Singapore, Jan 1, 2008: Korean bio industry is still in its take-off stage so there are not many companies showcasing sustained profitability. However, the entire industry has reached a market size of $4 billion-a-year and is growing at a constant year-on-year rate.

In the last three-four years in Korean stock market, there was a huge boom among the life science companies including pharmaceutical and bio venture companies.

There are several trends behind the current bio boom in Korea. One, of all bio companies listed in the country 50 percent were listed within last three-four years; two, the rise of the newly-listed bio companies brought re-appraisal of the undervalued pharmaceutical companies in the Korean stock market; three, government also initiated various support plans for bio companies, and four, global attention to stem cell, cell therapy, and anti-cancer drugs became a big issue in Korean bio industry as well and quite a few Korean companies got product approvals on these new type of drugs.

However, there are some challenges for Korean bio companies. Small to medium pharmaceutical companies have limitations on its marketing ability and product lineup while most bio venture companies don’t have competitive core technologies such as genetic modification technology, fermentation process, chemical separation and purification technology, cell culture technology, stem cell separation and culture technology. Therefore, market competitiveness of Korean companies is weaker compared to the companies of advanced countries.

Korean bio industry has its strength in manufacturing and core technologies while it lags behind in new material development. According to the world biotech competitiveness analysis, Korea scored over 90 percent in manufacturing technologies such as fermentation, and 70 to 85 percent in core technologies such as gene regeneration, cell culture, and protein engineering. On the other hand, in new material development technologies such as new material screening technology and safety evaluation technology, Korea scored only 25 percent representing poor new drug development environment
of Korea.

In other advanced countries, large pharmaceutical companies generally lead the bio industry. However, Korean bio industry is rather led by the bio venture boom that resulted in mushrooming of bio venture companies in the fields of new drug development, stem-cell research, cell therapy, gene therapy, bio diagnosis, and agri-bio. This venture boom successfully drew large companies’ attention to the bio industry. Large companies started to step into the bio business by investing some amount of money in the bio venture companies, making partnership agreements with the venture companies, and even creating bio department within the corporation.

Bio venture companies can be further categorized into new drug development, bio food, medical device, bio infrastructure, diagnostics manufacturing, and agri-bio segments. (See Figure 1)

Many Korean bio companies have been concentrating on new drug development. However, due to the relatively small investment scale, most of the companies have only progressed from the stage of preliminary study, preclinical, to phase one. While stem cell business including gene therapy, cell therapy, and cord blood stem cell takes a huge part of the Korean bio industry with 40 plus companies in related businesses.

Crystal Genomics is one of the leading companies in new drug development. The company focuses on efficient and accurate determination of chemical and protein structure, and rapid generation and optimization of novel drug leads, enabling efficient and productive discovery of novel leads and drug development candidates. The company uses the lock and key model of drug action structure (structural-based drug development method).

Several companies are in cell therapy business including Binex and Creagen using dendritic cells and NK bio using natural killer cells. Viromed is in gene therapy business and RNL bio is in stem cell research and natural material screening business. Sewon Cellontech is focusing on regenerative medical practices providing Cartilage Cell Implantation. Quite a few of aforementioned companies have gained the first market approval of their products after finishing phase two clinical trial and started selling their products in the market this year. The market size will rapidly grow with more products coming out next year. Cell therapy has several advantages in Korean bio market. Korean cell therapy technology is competitive as compared to any other leading country, there is less clinical trial time requested, cell therapy arouse little side effect, and market entry is relatively low because most indications of cell therapy fall into the category of first market approval with a condition to sell the product while processing phase three clinical trial.

In medical diagnostics reagents field, there are gene diagnosis and protein diagnosis companies. For example, a Kosdaq listed company SD is specialized in use of immunoassay. Seegene has a lot of good items in genetic diagnostics based on their noble platform technology. Seegene’s technology has a great potential to advance as a world-class technology in the near future.

Agri-bio business was formerly focused in the fertilizer additive, veterinarian medicine, and microorganism fertilizer and feed. Nowadays, the focus has moved to the organic business such as prevention of epidemics using natural enemies. Though agri-bio business is still not mature in Korea, there is a huge potential to grow if the government is determined to expand Agri-bio business and local governments nourish new business opportunities in
the field.

Many companies were founded in bio-infrastructure business including reagent, device, and gene. However, only one of each category supports and leads the field. Daesung has been producing antibiotics, antibacterials, anthelminthics, nutrition, and feed additives, Bioneer provides total genomic research solutions ranging from reagents to instruments used in molecular biology, Macrogen provides gene creation and analysis services, Seolinbio provides research tools, and Orientbio supplies guinea pigs for trial sites. Bio infrastructure business has not got much profitability. However, the business has a very independent character because those products and services are essential to most of the bio companies ranging from pharmaceutical, bio-food, to agri-bio field.

Bio-food business forms a huge segment of the Korean bio industry. Over half of the bio-food companies are in research and development of new drug. The R&D of new drug development takes too long with no profit. Therefore, those companies sell health-food related products based on their core technologies and items in order to sustain the business while developing new drugs. CellBiotech, for example, develops lactic acid bacteria and anti-microbial peptides to be used as ingredients for major food companies and BTGin supplies the highest quality Saponin of Ginseng to health food companies by enzyme engineering the regular Saponin.

Most Korean bio companies are in the initial stages. In time, there will be some fruitful achievements from these new-drug developing companies, and the bio food companies will soon start to develop new drugs based on their accumulated technology and production know-how.