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Biotech Industry of South Korea is Underperforming
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Biotech Industry of South Korea is Underperforming
  • By marie
  • September 28, 2016, 04:45
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Korea’s annual biotech R&D expenditures reached 4.8 trillion won (US$4.29 billion) in 2014, smaller than those in the IT industry (US$19.6 billion) and nanotech industry (US$7.5 billion).
Korea’s annual biotech R&D expenditures reached 4.8 trillion won (US$4.29 billion) in 2014, smaller than those in the IT industry (US$19.6 billion) and nanotech industry (US$7.5 billion).

 

The Hyundai Research Institute announced on September 27 that annual biotech R&D expenditures in South Korea increased from 1.4 trillion won (US$1.2 billion) to 4.8 trillion won (US$4.29 billion) between 2005 and 2014, showing an average annual growth rate of 14.6%.

According to the economic research institute, the amount recorded in 2014 is smaller than those in the IT industry (21.9 trillion won or US$19.6 billion) and nanotech industry (8.4 trillion won or US$7.5 billion). 

The ratio of biotech R&D investment to South Korea’s total R&D investment rose from 5.9% to 8.0% between 2005 and 2011 but fell to 7.5% in 2014.

In the meantime, venture investment as a part of investment in the local biotech industry is on a rapid increase these days. The amount had been slightly more than 100 billion won in 2008 but reached 317 billion won last year. However, only 12.3% of the venture investment in the industry went to companies in their early stages, three-year-old and younger ones to be specific.

The institute also mentioned that M&A-based investment activities in the sector are less active than the R&D investment and venture investment. From 2010 to 2014, a total of 1,938 M&A deals were signed with regard to pharmaceutical companies around the world. South Korean drug makers accounted for only 3% of them whereas the ratio was 24%, 11% and 6% for American, Chinese and Japanese.

“The local biotech industry is underperforming in comparison to the others as well,” it pointed out, adding “From 2010 to 2013, this sector ranked fourth in the world in terms of international patent application but its patent-related performance was poorer than those of many other sectors.”

As of 2014, South Korea’s biotechnology was 4.5 years behind those of global leaders. At that time, the gap was 2.7 years in IT, electronics and communications and 3.3 years in machinery, manufacturing and process technology. “At present, the biotech industry output is equivalent to only 0.5% of the output of the local manufacturing sector,” the institute explained.