Korea 2018 Review: Hopes And Worries Coexist In Pharma Sector
Executive Summary
As the year end approaches, Scrip wraps up what major events made headlines in the South Korean pharma/biotech sector in 2018.
When we look back on this year, 2018 was full of events that raised both hopes and concerns in the South Korean pharma/biotech industry, ranging from hefty cross-border licensing deals to a major accounting dispute at Samsung BioLogics.
While the biggest wider news in the country this year may be the seemingly warming relationship with North Korea, in the pharma sector the biggest headline was financial authorities’ finding of “intentional” accounting violations at Samsung BioLogics, which the company repeatedly denied and took legal steps to prove its innocence.
After repeated reviews, financial authorities deemed the company had “intentionally” breached accounting standards involving its shareholding in Samsung Bioepis Co. Ltd. over the 2012-14 period, which resulted in over-stated profits in 2015, and imposed punitive measures such as fines and recommended dismissal of the CEO, as well as asking prosecutors to formally probe the company and CEO.
The company avoided the delisting of its stock from the Korea Exchange, which decided to maintain the listing given the need for business continuity and financial stability. (Also see "Samsung BioLogics Vows Improved Management Transparency As Stock Resumes Trade" - Scrip, 11 Dec, 2018.) However, it is still facing a court battle and prosecutors’ probe into the case.
Local media reported that prosecutors have raided the headquarters of Samsung BioLogics, Samsung Bioepis, and Samsung C&T Corp., which is the largest shareholder in Samsung BioLogics, as well as accounting firms which handled the accounting of Samsung BioLogics, to secure accounting data relevant to the case.
Moves To Harmonize, Improve Transparency
In a broader move, financial authorities have tightened their grip on accounting practices in the pharma/biotech sector by examining companies’ R&D cost-related accounting, to harmonize the sector’s accounting practices with global trends. (Also see "Korea To Examine Companies' R&D-Related Accounting For Transparency" - Scrip, 31 Jan, 2018.)
The authorities also unveiled supervisory guidelines to ease uncertainties over accounting practices related to R&D costs, and improve transparency in the sector. (Also see "Biosimilar Firms Main Beneficiaries Of Korea R&D Cost Accounting Changes?" - Scrip, 25 Sep, 2018.)
In addition, authorities also moved to improve public disclosures by pharma/biotech companies of key information on clinical development, following a stock price rigging scandal involving a local bioventure Nature Cell. (Also see "Korea Toughens Corporate Disclosure Rules To Improve R&D Transparency " - Scrip, 20 Aug, 2018.)
Multiple Major Licensing Deals
Cross-border licensing-out deals by South Korean companies, particularly by biotechs, have increased this year, and were also in more diverse disease areas.
[Yuhan Corp.]’s license and co-development agreement with Janssen Biotech Inc. for the South Korean company's novel third-generation EGFR tyrosine kinase inhibitor lazertinib marked the biggest deal value this year, totaling $1.25bn plus double-digit sales royalties. (Also see "Yuhan Strikes Long-Awaited Lung Cancer Deal Through Huge Janssen Alliance" - Scrip, 5 Nov, 2018.)
Among biotechs, iNtRON Biotechnology Inc. reached a global licensing agreement worth $667.5m with Roivant Sciences GMBH for SAL200, a novel investigational biologic under development by the South Korean venture for the treatment of infectious diseases caused by antibiotic-resistant staphylococci. (Also see "Roivant Buoys Anti-Infective Portfolio With Novel iNtRON Asset" - Scrip, 21 Nov, 2018.)
ABL Bio Corp. meanwhile signed a $595m out-licensing agreement with US-based TRIGR Therapeutics Inc. for ABL001, a bispecific antibody candidate targeting two angiogenic factors VEGF and DLL4, in oncology and ophthalmology.
Kolon Life Science Inc., whose earlier deal with Mitsubishi Tanabe Pharma Corp. collapsed last year, reached a $591.7m license deal with Mundipharma for the development in Japan of the South Korean company’s first-in-class cell and gene therapy for osteoarthritis of the knee, Invossa (TC-C; tonogenchoncel-L).
There were also some sizable acquisitions by South Korean companies. Kolmar Korea became the new owner of CJ HealthCare Corp., the pharma affiliate of CJ Group, in an acquisition deal valued at KRW1.31tn ($1.21bn), enabling the cosmetics and pharma company to transform into a larger and more integrated healthcare firm. (Also see "Kolmar Korea Eyes Pharma Expansion Via CJ HealthCare Acquisition" - Scrip, 21 Feb, 2018.)
SK Group acquired 100% of California-based, rapidly growing AMPAC Fine Chemicals, raising the South Korean conglomerate’s CDMO manufacturing capacity to about one million liters. (Also see "SK Acquires AMPAC, On Track To Meet Global Contract Manufacturing Ambitions" - Scrip, 16 Jul, 2018.)
