Friday, September 23, 2005

 

Uncompetitive Pricing Practices of Taiwan INER

1. INER is a government agency. Therefore it enjoys many advantages over private companies when conducting business activities. For example, it does not need to pay various taxes, including income tax (25%) and sales tax (VAT, 5%). These all affect the customer prices.

2. Being a government agency, INER receives huge funding from central government each year. It is very likely that part of the government funding is used to subsidize their business activities, both directly and indirectly. This is a violation of the WTO agreements regarding subsidies.

3. INER does not have a pricing policy based upon cost analysis. It simply surveys the market prices of competitors and undercuts them. One of INER’s major products is Tl-201. They started selling this product in 2003. At that time the market price was around NT$950~1000 per mCi (a radioactivity unit), they undercut the market price by offering NT$900 average per mCi. Since then INER has kept dropping their prices to block out competitions and their price is now around NT$600. This price is even below our acquisition price from Bristol-Myers Squibb.

4. INER is a subsidiary of Atomic Energy Commission (AEC), which regulates radiation safety affairs in Taiwan. GMS’s radiopharmacies, in respect of radiation safety issues, is supervised by AEC. This is an unfair situation as competitors will worry any fierce confrontation with INER will get themselves into trouble with AEC. We do not think under this structure that INER should be engaged in any business activities.

 
Uncompetitive pricing practices of INER of Taiwan

1. INER is a government agency. Therefore it enjoys many advantages over private companies when conducting business activities. For example, it does not need to pay various taxes, including income tax (25%) and sales tax (VAT, 5%). These all affect the customer prices.

2. Being a government agency, INER receives huge funding from central government each year. It is very likely that part of the government funding is used to subsidize their business activities, both directly and indirectly. This is a violation of the WTO agreements regarding subsidies.

3. INER does not have a pricing policy based upon cost analysis. It simply surveys the market prices of competitors and undercuts them. One of INER’s major products is Tl-201. They started selling this product in 2003. At that time the market price was around NT$950~1000 per mCi (a radioactivity unit), they undercut the market price by offering NT$900 average per mCi. Since then INER has kept dropping their prices to block out competitions and their price is now around NT$600. This price is even below our acquisition price from Bristol-Myers Squibb.

4. INER is a subsidiary of Atomic Energy Commission (AEC), which regulates radiation safety affairs in Taiwan. GMS’s radiopharmacies, in respect of radiation safety issues, is supervised by AEC. This is an unfair situation as competitors will worry any fierce confrontation with INER will get themselves into trouble with AEC. We do not think under this structure that INER should be engaged in any business activities.

 

BetterMedWisdom Consulting, Ltd.

BetterMedWisdom Consulting, Ltd
百邁威管理顧問有限公司

Chairman: Li-ren Chang, Ph.D.
董事長 張立人 博士

Headquater:

Akara Bldg.
24 De Castro Street
Wickham Cay 1
Road Town, Tortola
British Virgin Island

M-phone: (+886) 936 073 373
E-address: lr.chang@msa.hinet.net


San Francisco Office:

20819 Dunbar Drive
Cupertino, Ca 95014
U.S.A.

Tel: (+1) 408 888 0098
Fax: (+1) 408 253 3201


Hong Kong Office:

Rm 8, Bk A, 4/F, Manning Ind. Bldg.
118 How Ming Street, Kwun Tong, Kln, H.K.
香港 九龍 廣東道 豪明街118號
萬寧工業大廈A棟四樓8室

Tel: (+852) 2736 7372
Fax: (+852) 2736 8895


Taipei Office:

11/F, 237 Fu-Shing S. Road, Sec. 1
Taipei 10666, Taiwan, Republic of China
中華民國 台灣省 台北市10666
復興南路一段237號11樓
Tel: (+886) 2 2702 9466
Fax: (+886) 2 2703 1133

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