South Korea Launches Second Pharma Development Fund
This article was originally published in PharmAsia News
Executive Summary
South Korea’s Ministry of Health and Welfare is launching its second ‘Global Pharma Industry Development Fund’ worth KRW135 billion ($124 million) to help small and mid-sized local firms with cooperative technology development, deals with foreign venture firms, sales networks and production facilities in foreign countries, and global clinical trials.
SEOUL – The fund has been established mainly to help cash-strapped mid-sized pharma ventures with their drug development programs. The new money, which will be mostly made available to cash-strapped firms armed with potential development pipelines, in common with the ministry's first round in 2013, will be also used to establish advanced manufacturing standards such as EU-GMP and cGMP, the ministry said.
"The second fund will be invested and managed for the coming eight years for Korean pharma companies to be selected for the use of the fund," the ministry told PharmAsia News. "Three or four pharmas will be selected within this year, and a total of KRW60 billion will be invested into them."
To establish the second fund, the ministry has injected KRW20 billion, while the remaining KRW115 billion was raised from the Korea Development Bank, Korea Investment Partners, Korea Investment and Securities and Industrial Bank of Korea, according to the ministry.
The first such fund was launched in 2013 with a total of KRW100 billion, which was invested in six South Korean biopharma ventures including Genexine, NeoImmune Tech, CrystalGenomics Inc., DiNonA Inc., LegoChem Biosciences and medical device firm Corenter.
Except NeoImmune Tech and DINONA, the other four are listed on South Korea’s second-tier, tech-oriented KOSDAQ stock market, in common with the country’s biopharma frontrunner Celltrion Inc.
Previous Selections, Strategy
In 2012, South Korea began to select drug companies it would help with financial and tax incentives. CrystalGenomics was among the "43 innovative companies" the country selected that year to provide with incentives to spur research and development activity.
The 43 companies were named after a close review of their R&D resources, including production facilities, R&D innovativeness, technical strengths such as drug patents, out-licensing and management transparency (Also see "Korea’s Health Ministry Selects 43 Innovative Companies For Tax/Funding Benefits" - Scrip, 20 Jun, 2012.).
The selection of the 43 firms came after South Korea had named in 2009 biologics, medical devices and global health care as among its national strategic development priorities in the years ahead (Also see "Korea Targets Biologics, Devices, Health Care Among Economic Growth Projects For Next Decade" - Scrip, 16 Jan, 2009.).
The health ministry said it pushed for the second round fund as the paradigm of South Korean pharma is switching from a focus on consumption in the local market to an expansion in global markets, as seen in the number of recent deals to supply products to international markets.
In early 2014, Boryung Pharmaceuticals Co. Ltd. signed a deal potentially worth $76 million to license Chinese rights for its angiotensin receptor blocker Kanarb (fimasartan) to Harbin Gloria Pharmaceuticals Co. Ltd.Harbin Gloria was to pay $5.4 million upfront, with the remainder of the $76 million available in potential milestone payments (Also see "Korea’s Boryung Licenses Hypertension Therapy Kanarb To China’s Harbin Gloria" - Scrip, 14 Jan, 2014.).
South Korean pharmas have also begun to strike deals to sell their products outside the country, although they are not ready to move onto the markets such as the U.S. and Europe (Also see "Boryung Pharma And Fellow Korean Firms Sign A Handful Of Overseas Deals – Bio Korea 2013" - Scrip, 17 Sep, 2013.).
Biosimilars
Celltrion is the most active in making inroads into the U.S. and European markets with its biosimilars, and is now moving to sell Remsima, its biosimilar version of Johnson & Johnson‘s Remicade (infliximab), in 12 more European countries beginning February (Also see "Celltrion To Launch Biosimilar Remicade in More European Countries" - Scrip, 9 Feb, 2015.).
More and more South Korean companies are now moving beyond traditional chemical drugs to biosimilars, backed in part by the government drive for products that can compete in global markets such as the U.S. and Europe. Frontrunner Celltrion is followed by other firms such as Samsung BioLogics and LG Life Sciences Ltd. (Also see "Charting Biosimilars In Korea" - Scrip, 17 Oct, 2013.).
However, another firm - Hanwha Chemical Corp., an affiliate of South Korea’s large Hanwha Group - seems to be stepping back from the biosimilar business after Merck & Co. Inc. terminated in December 2012 a 2011 licensing deal with Hanwha for an Enbrel (etanercept) biosimilar (Also see "Celltrion To Launch Biosimilar Remicade in More European Countries" - Scrip, 9 Feb, 2015.).
In the broader landscape, the South Korean government is moving to encourage domestic pharma firms to generally invest more in research and development by providing state money to support this shift towards innovation. In 2010, nine ministries including the health ministry said they would create a KRW2 trillion R&D fund to help local pharma companies develop globally competitive new drugs (Also see "Korean Government Announces Joint Fund To Beef Up Local Pharma Industry" - Scrip, 10 Feb, 2010.).