K-Pharma, the Next Wave?

Key Takeaways

• The Korean biopharmaceutical sector has historically focused on manufacturing and biosimilar development. However, the implementation of the product patent system in 1987 forced K-Pharma to re-think and strengthen their R&D effort on novel agents. Notably, the first of 30 domestically developed new drugs (as of mid-2018) was approved in 1999. The Korean government aims to further expand the biopharma sector by investing ₩2.8trn ($2.6bn) over 10-yrs starting from 2021.

• The last 5 years saw a surge in activity in the Korean pharmaceutical industry, with deal numbers increasing by 143% and overall deal value rising from $4.3bn in 2015 to $17.0bn in 2020 (+295%). For comparison, the US and Japanese biopharma industry saw increases in deal values by 16% and 115%, respectively.

• Some analysts suggest a bubble might be forming as the drastic increase in market caps for some key Korean biopharma players appear inflated compared to their respective revenues and rNPVs. 

• Today, the stronghold of K-Pharma remains within the areas of manufacturing and biosimilar development, as well as development and production of stem cell therapies. Novelty-centered R&D is mostly at an early preclinical or research stage. Hence, investments in innovative Korean R&D companies will likely involve betting on early-stage assets or concepts.