Korean-style Open Innovation Gains Traction as Domestic, Foreign Pharmaceutical Companies Team Up

The trend of collaborations between domestic and foreign enterprises of various sizes to achieve success in new drug development is on the rise. Such collaborations are viewed within the industry as a potential model for “Korean-style Open Innovation” in the pharmaceutical and biotech sectors.

According to industry sources on July 30, analysis of clinical trial results of combination therapy using Yuhan Corporation’s non-small cell lung cancer treatment Leclaza and Janssen’s biospecific antibody treatment Amivantamab are expected to commence in the second half of this year. Yuhan introduced the Leclaza candidate substance from domestic biotech firm Oscotec, optimized the substance and completed clinical trials before exporting the technology to global pharmaceutical company Janssen.

This case is a typical example of a multi-company collaboration where a venture company or a university discovers a new drug candidate, a domestic pharmaceutical company develops it, and the technology is then transferred to a global pharmaceutical giant.

Domestic ventures have the innovative ability to develop new candidate substances or new technologies, but they often lack the necessary funds to complete the development process. In contrast, large domestic pharmaceutical companies have abundant clinical experience and capital to introduce new technologies, but they may lack the capacity to carry out Phase 3 clinical trials overseas or to secure overseas licenses and business operations.

Therefore, the possibility of candidate substances becoming blockbuster new drugs increases when domestic pharmaceutical companies acquire venture substances, develop them to some extent, and then transfer the technology to global pharmaceutical giants with overseas clinical and marketing capabilities. The industry views this kind of tripartite collaboration as gradually establishing itself as a Korean-style Open Innovation model.

In particular, if this leads to overseas licensing and market release, ventures and pharmaceutical companies can generate significant revenue by receiving royalties based on sales, in addition to the existing milestone-based technical fee structure. The multinational pharmaceutical companies that hold the rights also stand to benefit.

In a similar example, Yuhan Corporation is currently negotiating to transfer the technology for the allergy treatment GI-301, which it acquired from new drug development company GI Innovation, to a global pharmaceutical company. The company also imported degenerative disc treatment technology from Ensol Biosciences, developed it domestically, and exported the technology to Spine BioPharma in the U.S. in 2018.

In addition, Handok transferred the technology of a target anticancer drug, jointly researched with CMG Pharmaceuticals, to a company in Singapore. Although the technology was returned, Bridge Biotherapeutics also introduced a candidate substance for idiopathic pulmonary fibrosis treatment from LegoChem Biosciences and exported the technology to Boehringer Ingelheim.

However, the profits from such tripartite collaborations can be less than when one company develops a candidate substance from discovery to licensing.

Still, industry insiders stress the importance of gathering funds and successful experiences through such collaborations, noting that there are not yet many companies in Korea capable of managing the full drug development process.