The Ministry of Health and Welfare said it will increase tax incentives to pharmaceutical companies that invest in the research and development of new drugs, officials said Friday,

As a revised law on special tax treatment control takes effect, small- and medium sized companies investing in R&D projects will get more deduction on corporate tax from 25 percent to 30 percent. Big companies will also get tax deductions of up to 20 percent from 3-15 percent.

Companies are expected to enjoy tax deductions worth 34 billion won ($31 million), officials said.

Local drugmakers in joint ventures with multinational firms, have been expanding overseas businesses and investments. Their investments into R&D projects also surged 37 percent last year in the third quarter in 2012, up from 23 percent in the same period the previous year.

By Cho Chung-un (christory@heraldcorp.com)