Biotech, Health Care Sector to Win Back 1st Place in New VC Investment

The biotech and health care industry is expected to win back the first place in terms of the size of new venture capital (VC) investment this year.

According to the bio industry on October 17, there has been an upsurge of investment in the biotech and health care sector. When the current trend continues, the industry is forecast to reclaim the top spot in terms of new investment attraction in two years.

According to the data from the Korean Venture Capital Association (KVCA), the biotech and medicine industry attracted a total of 519.6 billion won (US$461.05 million) in fresh investment from 128 venture capital companies from January to August this year, the highest among a total of nine industries.

The figure increased 151 percent compared to the same period a year earlier. It was also 6 percent higher than the ICT service sector that ranked first in terms of new VC investments in 2017. The biotech and health care industry accounted for 23.5 percent of the total new investments, taking the top spot from the ICT service industry with 22.1 percent.

The biotech and health care industry topped the film, performance and music industry in new VC investments in 2014 but it slipped to second place after the ICT service industry in 2015. It came in first again in 2016 but fell to third spot last year while the ICT service and the distribution and service industry ranked first and second.

In particular, the investment in the biotech industry greatly shrunk as there was a growing negative perception of the industry due to the aftermath of the change of technology export contract between Hanmi Pharmaceutical Co. and French pharmaceutical firm Sanofi S.A. at the end of 2016. Hanmi Pharmaceutical downsized the license deal for new diabetes drugs with Sanofi from 5 trillion won (US$4.44 billion) to 3.5 trillion won (US$3.11 billion) at the end of 2016.

However, the growth potential of the domestic biotech industry is drawing attention again as there have been various favorable factors, such as Hanall Pharmaceutical International Inc. and Genexine Inc. receiving license deals at the end of last year, and Samsung BioLogics Co. winning a large-scale biologic drug consignment production contract, Green Cross Corp.’s Immuncell-LC gaining orphan drug status for liver cancer and brain tumor from the Food and Drug Administration (FDA), Celltrion Inc.'s Truxima receiving a recommendation for approval from the US FDA’s Oncologic Drugs Advisory Committee (ODAC) this year.

Accordingly, the combined amount of new VC investments in the biotech and medical industry has already exceeded 378.8 billion won (US$336.11 million) of the annual new investments in 2017 by more than 140 billion won (US$124.22 million) as of the end of August this year. The bio and medical care industry has been gaining an investment momentum especially after President Moon Jae-in pledged to get rid of excessive regulations on the medical device and healthcare sector in July.