upgraded Online Blessing Lifestyle Information Co., Ltd., Cablesoft Tech
Inc.
Cardinal Tien Hospital Omnibearing and Comprehensive Netown Corporation, Angel Net
Senior Citizen Healthcare Universal Co., Ltd.
Network Program
Missioncare Inc. Non-institution Senior Citizen Care MiTAC-SYNNEX Group., ELAN
Service Platform Programs Microelectronics Corp., Visatac
International Co., Ltd., Health & Life
Co., Ltd.)
Yunlin Senior Citizens’ Program of Wireless Physical TaiDoc Technology Corp.
Society Monitoring System to be Used for
Diabetes and High Blood Pressure
Patient Home Care for Senior
Citizens
Z-Land Action Digital Information ---
Healthcare Services System for
Senior Citizens
RPTI Interrnation Ltd. Action Healthcare Services System PGD Taiwan, VODTEL
for Senior Citizens Communications, Inc., Universal
Technology Systems Inc., Hitron
Technologies, Inc.
Far Eastone Lead Planning for Remote ---
Telecommunications Co, Healthcare Demo Service Programs
Ltd.
Source: Department of Industrial Technology, Ministry of Economic Affairs

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III. Optimum Investment Items for Foreign Investors

(I) Taiwan is the optimal choice

Taiwan can provide better incentives for foreign investment on medical


service and healthcare industries as the following:

1. Government’s active attitudes toward the medical service and


healthcare industry

The concrete measures include: The U-Care industry specifically


encourages to develop care service systems through development
institutions/communities/homes or emergency rescue, chronic disease
management services and business operation systems, senior citizen lifestyle
and entertainment services & operating modes. Taking judicial (corporate)
person institutions as the infrastructural environment and platforms, it
encourages innovation of “omnibearing and comprehensive health services to
senior citizens.” The U-Care industry is intended to set up senior citizen care
and service systems in the short-term, to expand to cover chronic disease care
management & services in the mid-term and further to expand to cover
healthcare services in the long-term.

The development strategies include the guidance and encouragement to


the industries to invest in R&D. The U-Care industry will take advantage of
leading new products to help the participating firms minimize the risks in
R&D and to help guidance and promotion through intellectual medical care
electric products and medical care devices. Development of high added value
health management medical devices includes the U-Care efforts which will
promote association with information & communications technology to
develop products toward tiny-sized, wireless, home-oriented and e-oriented
inspection trends to develop medical devices of high added values. It will

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also make use of remote healthcare services to develop Class II, the
innovating medical devices at a higher level.

2. Shaping of industrial chains

In terms of the status quo of Taiwan’s medical service and healthcare


industry chain development, with the support and promotion from
government, more and more local investors have joined in. At the moment,
Taiwan’s medical service and healthcare industry chains have gradually come
into being.

Taiwan Secom Co., Ltd., for instance, has teamed up with hospitals,
information system platforms as well as software manufacturers. Tian’s
Memorial Hospital has associated itself with care services and network firms.
Min-Sheng General Hospital has been in cooperation with the information,
electronic and medical device manufacturers. Other institutions like National
Taiwan University Hospital, Chang Gung Memorial Hospital and Mackay
Memorial Hospital have expanded into the remote care related services as
well. The overall industrial chains might have not come into being. But
potential and opportunities are definitely there.

3. Strength in terminal product manufacture

Taiwan is taking the leading position in care-oriented medical device


development, in particular digital blood pressure meters, blood sugar meters,
electric scooters, ear thermometers, electric thermometers, respiratory first
aid kits, air cushion respiratory therapeutic devices, physical monitors, in the
global markets. In the future, government will continue to put resource to
invest in the industry, and the manufacturers in turn will gain significantly
competitive edges in technology & know-how and product development.

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(II) Investment Niches and Suitable Investment Categories

Driven by the long-term advantages and competitive edges, Taiwan has


taken rapidly large share of the medical service and healthcare markets
around the world. In Asia, notably, Taiwan is widely recognized as the center
of healthcare industry. Taiwan has completed relevant deployment plans and
is believed to have great potential of development beyond 2008. In 2010,
Taiwan will become the experimental laboratory for remote medical care in
Asia. Following the mode where Taiwan has successfully built medical care
industry with added values and industrial chains, Taiwan is regarded as
capable of transplanting or duplicating the medical care related products,
business models, application services to the Asian neighbors first and then to
world.

