Korean drugmakers have stepped up research and development (R&D) investment this year. They are pouring money earned overseas into new drug development to build fundamental strength. Analysts say they are betting their survival on securing future growth engines as the industry environment changes.
◇ Big 5 spend 560 billion won on research and development in first half… new drug trials speed up
According to semiannual reports from Korea's five largest pharmaceutical companies on the 20th, first-half research and development spending totaled 562.8 billion won, up 16% from the same period a year earlier. Hanmi Pharmaceutical(128940) invested the most at 125.5 billion won in first-half research and development. Next were Yuhan(000100) (122.2 billion won), Daewoong Pharmaceutical(069620) (115.7 billion won), Chong Kun Dang pharmaceutical(185750) (113.5 billion won), and GC 녹십자 (85.9 billion won).
Hanmi Pharmaceutical is currently focusing on developing obesity treatments. It plans to commercialize a Korea-tailored obesity drug within the year and a candidate that increases muscle mass in 2031. Yuhan is developing candidates for allergy and metabolic dysfunction-associated steatohepatitis (MASH; fatty liver) treatments following its lung cancer drug Leclaza. They entered phase 2 and phase 1 trials, respectively, in the first half of this year.
Daewoong Pharmaceutical is developing a candidate for a fibrosis treatment. It aims to announce phase 2 results next year and pursue a technology transfer (license-out). Chong Kun Dang pharmaceutical is conducting phase 1 trials for candidates to treat dyslipidemia (hyperlipidemia) and solid tumors. GC Biopharma is developing Alglilo, an immunodeficiency treatment, from an intravenous formulation to a subcutaneous injection.
◇ Pharma industry on alert… "Only aggressive investment will keep us alive"
Korean drugmakers are accelerating new drug development based on cash cows secured overseas. In the pharmaceutical industry, it is commonly believed that bringing a single new drug to market typically requires more than 1 trillion won and over 10 years. Despite the risk of failure, they are increasing research spending because of a sense of crisis that they must survive in the global market.
The industry expects bold investment to continue in the second half. The government's move this month to lower prices of generics, fostering an environment that promotes new drug development across the industry, is also having an impact.
However, some say that even if Korean companies increase research spending, it still falls short compared with overseas. Research and development accounts for about 10% to 16% of these companies' total sales. U.S. drugmaker Eli Lilly and Company invested $13.337 billion (19 trillion won) in research and development last year, 20% of its total revenue.
A Korea Pharmaceutical and Bio-Pharma Manufacturers Association (KPBMA) official said, "In the end, only corporations that secure capital strength and continue aggressive research and development investment can guarantee the future," adding, "Companies also seem to have realized that they need to deliver results such as new drug development or technology exports to achieve sustainable growth."