In Search of an Innovative State: The Development of the Biopharmaceutical Industry in Taiwan, South Korea and China Jenn hwan Wang, Tsung-Yuan Chen and Ching-Jung Tsai ABSTRACT Recent developments in the biopharmaceutical industry in Taiwan, South Korea and China bear witness to the transformation of these states in nurtur- ing an innovation-based industry. This article argues that the segmentation of the value chain of the biopharmaceutical industry has provided indus- trializing 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 incre- mental 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. INTRODUCTION As a representation of the knowledge-based economy, biotechnology has become one of the priorities that both developed and developing countries have been pursuing to advance their economic growth. Among the many different sectors within biotechnology, the biopharmaceutical industry is The funding for the research on which this paper is based was provided by the National Science Council of ROC (97-2410-H-004-077-MY3) and Top University Grant of National Chengchi University, Taiwan. The authors would like to extend their gratitude to Joseph Wong, Doug Fuller and three anonymous reviewers for their comments and suggestions. Development and Change 43(2): 481–503. DOI: 10.1111/j.1467-7660.2012.01769.x C  2012 International Institute of Social Studies. Published by Blackwell Publishing, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main St., Malden, MA 02148, USA