At present, Taiwan is comparatively more competitive in care-oriented


terminal products but still calls for supports from large-scale foreign
counterparts in the aspects of biochips, core service system integration, test
equipment and facilities. In Taiwan, the areas of commercial models and
application services are optimal to investors as well.

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IV. Successful Examples of Cross-Border Strategic
Alliances and Foreign Investment in Taiwan

(I) Tunstall Group Ltd.

Tunstall was incorporated in 1957 and is headquartered in Yorkshire,


England. The entire Europe has long been the leading providers of solutions
to individual and home security as well as response center systems. Tunstall
has rendered technological support to 30 countries throughout the world.
Tunstall set up Marketing Division in Australia in 1992 and established the
Emergency Response Center in Brisbane in May 2001. Since October 2002,
Tunstall’s nationwide emergency response center has been in sound
performance in Tauranga as one of the response service centers serving New
Zealand with the largest workload. Tunstall set up its Southeast Asian
response division in Malaysia in January 2007, as the only and sole
emergency response center of the entire Malaysia, rendering hands-on
support to the markets in Malaysia, Singapore and Brunei. At the moment,
Tunstall is operated by a total of 1,100 employees, serving over 2.5 million
patients through remote care systems.

Tunstall established Tunstall Taiwan Co., Ltd. in July 2007 through


which Tunstall introduced to EverCare remote home care systems. Having
witnessed Taiwan government’s efforts focusing on the problems resulting
from the fast-growing number of senior citizens, Tunstall has landed in
Taiwan and as its bridgehead before entering in other key markets in
Asia-Pacific Region gradually into Japan and China. In Phase I, Tunstall
will team up with the Evergreen Association to help its members with home
care services. In January 2008, the care systems developed by Tunstall were
officially adopted by the Vocational Advisory Commission for Retired
Servicemen of the Executive Yuan (the Cabinet) which installed the systems
into more than one thousand homes of the retired servicemen in remote areas.
Thanks to the advanced Tunstall care systems, the government has made

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support and rescue readily available to the retired servicemen whenever they
are in an emergency or in other needs.

(II) Moscow Aviation Institute (MAI)

Moscow Aviation Institute (MAI) started to work in collaboration with


Industrial Technology Research Institute (ITRI) as early as in 2002. Together
they successfully developed the “Next-Generation Physiological Monitoring
Technology”. In 2004, they further expanded the scale of cooperation and
began to develop the “Ultra Wideband Non-Contact Breathing and Heartbeat
Monitoring Technology”. Through the “Ultra Wideband Physiological
Sensing Strategic Alliance”, the collaborative effort was accelerated in order
to set up product specification standards and to extend the scope of industrial
application and establish innovative businesses.

In May 2007, MAI and the Center for Measurement Standards/ITRI


successfully co-developed the “Ultra Wideband Non-Contact Breathing and
Heartbeat Monitoring Technology”. This new technology enables the
measurement of breathing and heartbeat in a non-contact way, and is now
going for trial production. As the wireless technology is used, no physical
contact with the patient is required throughout the entire measuring process.
A monitoring system placed within 1 meter by the patient, can measure the
patient’s physiological data such as breathing, number of heartbeats and
blood pressure by low-power pulsating radio waves. The data is then
transmitted and recorded in a computer through ultra wideband network.
With the advantages of easy operation and maintenance, the technology will
be mainly applied in remote home healthcare and may become a
representative high-end product in the medical care market in the future. MAI
has already joined the “Ultra Wideband Physiological Sensing Strategic
Alliance” that ITRI established in 2007. For now and the future, MAI will

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assist the industry players in Taiwan to enter into the global medical
electronics market worth as much as NTD60 billion.

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V. Industrial Investment Incentives
In a bid to facilitate the rapid development of the Healthcare industry,
the Taiwan Government offers a variety of investment preferences, such as
tax preference, R&D subsidies, low-interest loan, personnel training, etc. to
asssist Healthcare industry players and to attract foreign investments.

