1) Supply pattern: Emerging biotechnology-oriented industrial support
MOTIE began to support the country’s fledgling biotechnology industry on the basis of the Plan for Fostering Biotechnology Industry in 1994. In 2001, just after the recovery from the Asian financial crisis, the government chose the biotechnology industry (referred to as ‘BT’) to be one of six next-generation growth engines (HeraldBiz, 17/1/2013). Since then, MOTIE has expanded its administrative scope.
In line with this, MOTIE’s policy focus has been mainly to bring up DBFs. It started a certification system for so-called ‘bio venture’ companies, and the certified venture firms have benefited from both participation in NRDPs and tax breaks (Table 5.6).133 It also supported the construction of regional biotechnology clusters, although the policy has caused duplication of R&D investment (e.g., techno-parks and technopolises).134 That is, MOTIE is fostering biotechnology start-ups to further its ultimate policy goal, the industrialisation of biotechnology.
Table 5.6: Number of new DBFs by year
Year 1995 1996 1997 1998 1999 2000 2001
Number of
new DBFs 19 14 27 36 71 233 200
Source: DBFs Survey by the Ministry of Commerce, Industry and Energy in 2001
MOTIE is now broadening its supportive scope, mainly focusing on commercial development. Several large-scale NRDPs have been launched, such as the Bio-Star Project in 2005 and the New Growth Engine Projects in 2009 (Table 5.7). The Bio-Star Project was established to develop biotechnology-based commercial drugs (i.e., innovative biologics, biosimilars, stem cell therapy and converging technologies between biotechnology and ICTs).135
a certain role as an institutional promoter of developing new drugs by local companies for a cheaper and effective new drug supply for the people. Without the existence of local new drugs, the market dominance by a small number of Big Pharma firms would continue. Many developing countries are already facing many negative effects of this dominance, such as import cost, lack of appropriate drugs for locally common diseases, and further deficit of the national health system.
133 Many leading DBFs were established in the period, such as Viromed (1996, drug R&D), Macrogen (1997, genomic R&D), and Crystal Genomics (2000, drug R&D). Bioneer, Viromed and Crystal Genomics have been published by the preferential system of a company having core technologies without proving the record of market performance by first registering in the Korea Securities Dealers Automated Quotations (KOSDAQ) in 2005, while Macrogen was the first IPO company as DBF in 2000.
134 It is now estimated that a total of 34 bio-clusters are now being operated, mostly by regional governments, and the duplication of investment has been criticised (Kim, 2011).
135 It, on average, supports about US$1 million annually for five years based on the annual evaluation system and matching fund style.
In terms of the authority in charge of drug R&D, a division administrating the biotechnology industry was first articulated in 1998 as a division of the chemical and biological industry under the life industry. In 2011, MOTIE established a new division of bio-health that was responsible for strengthening the promotion of biotechnology industrialisation and medical service-related industries in earnest.136 This indicates an expansion of the ministry’s administrative scope in the industrialisation of biotechnology beyond the chemical industry, with increasing R&D investment.
Table 5.7: Main fields of the major R&D programmes by MOTIE Name of NRDP Main technological fields supported
Bio-Star ∙ Innovative biologics – Antibody, stem cell and gene therapy
∙ Partly NCEs and phytomedicines (since 2008)
New Growth Engine
∙ Antibody drugs, stem cell therapy, gene therapy drugs (Core-tech)
∙ Commercialisation of biosimilars and their export (Infrastructure)
∙ Biotechnology based contract research organisation (CRO) and contract manufacturing organisation (CMO), production base of bio-drugs
∙ Support for the clinical trial base for bio-drugs Source: Various data sources
2) Problems: Capability in implementing industrial policy in the science-based industries
However, while MOTIE has focused on the industrialisation of emerging biotechnology in the past decade, the established, chemical-synthesis-based pharmaceutical industry has been barely comprehended by the ministry’s promotion of biotechnology-oriented commercialisation support. That is, the overall policy pattern of MOTIE toward emerging biotechnology in practice hardly considers the role of the established pharmaceutical industry for biotechnology industrialisation.
MOTIE has been drawn to support emerging biotechnology and its industrialisation. Their focus on commercialisation was a step in the right direction, given the upstream research-oriented support by MOST. However, MOTIE has hardly recognised the importance of the pharmaceutical industry as the final gate for biotechnology industrialisation... (Interview 34 (Big Pharma)).
136 In this line, MOTIE started to gradually comprehend the development of the phytomedicines and NCEs, in keeping with the new biotechnology-oriented industrial policy.
This poses another risk that national resources will be overly concentrated on the emerging new technologies that have a high degree of uncertainty in terms of both technology and market.
Although in the long-term view, biological drugs will definitely supplant the present chemistry-based drugs, the latter type of drugs are still far more dominant in the pharmaceutical market, and this trend will continue for a long time. However, in spite of that technological stability and the regulatory environment of biological drugs, even biosimilars, is still estimated to be opaque, the government seems to deliver their institutional efforts only to biotechnology (Interview 42 (K-Pharma)).
In reality, since 2010, biosimilars (and the stem-cell business) have (re)gained governmental attention as the most promising biotechnology businesses. Samsung Biologics was selected as the main player for developing biosimilars under the New Economic Growth Smart Project in 2009, despite the absence of any previous industrial experience in the area. In 2011, the country approved a novel stem cell therapy, followed by two more stem cell therapies in 2012, although concerns about their safety have been constant. Celltrion has been the largest company listed on the Korea Securities Dealers Automated Quotations (KOSDAQ) since 2009, even though it has not shown clear profit realisation of its business model in biosimilars. The company acquired the world’s first approval of its monoclonal antibody biosimilar in Korea in 2012.
Related to this, interviewees who conduct chemical drug R&D were sceptical of the commercial possibility of stem cell-based therapy in the short- and medium-term.137 In addition, they regard the industrial support of biosimilars with the aim of taking global market leadership through mass production as a ‘policy bet’ due to technological instability, an immature market (only a few biosimilars had launched as of 2012) and regulatory uncertainty.
3) Summarising remarks
On the whole, MOTIE has actively driven the industrialisation of emerging biotechnology by launching development-oriented NRDPs, fostering DBFs and attracting Chaebol to the new industrial area. However, in spite of these active efforts in biotechnology, the incumbent pharmaceutical industry was hardly included in MOTIE’s policy implementation. The reason lies in MOTIE’s misunderstanding of the role of the established pharmaceutical industry as the commercial channel when they fostered the
137 Among them, one of most pessimistic views was the impossibility of the ‘real’ commercialisation of stem cell therapy within 10 years.
upstream research-based biotechnology business. At the same time, the established pharmaceutical industry has been regarded as the juridical right of MOHW.
Table 5.8: Inter-ministerial comparison of institutional momentum
MOST MOHW MOTIE
∙ Upstream research ∙ Efficient production
∙ Pre/ clinical trial
Source: Author’s elaboration based on various data sources