Promotion of Bio Startups
The Korean government has come up with measures to promote the ecosystem of the bio sector, which is considered the nation’s next-generation growth engine. It has decided to end R&D projects carried out by various agencies and focus on investing in the development of stem cell and gene therapy, which have far reaching powers. It will also create funds with 80 billion won (US$67.62 million) to support bio startups, and carry out “10 projects,” which will fill up the vacuum of the bio industry ecosystem, by injecting 130 billion won (US$109.89 million) for three years.
The Ministry of Science, ICT and Future Planning (MSIP) announced that it considered and confirmed “bio industry promotion strategy in the medium term” and “10 bio creative economy vitalization projects” at the second Bio Special Committee meeting held by National Science & Technology Council on May 25.
The bio industry is widely viewed as the nation's next growth engine after IT, as Hanmi Pharmaceutical recently signed a large-scale export deal for new drug technology and Celltrion Samsung Bioepis pushed into the global biosimilar market. When looking into the industry, however, it is not full of rosy forecasts. The government’s R&D budget for the bio sector this year amounts to 2.77 trillion won (US$2.34 billion), the second largest amount in the overall technology sectors. But, they are going to separate small and short-term projects in various agencies and the rate of commercialization R&D stands at only 3 percent. The industry also shows a small number of startups. The number of bio venture startups plunged from 71 in 2007 to 2 in 2013. Since private investors are reluctant to make a high risk and long term investment, the companies also see a low growth rate. Currently, 69 percent of bio companies couldn’t pass the break-even point.
In order to fill up the blank of such industry ecosystem and create the virtuous cycle, the government will drive the mid-range strategy by 2018. It will first raise the R&D investment in the bio sector by more than the increase in the overall R&D budget, and focus on its R&D investment strategy and the investment in developing 19 suggested future growth engines, such as stem cell and gene therapy, converged diagnosis and treatment device, and body replacement and assistive device. The MSIP will play a concrete role in “basic”, the Ministry of Health and Welfare in “clinical trials,” the Ministry of Trade, Industry and Energy (MOTIE) in “commercialization” and Korea Food & Drug Administration in “permission.” Then, the government will end similar or overlapping projects from next year. In a bid to crate the bio startup ecosystem, it will create two funds with 80 billion won (US$67.62 million) – 30 billion won (US$25.36 million) from the MOTIE and 50 billion won (US$42.27 million) from Small and Medium Business Administration – to support startups. It will also foster regional clusters by coming up with “advanced medical complex operation efficiency strategy” by September this year.
In addition, the government will carry out 10 bio specialized projects. For open innovation with the cooperation of industry, academic and institutes, it will help companies with “matching R&D” based on their demand and establishment of special purpose firms for corporate R&D. The MSIP will invest 130 billion won (US$109.89 million) in the program in the next three years.