The Korean government and businesses are going to great length to promote biotechnology and pharmaceutical industries as the nation’s new growth engine.

Policymakers are pumping out administrative supports and industrialists are responding with sharply increased spending on research and development to develop new drugs, business watchers said Wednesday.

The Seoul government has high expectations on bio-pharmaceutical sectors. Nothing shows this better than its slogan of “entering into the ranks of G7 in drug-making.” It was in 2012 that Seoul set out to develop bio-pharmaceutical sector by legislating “Special act on fostering and supporting pharmaceutical industry.”

The following year, officials announced the “first five-year master plan to develop pharmaceutical industry,” putting forth 13 promotional strategies and 41 action plans in the areas of R&D, loans and investment, workforce training, overseas advance, and infrastructure.

More specifically, these called for, among others, redoubling the share of pharmaceuticals in total R&D outlays, creating 500 billion-won ($431-million) fund for fostering global pharmaceuticals, tax incentives for expanding R&D investment, support for overseas investment and advance abroad, enhancing workforce specialized in developing new drugs.

In 2016, the government came up with additional policy supports, including greater tax breaks for candidate substances and clinical tests related to developing new medicines, the creation of a 150 billion won fund for similar purposes and extending tax exemptions for three more years for capital spending on improved quality controls of medicinal products. Separately, the Ministry of Health and Welfare has poured 1.74 trillion won into developing new drugs between 2008 and 2014.

Korea still has a long way to go before joining the G7 in drug making, but these investments have borne fruits, as seen by the growth of medicine exports and increased development of new drugs.

The exports of medicine and medical supplies jumped from 2.3 trillion won in 2012 to 3.3 trillion won in 2015. Since 2013, the domestic pharmaceutical firms have developed eight new drugs, including Hanmi Pharm’s Olmutinib, and made 30 technology transfers to foreign companies on the stage of the candidate substance for new drugs.

The government is set to push ahead with this accomplishment with the “second five-year master plan,” which will go into effect next year, officials said.

Chemists are experimenting with drug substances at a research-focused hospital in Seoul.

Businesses step up efforts to develop new drugs

Encouraged by the government’s support, the domestic pharmaceutical firms have shifted their focus from generic to new drugs and made significant accomplishment, too.

The nation’s bio-pharmaceutical industry has a history of more than 100 years, but it was only three decades ago that the sector began to concentrate on developing new drugs. The first new drug developed by the domestic makers was Sunpla, an anticancer drug developed SK Chemical in 1999. The nation has since developed 27 new drugs, an average of 1.6 new drugs a year.

They are also breaking the negative perception that the Korean new drugs are only for use by domestic consumers. Since 2013, the Korean makers have begun to put forth new drugs recognized by large U.S. and European markets. Starting with LG Chem’s antibiotic Factive Tab in 2013, a slew of Korea’s new drugs have won clearance from the U.S. Food and Drug Administration for marketing in American market, including Dong-A ST’s antibiotic Sivextro Tab (2014), Celtrion’s arthritis treatment Remsima (2016), and SK Chemical’s antihemophilic Afstyla. Celtrion’s Remsima, the world’s first biosimilar product, has been sold in the U.S. market since 2016.

Among drugs approved by the European Medicines Agency are Remsima in 2013, Shin Poong Pharm’s malaria cure Pyramax Tab (2015), Samsung Bioepis’ autoimmune disease treatments of Flixabi and Benepali (2016), and SK Chemical’s Afstyla and Samsung Bioepis’ diabetes drug of Lusduna (2017).

Korea’s drug-developing technologies have also won global recognition. An increasing number of multinational pharmaceuticals are showing interests in candidate substances for new drugs developed in Korea, leading to technology exports. Hanmi Pharm, for instance, signed tech export contracts worth 7 trillion won with Sanofi-Aventis and Janssen in 2015 and 2016, respectively. In December, Abbvi made a $525-million contract (milestone included) with Dong-A ST to buy MerTK inhibitor, a candidate substance for an anticancer drug developed by the Korean company.

The ongoing trend has worked to stimulate the R&D investments by Korean bio-pharmaceutical companies.

At the center of the latest zeal are “innovation-oriented” drug makers certified by the Korean government. The Health-Welfare Ministry introduced the system in 2013 to promote the domestic pharmaceutical industry, providing preferential treatments in pricing, taxation, regulation, policy loans, and human resources support.

The government has designated 47 companies as innovative makers, which made combined R&D investment of about 1 trillion won last year and planned to ratchet up spending by 21 percent to 1.2 trillion won this year.

The thirst for new drug development has also led to the growth of bio ventures. The investment into bio ventures, which stood at 93.3 billion won in 2011, rocketed to 468.6 trillion won in 2016. Among them is the 38.8 billion won fund for bio startups created by the Ministry of Trade, Industry and Energy.

pkt77@docdocdoc.co.kr

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