Major presidential candidates have announced policy promises to actively foster the pharmaceutical and biotechnology industries as new future growth engines. Emphasis was placed on strengthening support for new drug research and development (R&D) to become a leading country in biotechnology. However, there were clear differences in how to implement these policies and approach regulations.
According to the announcement of each candidate's pledge on the 30th, Lee Jae-myung of the Democratic Party of Korea and Kim Moon-soo of the People Power Party included support measures for the biotechnology industry, such as strengthening rewards for new drugs and improving drug pricing systems. Lee Jun-seok of the Reform Party did not specifically mention the biotechnology industry but introduced the concept of a 'regulatory standard state' to lower entry barriers for new industries by introducing pioneering country regulations domestically.
◇ Lee and Kim to revise new drug pricing
Candidates Lee Jae-myung and Kim Moon-soo both stated their intention to revise the pricing compensation system for innovative new drugs. Corporations pointed out that despite investing significant funds and time into developing new drugs, the threshold for health insurance registration is high, and prices are set lower than in other countries, discouraging domestic release. If released domestically at a low price first, it results in losses when pricing overseas.
In fact, domestic new drugs such as SK Biopharmaceuticals' epilepsy treatment "Cenobamate," sleep disorder treatment "Sunosi," and Dong-A ST's antibiotic "Sivextro" have been approved by the U.S. Food and Drug Administration (FDA) and are sold overseas but not released domestically. This has led many pharmaceutical corporations to turn their attention to developing generics and incremental drugs, which are relatively easier than developing new drugs. Such pricing policies make it difficult for patients to benefit from new drugs.
Candidate Lee promised to introduce a 'new drug R&D investment ratio-linked pricing compensation system' that rewards corporations investing heavily in R&D, and to expand R&D tax credits for innovative corporations. Candidate Kim also intends to revise the pricing compensation system for R&D innovative new drugs and introduce a policy that reflects the value of innovative new drugs in pricing. The plan includes strengthening compensation for essential medicines for children and the elderly, and establishing separate funds for medications for severe and rare diseases.
Both candidates also agreed on revitalizing the digital healthcare sector. Candidate Lee announced plans to cultivate medical artificial intelligence (AI) specialists and establish an investment framework covering the entire investment cycle, while Candidate Kim promised to create a digital healthcare ecosystem by supporting corporate R&D and expanding insurance coverage.
◇ Divergent views on industrial fostering entities
However, their views diverged on how to foster the industry. Candidate Lee emphasized a government-led R&D investment system and the creation of a large-scale fund, while Candidate Kim stressed a private sector-led growth approach, emphasizing deregulation and a regulatory sandbox aimed at temporarily lifting regulations for innovative technologies.
There was also a difference in their stance on the 'deduction of corporate tax expense before continuing project losses' regulation, which has been criticized as a toxic clause for biotech ventures. Due to the nature of biotech corporations, which spend heavily on R&D without immediate revenue, they often face delisting crises as these continuing project losses are large compared to other industries. Corporations have requested that R&D expenditures be treated as intangible assets.
The cause is the technology-based special listing system. Biotech ventures can enter the KOSDAQ market with technological prowess even if they lack capital. However, if their business losses exceed half of their equity capital three years after listing, or if their sales do not surpass 3 billion won five years after listing, they face designation as managed stocks by the Korea Exchange and stand on the brink of delisting.
Candidate Kim, considering this industry situation, proposed easing KOSDAQ listing standards for R&D-centric biotech corporations and establishing a 'R&D Expense Appropriateness Evaluation Committee' within the exchange. The plan aims to reform the system to allow R&D expenditures to be recognized as corporate tax expenses.
Previously, Lee's camp also considered easing conditions for continuing project losses and extending the grace period for managed stock designation, but these details were omitted from the final pledge book. It is evaluated that concerns about investor protection and the potential increase in insolvent corporations played a role. A Lee's camp official noted that 'issues related to continuing project losses for biotech corporations are still under review, and specific plans will be formulated by the transition team upon election.'
Previously, the Korea Biotechnology Industry Organization and the Korea Pharmaceutical Biotechnology Industry Association welcomed the inclusion of industry fostering plans in the pledges of candidates Lee Jae-myung, Kim Moon-soo, and Lee Jun-seok. Lee Seung-kyu, vice chairman of the Korea Biotechnology Industry Organization, remarked, 'Even though the specifics differ, it is encouraging that the overall direction aligns on supporting new drug development corporations and easing regulations,' adding that 'what matters more than who leads industrial development is how well the policy reflects the voices of different industry situations.'