 | |
|
Why South Korea’s Booming Bio-Manufacturing Sector Still Lags Behind in Global Pharma Innovation
Despite rapid growth over the past decade, South Korea’s biotech industry is facing criticism for falling behind in the global race for high-value pharmaceutical innovation. The numbers speak for themselves: the U.S. currently boasts 34 blockbuster drugs, while South Korea has none.
📈 Manufacturing Power vs. Innovation Deficit
Over the past ten years, Korea’s "K-bio" sector has grown rapidly, largely focused on “Red Bio”—the fusion of life sciences and medical technology. Leveraging its strengths as a manufacturing powerhouse, Korea quickly moved into producing biosimilars and generic drugs once global patents expired.
The sector also expanded through contract development and manufacturing (CDMO), producing drugs for global pharmaceutical giants. Industry leaders like Celltrion and Samsung Biologics have ridden this wave of outsourcing.
Korea's major listed biopharma firms saw revenue grow 2.8x over the past decade, outperforming China (1.8x), the U.S. (1.6x), and Japan (1.2x). However, their overall R&D spending remains alarmingly low, raising questions about the country’s true competitiveness in high-value drug development.
📉 PwC Rankings: Korea Still a “Bio Underdog”
A recent PwC global biotech competitiveness index put Korea at 14.7 points, falling behind not just the U.S. (21.7) but also China (16.3) and Japan (15.2).
This score reflects key criteria such as:
Life sciences citations
Number of researchers per capita
Clinical trial infrastructure
Regulatory agility
Industry ecosystem
Access to capital
Korea did rank highly in clinical trial infrastructure, thanks to its "Big Five" hospitals. But its startup ecosystem and cluster efficiency scored among the lowest. Few bio-healthcare startups and underdeveloped bio-clusters continue to hamper innovation.
Chronic Underfunding in R&D and VC
One of Korea’s biggest weaknesses is funding. The U.S. top 10 pharma companies invested over $102.9 billion in R&D last year. Korea? Just $900 million—less than 1% of the U.S. figure. Even Israel (with a smaller economy) outspent Korea at $1.2 billion.
Biotech makes up just 9% of Korea's government R&D budget, compared to over 20% in the U.S. and China.
Venture capital (VC) activity tells a similar story. Over the past five years:
U.S.: $199 billion
China: $73 billion
Europe: $66 billion
South Korea: only $6.6 billion
🧬 Zero Blockbusters, Zero Global Impact?
The investment gap directly affects real-world outcomes. According to PwC:
Europe has 36 blockbuster drugs (>$1B annual revenue)
The U.S. has 34
Japan has 3
China has 1
South Korea has 0
This stark absence raises alarm bells about Korea’s long-term competitiveness. Industry experts argue that a massive policy and funding shift is urgently needed to move toward first-in-class drug innovation.
Expert Opinions: Change is Critical
Patrick Horber, President of Novartis International, noted:
“Only 13% of drugs in Korea are innovative. The rest are generics or biosimilars. The Korean government must be willing to pay more for innovation.”
He warned that without stronger incentives and investment:
“Korea’s pharmaceutical industry won’t grow as fast as expected.”
Regulatory Reform & IPO Flexibility Needed
Industry voices are also calling for reform in Korea's IPO requirements, especially around Tech-special listing rules. Developing a single blockbuster drug often takes over $1 billion and more than a decade.
Because of their high R&D costs, biotech firms often fail to meet the "operating profit" conditions required to stay on the KOSDAQ. Analysts say that excluding R&D costs from profit-loss calculations could prevent promising biotech firms from being delisted or penalized.
A KIPO (Korean Intellectual Property Office) examiner even suggested:
“For biotech designated as a national strategic technology, fast-track approval points from the MFDS (Korea’s FDA) could significantly boost competitiveness.”
What Needs to Happen Next?
South Korea has proven itself a global leader in biomanufacturing—but that’s no longer enough. Without bold government support, investment incentives, and regulatory reform, the country risks staying stuck as a “factory for global pharma” rather than becoming a true biotech innovator.
To rise from a bio middle-power to a global biotech leader, Korea must now make a strategic leap—from manufacturing to discovery.
No comments:
Post a Comment