President Yoon Suk Yeol emphasized from the early stages of his administration that he would nurture the bio-industry as a future growth engine alongside semiconductors and aerospace. In February, he announced a strategy to create new markets in biohealth, aiming to develop two blockbuster drugs that generate over 1 trillion won in annual sales by 2027 and double exports of pharmaceuticals and medical devices.
However, concerns are growing that the 'speed' of the bio-industry nurturing policy is adrift due to President Yoon's state of emergency, leading to delays in its implementation. Moreover, political uncertainty has been criticized for further complicating funding conditions for the domestic pharmaceutical and bio industry, resulting in a shock to the stock market.
◇National Bio Commission effectively canceled
According to the Ministry of Health and Welfare on the 12th, the launch of the National Bio Commission and its first meeting, initially scheduled for this month, have been indefinitely postponed. No further schedules have been set. The National Bio Commission is a presidential advisory body. Given the impeachment crisis facing President Yoon Suk Yeol, the industry has remarked that it is 'effectively canceled.'
The National Bio Commission is a control tower for bio policies aimed at paving the way for Korea to emerge as a top-five global bio powerhouse. The Ministry of Science and ICT, the Ministry of Health and Welfare, and the Ministry of Trade, Industry, and Energy are joining in, with Lee Sang-yeop, Vice President of the Korea Advanced Institute of Science and Technology (KAIST), earmarked as the private vice-chairperson. Over 20 bio experts, including Kim Bit-naeri, head of the RNA Research Center at the Institute for Basic Science (IBS) and a Distinguished Professor at Seoul National University, Ko Han-seung, head of future business planning at Samsung Electronics, and Kim Young-tae, president of Seoul National University Hospital were expected to participate as private commissioners. There was great anticipation that, having emphasized bio-nurturing since his campaign, the president would directly oversee discussions on research and development (R&D), licensing, and overall bio policies.
However, with the state of emergency, all these plans have been put on hold. A private commissioner who requested anonymity remarked, 'I was informed that the launch of the Bio Commission has been indefinitely postponed due to the state of emergency. There’s no leadership and we’ve lost momentum, so the atmosphere is that it’s effectively canceled,' adding, 'The industry had great expectations, so this is very disappointing.' Lee Sang-yeop, the private vice-chairperson, noted, 'While I understand the substantial disappointment from bio companies, the reality is that the national situation is very severe, and there aren’t many options available at this time.'
The Bio Health Innovation Committee, which was chaired by Han Duck-soo, Prime Minister, and launched in October last year, has found itself in a similar position. The goal was to foster the domestic biohealth industry and to support the convergence of artificial intelligence (AI) and nanotechnology as a joint public-private control tower; however, only discussions have taken place on R&D and professional workforce development over four sessions, with no decisions made.
The United States is seeking to build a new bio supply chain that excludes Chinese corporations. To this end, the U.S. Congress has introduced a bioterrorism bill to counter Chinese bio corporations. Contrary to initial expectations, its passage within the year has become difficult, but it is likely to be re-discussed after the Donald Trump administration takes office in January. Since the outbreak of COVID-19 in 2020, the U.S. government and Congress have recognized bio issues as a 'security' problem.
◇Concerns over Korean-style ARPA-H and bio fund slowdown
The state of emergency has also dampened corporations' opportunities for global business. Lee Seung-kyu, vice president of the Korea Bio Association, stated, 'This state of emergency has frozen domestic and overseas investments, causing many bio companies to feel inhibited,' adding, 'Some companies are even considering forgoing participation in the JP Morgan Healthcare Conference next month, the first international event of the new year in the United States.'
Given the situation, there are many opinions suggesting the need for a bio policy promotion discussion body composed entirely of industry and private experts, excluding government departments. Some discussions have reportedly taken place. Vice President Lee Seung-kyu said, 'We are seriously considering a channel to thoroughly gather the industry’s opinions and convey them to the government,' adding, 'Discussions have already begun internally.'
The government-backed 'K-Bio and Vaccine Fund,' which directly injects funds into corporations, is also expected to face difficulties. This initiative, led by the government, aims to revitalize financing for domestic pharmaceutical and bio companies for clinical trials, R&D, global market entry, and mergers and acquisitions. It has been the only funding avenue for small businesses struggling to attract investment.
The situation has also affected domestic researchers and startups' R&D initiatives. The previous day, a budget cut led by the opposition passed in the National Assembly, resulting in a reduction of 165.5 billion won in the health and welfare sector budget compared to the government's proposal. Among this, the budget for the 'Korean-style ARPA-H' project, aimed at addressing pressing health issues, was cut by 6.9 billion won compared to the government proposal.
The Korean-style ARPA-H is a flagship large project of the Ministry of Health and Welfare that started in 2023. Its goal is to undertake mission-oriented R&D that is costly and challenging, aimed at resolving health challenges and crises faced by the nation. It benchmarks the models of the Defense Advanced Research Projects Agency (DARPA) under the U.S. Department of Defense and the Advanced Research Projects Agency for Health (ARPA-H) under the U.S. Department of Health and Human Services.
DARPA is synonymous with challenging and innovative R&D. The messenger ribonucleic acid (mRNA) vaccine developed just a year after the COVID-19 pandemic began, Apple's voice recognition system (Siri), Google Street View, stealth technology, and the Global Positioning System (GPS) have all come to fruition with DARPA's groundbreaking support. President Joe Biden established ARPA-H in 2022 to apply this concept to medical research, with an annual budget of $1.5 billion (2.15 trillion won). The Korean-style ARPA-H, which mimics this, is a project that depends on the government’s will and support, and it has been hit by a crisis right in its first year.
At a presentation of excellent projects by the National New Drug Development Foundation the previous day, a Chief Technology Officer (CTO) from a bio corporation stated, 'Many researchers and startups in Korea are creating growth opportunities through government R&D projects,' adding, 'If the execution and selection processes of the various relevant ministries involved in R&D policy come to a halt or are delayed, the burden on maintaining personnel at companies increases, and it could fall behind in global technological competition.'