The local pharmaceutical industry is increasingly seeking “open innovation,” through which drugmakers form a partnership with startups to earn new technologies and ideas for drug development. Various ways of large pharmaceutical firms’ capital investment in biotech startups could vitalize the pharmaceutical sector’s growth, industry officials said.

Boryung Pharmaceutical on Monday established Boryung D:HealthCovery, a fund to support digital healthcare startups, and decided to invest 1 billion won ($843,455) in the fund. D:HealthCovery is a coined term combining “digital healthcare” with “discovery.” Collaborating with The Invention Lab, a private startup accelerator, Boryung Pharmaceutical plans to discover and support early-stage digital healthcare startups, the company said.

Earlier in July, Boryung said it would invest 2.4 billion won in U.S. healthcare companies through a corporate venture capital by Hayan Health Network, Boryung’s U.S. subsidiary.

“Besides the investment, we will provide startups with opportunities to do business with Boryung’s affiliated firms, support their advancement of business skills, and help them connect to our healthcare networks. By doing so, we will seek joint growth with startups,” an official at Boryung Pharmaceutical said.

In May, Kwangdong Pharmaceutical made an additional 8 billion won in a bio investment fund established last year. The company invested 20 billion won to set up venture capital, KD Investment, in May last year.

Another firm acquired a biohealth-specialized venture capital, rather than directly establishing one.

Vivozon acquired a 100 percent stake of IHU Investment, a venture capital investing in biotech firms, in July. IHU Investment has been investing in LabGenomics, OliPass, Remed, and Rayence.

Hugel is incubating a startup through a government program.

The company renewed its TIPS program, which started in 2017. Short for Tech Incubator Program for Startup, TIPS is a program run under the Ministry of SMEs and Startups that helps startups receive investments from TIPS partners. A designated TIPS partner can provide legal counseling, a business site, and research equipment lending for a venture firm in the biotech sector.

TIPS partners can decide whether to review the partnership after three years of business. Hugel, designated as a TIPS partner in 2016, started to operate the TIPS program in 2017. After completing the first TIPS program in 2019, the company renewed the partnership in early 2020.

Open innovation activities are promising because they can stimulate a virtual cycle of technologies and capital in the pharmaceutical and biotech sectors, observers said.

“Some (biotech) firms with good technologies have to shut down the business because they fail to secure capital,” an industry official said. “Various forms of investments will have a positive impact on the entire industry.”

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