VC Investments ICT Manufacturing Drop 46.5%
With the ongoing spread of the COVID-19 pandemic, venture capital (VC) investments in the biotech and medical sectors have seen a sharp increase.
The Korea Venture Capital Association (KVCA) announced on June 7 that fresh VC investments in the first quarter of this year totaled US$620 million (746.3 billion won), with a large portion of the investments concentrated on the biotech and medical sectors. US$186 million (224.4 billion won), which accounts for 30 percent of the total, flowed into these sectors.
What should be noted is that despite the decrease in the amount of new VC investments compared to the same period of the previous year, VC investments in the biotech and medical sectors saw a sharp increase.
The total amount of new VC investments in the first quarter dropped by 4.3 percent from US$647 million (778.9 billion won) posted last year. On the contrary, VC investments in the biotech and medical sectors increased by approximately 32.0 percent, from US$141 million (170 billion won) to US$186 million (224.4 billion won).
The proportion of VC investments in the biotech and medical sectors also greatly increased by 8.3 percentage points, from 21.8 percent in Q1 of last year to 30.1 percent in Q1 of this year.
Compared to the figures posted in Q4 of 2019, right before the outbreak of COVID-19, new VC investments in the two sectors increased by US$11 million (13.9 billion won), or 7 percent.
The steep growth in new VC investments in the biotech and medical sectors is greatly highlighted when compared with the 46.5 percent drop in new VC investments in the ICT manufacturing industry. New VC investments in the ICT manufacturing sector in the last quarter of 2019 totaled US$45 million (54.8 billion won). What attracted large investments in the biotech and medical sectors was the high growth potential of the companies that possess diagnostics technologies and abilities to develop vaccines and treatments for the coronavirus.
Especially as the world continues to struggle amid the pandemic without vaccines, South Korean-made diagnostic kits are demanded by countries all over the world. Nine diagnostic kit developers including Osang Healthcare, Seegene, SD Biosensor, SEASUN BIOMATERIALS, LabGenomics, 1drop, Genematrix, BioCore, and SolGent have received emergency use authorization (EUA) from U.S. FDA.
Development of vaccine and treatments against the virus is also underway. As of now, clinical trials are being conducted for approximately 10 drugs as treatments for the virus. Among the 10 drugs currently being tested, five, including Remdesivir, are foreign drugs and five are South Korean. South Korean drugs include Bukwang’s hepatitis B treatment Levovir, Enzychem Lifesciences’ EC-18, Shinpoong’s Pyramax, Young Poong’s Ferodil, and Hanlim’s Haloxin.
As South Korean companies are being highly acclaimed by international society amid the pandemic, the number of small and mid-sized venture companies seeking to obtain international certification to enter the overseas markets is growing. Backed by the high demand for South Korean medical supplies and hygiene products in the American distribution market, many companies are hoping to receive approval from U.S. FDA to enter the American market.
The Korea Testing & Research Institute (KTR), which performs international certification works for small and mid-sized venture companies, said on June 4 that among all 2,880 products submitted up until last month for certification, 297 products were medical-related products such as hand sanitizers, masks, test kits, and protective medical gear. Compared to the 3,405 products submitted during the same period last year, the figure dropped by 15 percent. However, the number of medical-related products increased by almost 30 percent from 229 products last year. While the total number of products submitted for international certification decreased due to sluggish exports, number of medical-related products increased. The proportion of medical-related products also increased from 6.7 percent last year to 10.3 percent this year.