Pharmas have also increasingly sought an open innovation approach to R&D. GC Pharma, formerly known as Green Cross Corp., and Yuhan Corp. agreed to join hands to develop orphan drugs and potentially other indications in a rare cooperative move by leading Korean pharma firms. (Also see "GC-Yuhan Orphan Alliance Signals Changing Korean Views On Open Innovation" - Scrip, 21 Jun, 2018.)
Biosimilar Firms Pursue Diverse Strategies
In the country's highly successful biosimilars sector, South Korean companies began to feel intensifying competition in the global biosimilar space. Celltrion Inc. reported worse than expected third quarter earnings after the company lowered the unit supply price of Truxima (biosimilar rituximab) in Europe. (Also see "Celltrion Hit By Truxima Price Cut, Temporary Utilization Rate Drop " - Scrip, 13 Nov, 2018.)
To expand its Remsima (biosimilar infliximab) franchise, Celltrion also filed for regulatory approval of the subcutaneous version of Remsima (CT-P13 SC) in Europe after successful clinical trials and aims to receive approval next year.
This year, Celltrion has received regulatory approvals for Truxima in the US after resubmitting an application. (Also see "Celltrion’s Rituximab Biosimilar Has Easy US FDA Panel Ride Despite Questions About Narrow Label" - Pink Sheet, 10 Oct, 2018.) It also received approval for biosimilar trastuzumab Herzuma in Europe. (Also see "Celltrion's Trastuzumab Biosimilar Gets EC Nod" - Scrip, 15 Feb, 2018.) Samsung Bioepis launched biosimilar adalimumab Imraldi in Europe, while its BLA for biosimilar adalimumab was accepted for review by the US FDA.
Meanwhile, late comers and smaller biosimilar firms are taking different strategies to deal with intensifying competition in the major markets. Chong Kun Dang Pharmaceutical Corp. received marketing authorization for its biosimilar darbepoetin alfa in South Korea, marking further progress towards the product’s global entry following a recent regulatory approval filing in Japan. (Also see "World First Korea Darbepoetin Biosimilar Approval To Speed CKD's Global Entry?" - Scrip, 5 Dec, 2018.)
Alteogen Inc. aims to enter the ASEAN and Organisation of Islamic Cooperation biosimilar markets by establishing a joint venture with a state-owned Malaysian firm. (Also see "Alteogen Eyes ASEAN, OIC Biosimilar Markets Via Malaysian JV" - Scrip, 30 Mar, 2018.)
LG Chem got an approval for its etanercept biosimilar Eucept in Japan and Korea during the year (Also see "LG Up Against Samsung After Korea Biosimilar Etanercept Nod" - Pink Sheet, 20 Mar, 2018.), while GC Pharma joined hands with Biocon to launch the biosimilar insulin glargine Glarzia in South Korea. (Also see "GC Pharma/Biocon Eye Low Price Strategy As Biosimilar Insulin Glargine Approved In Korea" - Pink Sheet, 12 Mar, 2018.)
Government Support, Industry AI Moves
In other regulatory moves, the South Korean parliament submitted a bill to support the development of innovative drugs and also medicines used in public health crisis situations. (Also see "Korea Seeks Fast Tracks For Innovative And Public Health Crisis Drugs" - Pink Sheet, 3 Oct, 2018.)
As part of the revised free trade agreement with the US, South Korea revised rules for a so-called global innovative drug pricing scheme, which brought strong objections from local and multinational pharma associations. (Also see "Revised Korean Innovative Drug Pricing System Draws Strong Pharma Objections" - Pink Sheet, 13 Nov, 2018.)
This year, there have been important policy moves to increase government support for industry moves on pursuing artificial intelligence-driven drug development, as the country strives not to fall further behind the globally emerging trends in digital healthcare. (Also see "AI-Driven Drug Development Seen Blossoming In Korea As Govt Lends Support" - Scrip, 28 Nov, 2018.)
As an example, parliament passed a bill to support and nurture AI-based new drug development, while the Science Ministry began to develop big data and AI systems that predict the relationship between drugs and their targets and drug mechanisms.
The Science and Health Ministries have also prepared an AI-based new drug development strategy, which includes R&D investment of KRW58bn ($51.4m) in four areas – discovery of lead substances, clinical trials, smart drug supervision and drug repositioning – over the next three years.
Meanwhile, pharma firms such as Yuhan Corp. and CJ Healthcare tied up with start-ups like Syntekabio to combine AI technology with new drug development, while companies including SK Biopharmaceuticals Co. Ltd. have developed their own AI-based drug design platforms.
Infectious Disease Focus Of Inter-Korea Plans
Amid ongoing denuclearization talks with North Korea, also involving the US, and the possibility of a warming relationship with the communist country, the two Koreas also took concrete steps to seek ways to cooperate economically once international sanctions on the North are formally lifted.
As part of this possible economic cooperation, North and South agreed to step up cooperation to prevent the import and proliferation of infectious diseases, and to initially exchange information on their infectious disease situations this year. (Also see "Infectious Diseases Proposed As Focus Of Inter-Korea Health Cooperation " - Pink Sheet, 11 Dec, 2018.)
From the editors of PharmAsia News.