Investment Preferences Offered by Taiwan Government


Benefits Measures Contacts
Tax ※ Emerging important strategic industry Ministry of Economic Affairs
(Investment tax credit for shareholders http://www.moeaidb.gov.tw
or 5 year tax free) E-mail: service@moeaidb.gov.tw
※ Personnel training expenditure Tel: +886-2-2754-1255
(business income tax credit based on
35% of the training expenditure of the
same year)
※ R&D expenditure (business income
tax credit based on 35% of the R&D
expenditure of the same year)
※ Accelerated depreciation of facilities
(maximum depreciation period: 2
years)
※ Tax credit for the purchase of facilities
and technology investment.
※ Tax-free import facilities
※ Income tax free for technology transfer
or technology cooperation.
※ Preference for the establishment of
operation headquarters.

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R&D ※ Industrial Technology Development Department of Industrial
Subsidy Program(ITDP) Technology, MOEA
※ Small Business Innovation Research http://doit.moea.gov.tw/
Program(SBIR) Tel:886-2-2321-2200
※ Industrial Technology Development
Alliance Program(ITDAP)
※ Strategic Service-Oriented Industry
R&D Program(SRD)
※ Information Technology Applications
Program(ITAP)
※Industrial Technology Innovation
Center Program for Local Enterprises
(MNCD)
※Industrial Technology Innovation
Center Program for Foreign Enterprises
(MNCF)
※Leading Innovative Product Industrial Development Bureau,
Development Program MOEA
※Enterprise R&D Alliance Program http://www.moeaidb.gov.tw
※Enterprise Operation Headquarters E-mail:service@moeaidb.gov.tw
Service solution@moeasmea.gov.tw Tel:886-2-2754-1255
Low-Interest ※Industrial R& D Loan Ministry of Economic Affairs
Loans http://www.moeaidb.gov.tw
E-mail:service@moeaidb.gov.tw
Tel:886-2-2754-1255
※Low-Interest Loans for Mid- and Council for Economic Planning and
Long-Term Capital Development, Executive Yuan
http://www.cepd.gov.tw/
Tel:886-2-2316-5300
※Project Loans for Small and Medium Small and Medium Enterprise
Enterprise Administration, MOEA
http://www.moeasmea.gov.tw
E-mail:solution@moeasmea.gov.tw
Tel:886-2-2368-6858

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※Bank Draft and Loan Preferences for National Development Fund,
Development Fund, Executive Yuan Executive Yuan
http://www.df.gov.tw/
E-mail:df@df.gov.tw
Tel:886-2-2389-0633
※Low-Interest Loans for Science Parks Science Park Administration
http://www.sipa.gov.tw/
Tel:886-3-577-3311
Personnel ※International Experts Recruitment HiRecruit Services
Training http://hirecruit.nat.gov.tw/
E-mail:hirecruit@taitra.org.tw
Tel:886-2-2370-9687
※Military Training Service Application Military Training Project Office
http://rondi.mnd.gov.tw
E-mail:mndsys@iii.org.tw
Tel:886-2-2736-8088#3414
※R&D Substitute Service R & D Substitute Service Program
Office, Ministry of t he Interior
http://rdss.nca.gov.tw
E-mail:rdss@mail.nca.gov.tw
Tel:886-2-2736-6066#206
Source: organized for the present study, 2007/12

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VI. Industry-Academia Collaboration in Taiwan
Integrating the efforts from the government, private sector and industry
associations, Taiwan is actively pushing forward the development of the
Healthcare industry.

Cooperating Institutions for the Development of Healthcare Industry in Taiwan

Institution Website
Industrial Development Bureau, MOEA www.moeaidb.gov.tw
Department of Industrial Technology, MOEA www.doit.moea.gov.tw
Department of Investment Services, MOEA www.dois.moea.gov.tw
Committee of Communication Industry Development, www.communications.org.tw
MOEA
Department of Health, Executive Yuan www.doh.gov.tw
Taiwan External Trade Development Council www.taiwantrade.com.tw
Taiwan Electrical and Electronic Manufacturers’ www.teema.org.tw
Association
Industrial Technology Research Institute www.itri.org.tw
Institute for Information Industry www.iii.org.tw
Telecom Technology Center www.ttc.org.tw
Source: organized for the present study, 2007/12

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