[REPORTER'S DIARY] Making Korea into real biopharmaceutical powerhouse

Industry

Published: 07 Jul. 2022, 19:07

[REPORTER'S DIARY] Making Korea into real biopharmaceutical powerhouse

An SK bioscience researcher conducts tests to develop a Covid-19 vaccine at the company's lab. [SK BIOSCIENCE]

Korea has its own Covid-19 vaccine as SKYCovione, developed by SK bioscience, won use approval from the Ministry of Food and Drug Safety last week.

Whether it was too late or not, it is such remarkable news for the country to succeed in developing a Covid vaccine. The company is now set to apply for use approvals and emergency authorizations from other countries to sell globally.

One big question remains: Can we really say SKYCovione is entirely our own Covid-19 vaccine?

A tremendous amount of money from overseas was put into the development of SKYCovione. Selected as the first vaccine candidate for the Coalition for Epidemic Preparedness Innovations (CEPI)’s “Wave 2” initiative, SK bioscience received a total of $213.7 million from the CEPI and the Bill & Melinda Gates Foundation for the development of SKYCovione. Of that, $173 million was used in only Phase 3 clinical trials.

The process of making SKYCovione reminded this reporter of what Won Hee-mok, chairman of the Korea Pharmaceutical and Bio-Pharma Manufacturers Association (Kpbma), said during the BIO International Convention (BIO USA) 2022 held in San Diego last month. Won said the fruition of pharmaceutical development never comes without a massive investment in research and development (R&D), and in terms of that, Korea still has a long way to go.

Taking a walk around the exhibition hall of the BIO USA 2022, often called the CES of biopharmaceuticals, it could be seen that the booths of Korean companies are always crowded with visitors, while business discussion tables are nearly full all the time.

While big names such as Samsung Biologics steered the focus toward the contract and manufacturing organization business, smaller companies were also busy doing their own business, which is to find partners to transfer their high potential drug candidates — what the industry calls licensing deals.

Licensing deal is what small Korean companies are doing — also what they are good at — so their businesses grow and make profit.

Numbers prove it. Korean pharmaceutical companies inked a total of 33 licensing deals last year, worth 13.4 trillion won ($10.3 billion), up 32 percent on year and a record high.

Lee Sang-hoon, CEO of ABL Bio, even said this year’s BIO USA was totally different from what it used to be three years ago. Back then, he was always the one who was desperate to find partners, but this year, he got so many calls from many big global pharmaceutical companies.

The global standing of ABL Bio changed since it inked a technology transfer deal in January worth around $1.06 billion with Paris-based Sanofi for ABL301, a treatment candidate for degenerative brain diseases such as Parkinson’s disease. It received a $75 million up-front payment, the largest amount that a Korean venture has ever received for a licensing deal, which also suggests that the deal itself shows the potential of the candidate.

Other smaller companies this reporter met in the conference, including JW Pharmaceutical, Kangstem Biotech and AptaBio, also said they have found global pharmaceutical companies for the transfer of their candidates and have been in next-round discussions.

SKYCovione, the first domestically developed Covid-19 vaccine. [SK BIOSCIENCE]

Some may see it as a win-win strategy, but looking at it more closely, it’s a sad reality that Korean companies end up selling their high potential drug candidates to foreign firms giving up the chance to earn much more money through them in the future.

Then why does that happen? Those small companies do not have enough money to bet on the new drug development, which cost millions of dollars while the success rate is extremely low.

It is said that a company needs around 2 trillion won and some 14 years to develop a new drug. The success rate, however, stands at less than 10 percent.

The ten largest Korean biopharmaceutical companies spent 1.4 trillion won on R&D investment, while the top ten global companies spent 82 trillion won.

Pfizer alone spent around 10.6 trillion won in R&D in 2020.

But who could say that’s just their fault? Won of Kpbma says the Korean government should not just sit by and watch.

The Korean government set a 1.8 trillion won budget for R&D in the bio sector this year, 11.4 percent of its total R&D budget, saying that the biopharmaceutical industry would be “one of the six future growth engines” of the country.

However, Belgium, the home country to many global pharmaceutical companies including Janssen, spends 40 percent of its R&D budget in the bio sector. The United States spends 30 percent on average.

When the Covid-19 pandemic emerged, the U.S. government immediately spent 20 trillion won for Pfizer and Moderna vaccines, while the British government spent 10 trillion won for AstraZeneca vaccines — the three vaccines that most Koreans have received.

To date, no drug that is domestically developed has made meaningful achievements by sales in the global market. A total of 33 drugs have been developed in Korea as of end of last year, and only three are making around 50 billion won in annual sales.

Who could call a country a biopharmaceutical powerhouse if it doesn’t own a single blockbuster drug? Abbvie’s Humira alone generated 25 trillion won sales in global markets last year, which is just in line with the market size of the entire biopharmaceutical industry of Korea.

Visitors to the BIO International Convention take a look at Korean pharmaceutical companies' booths in San Diego last month. [SARAH CHEA]

If Korea really thinks the biopharmaceutical industry is important, it should spare no expense in making aggressive investments in the sectors that are really needed.

Of course, new drug development is a high-risk sector that even large companies could not jump into easily. It is a high-risk segment, and that is why the government must show movements first.

It is irrefutable fact that the biopharmaceutical industry is the next-generation growth engine. Korea should not miss out on opportunities and catch the golden time.

But of course, money can’t solve everything. For the local bio industry to grow as big as that of the United States, regulatory breaks, especially in the respect to the freedom of research and testing, should be ensured.

Strict regulations on conducting clinical trials leave local companies with no choice but to conduct them overseas instead, which cost them much more money.

Korea’s outstanding technological capability could go a long way toward jump-starting explosive growth in its biopharmaceutical industry.

Lavish Investments and removing some regulations may do the job.

BY SARAH CHEA [chea.sarah@joongang.co.kr]