South Korea is looking to make its mark in biotechnology as it eyes leadership in new industries geared for sharp growth in the years ahead.

Biotechnology refers to technology that harnesses the science of genetics and molecular biology to develop new medical treatments and services. In the coming era of aging populations, the global biotech market is set for significant growth.

The Ministry of Strategy and Finance forecasts the global biotechnology market will reach $2.61 trillion by 2024, surpassing the combined market size of Korea’s top three exports -- semiconductors, petrochemicals and automobiles.

Eyeing its lucrative market potential, the Korean government has set biotech development as a key policy priority, pledging large-scale support toward small and large biotech businesses.

“We will actively nurture Korea’s biotechnology sector with aims to place Korea as one of the world’s top seven biotech health leaders,” said Prime Minister Hwang Kyo-ahn at the Bio Korea 2016 international convention in Seoul in March.

Referring to recent success cases such as Hanmi Pharmaceutical, Hwang expressed “high hopes” that local biotech firms will likewise expand their businesses. In 2015, the local drug maker sealed seven mega biopharma technology export deals worth some 8 trillion won ($6.93 billion) with multiple global pharma giants including Sanofi, Eli Lilly and Boehringer Ingelheim.

To achieve this goal, the government plans to abolish policies that hamper the development of new technologies and new business creation to accelerate the development of new biologic drugs, medical services, stem cell therapies and regenerative medicine, among others, Hwang said.

Government bets big on biotech

Led by the Ministry of Science, ICT and Future Planning, the Korean government has been channeling heavy investment toward advancing local biotech research and development over the past few years.

In 2015, eight ministries together invested 2.38 trillion won in the local biotech sector, around 86 percent of which was channeled into R&D, according to the Korea Biotechnology Industry Organization, the main body representing Korean biotech businesses.

Seoul is particularly keen on nurturing the local life sciences and biomedical sectors such as stem cell drugs, gene therapies and biotech-based medical services -- emerging fields in which Korea has a high potential for success, KoreaBio said.

In March this year, the government established an overarching committee to act as a “control tower” to better coordinate and streamline policymaking related to biotechnology scattered across multiple ministries.

“The committee will act as a problem-solving body focused on mediating contentious issues between different ministries and government agendas in the biotechnology field,” First Vice Minister of Science Hong Nam-ki said at the time.

In May, the Science Ministry announced a three-year plan to spur the country’s biotech innovation. It plans to form two funds worth a total of some 80 billion won for the purpose of boosting young biotech start-ups in their early stages.

It also pledged to ease the approval criteria for biotech companies seeking a public listing on Korea’s tech-loaded secondary stock exchange KOSDAQ, and expedite the approval process for novel biologic therapies, among other commitments.

The government is not alone in its biotechnology push. Korea’s largest conglomerate Samsung Group has placed importance on the field as well. So far, it has invested more than 3 trillion won in its two biotech units Samsung BioLogics and Samsung Bioepis.

The former, founded in 2011, is a contract manufacturer of biologic drugs while the latter, established in 2012, focuses on developing biosimilars -- cheaper, near-replicas of complex biologic drugs that have lost patent protection.

Hurdles to Korean biotech innovation

Despite the government’s ambitions, Korea’s biotechnology industry is still in its early stages, as a majority of biotech firms, except for a handful of established players in the field, remain unprofitable.

As of 2014, there were 975 biotech companies in Korea around two-thirds of which did not generate any profit, according to latest data compiled by the Korea Biotechnology Industry Organization.

Given the nature of the field, which requires long-term research and investment, KoreaBio said many local biotech firms could benefit from more state-led R&D sponsorship. For instance, many firms are in need of targeted funding for clinical trials of new biologic drugs under development.

“The development of new biopharmaceutical products requires immense capital, particularly during the third-phase clinical trial stage, the most expensive part (of developing and commercializing new drugs),” KoreaBio spokesperson Park Sun-mi told The Korea Herald in an email interview.

“As many Korean biotech firms develop new biologic therapies for the purpose of exports, the government should strongly consider the option of offering tax benefits to companies carrying out phase 3 clinical trials outside of Korea,” she said.

The body also called for the provision of more specialized laboratories and equipment which would remain open for use by young biotech start-ups with limited starting capital – a crucial factor in encouraging biotech innovation and business formation.

“Korea needs at least 10 to 20 biotech companies able to generate at least 100 billion won in revenue before the industry can feel tangible to investors and the public,” KoreaBio President Seo Jeong-sun said in a former interview with The Korea Herald.

KoreaBio has set an ambitious target of nurturing 1,000 biotech start-ups in the coming years. For a start, the organization, alongside two foreign venture capital funds, has received funding from the Ministry of Trade, Commerce and Industry to discover and fund new start-ups.

Though South Korea still has a long way to go until it can become a notable force in the global biotechnology sector -- now mostly led by the U.S. and European countries -- Seo believes its outlook is inherently promising.

“Equipped with an advanced medical infrastructure paralleling that of the U.S. as well as cutting-edge Internet and computing technology, Korea is in an excellent position to take the lead in the field of biotechnology,” said Seo, who is also the chairman of Seoul-based genome sequencing firm Macrogen.

KoreaBio predicts that Korea’s aim to become one of the world’s top seven biotech leaders could be fulfilled within 10 to 20 years, with sustained and strategic investment from both public and private sectors.

“At the end of the day, biotechnology, unlike other fields, is a ‘life science’ that can save and improve the quality of life for millions of people around the world. If Korea can do this successfully, the country will become a true global force for good,” Seo said.

By Sohn Ji-young (jys@heraldcorp.com)