The Ministry of Health and Welfare will create a new category, "quasi-innovative pharmaceutical companies," for small and venture pharmaceutical corporations that invest above a certain level in research and development (R&D).
The government currently certifies corporations with a high share of R&D investment as "innovative pharmaceutical companies," providing benefits such as extra points in government R&D programs, a tax credit, preferred reimbursement prices, and priority review of medicines. On Jul. it overhauled the innovative pharmaceutical company certification system, raising the R&D investment criteria and strengthening quantitative evaluations.
The ministry plans to lower the bar compared with innovative pharmaceutical companies and set up a growth ladder to support small and venture firms that meet R&D investment levels.
The Ministry of Health and Welfare held the "1st public-private consultative body for pharmaceutical industry innovation" at the Koreana Hotel in Jung-gu, Seoul, on the 2nd and discussed measures to strengthen the competitiveness of the pharmaceutical industry reflecting these points. Second Vice Minister Lee Hyeong-hun and Chairman Noh Yeon-hong of the Korea Pharmaceutical and Bio-Pharma Manufacturers Association (KPBMA) served as co-chairs, and 21 people from the government, public institutions, the pharmaceutical and bio industry, and experts participated.
◇ New "quasi-innovative" category added… Step-by-step development of R&D corporations
The ministry plans to build a step-by-step development system that proceeds from "startup → quasi-innovative → innovative → global-level pharmaceutical companies."
In the industry, there has been concern that domestic small pharmaceutical firms could face heavier burdens due to the government's recent cuts to prices of generic drugs, and the intent here is to enhance industrial competitiveness by offering preferred pricing to corporations that invest in R&D at a certain level.
Previously, the Health Insurance Policy Deliberation Committee approved preferred pricing for up to 4 years at 50% for newly listed generics produced by quasi-innovative corporations, and pricing at about 47% for three years for already listed medicines.
This consultative body discussed follow-up measures to specifically designate and operate the corporations to which preferred pricing will apply.
Quasi-innovative status will be designated mainly based on the share of R&D investment relative to pharmaceutical sales.
Corporations with average pharmaceutical sales under 100 billion won over the previous three years must meet an R&D share of at least 7% and a minimum R&D investment of 5 billion won. For those with sales of 100 billion won or more, the threshold is 5%, and for corporations meeting U.S. cGMP or European Union (EU) GMP quality standards, at least 3% has been proposed.
Disqualifying factors such as rebates or unethical conduct by executives and employees will be applied the same as for innovative companies. The designation period will be three years, and the Korea Health Industry Development Institute (KHIDI) is being discussed as the body to handle applications, intake, and reviews. The ministry plans to establish a legal basis within the year and then accept applications for quasi-innovative pharmaceutical companies.
◇ Adjusting scoring for certification of foreign pharmaceutical companies
It also specified the certification evaluation criteria for innovative pharmaceutical companies to induce domestic investment and open innovation by foreign pharmaceutical firms such as global big pharma.
Foreign pharmaceutical companies can choose to apply under either the domestic pharmaceutical company certification standards or the foreign pharmaceutical company certification standards.
To promote the attraction of domestic research and production facilities by foreign pharmaceutical companies, the score for research and production facilities will be raised from 5 to 8 points. The score for partnership and collaboration activities will also be increased from 8 to 14 points.
On the other hand, considering that foreign pharmaceutical companies often have their headquarters hold the technology and patents, the score for technology transfer outcomes will be lowered from 8 to 3 points.
◇ Consultative body to meet monthly… Comprehensive plan in Nov.
The consultative body plans to address as key agenda items: ▲ fostering innovative and quasi-innovative pharmaceutical companies ▲ strengthening oversight of contract sales organizations (CSOs) for medicines ▲ scaling and specialization of corporations centered on generics and transforming them into export-oriented corporations ▲ promoting development of bio new drugs, improved new drugs, and natural product new drugs ▲ innovating new drug development and manufacturing using artificial intelligence (AI).
By Nov., the ministry plans to prepare a comprehensive improvement plan to strengthen the competitiveness of the pharmaceutical industry, submit it to the Pharmaceutical Industry Promotion and Support Committee, and finalize it through a vote.
Second Vice Minister Lee Hyeong-hun said, "We hope to share the current state of the pharmaceutical industry in our country in the consultative body and, through intense discussions, set the direction for fostering and developing the pharmaceutical industry that will drive our country's growth."
KPBMA Chairman Noh Yeon-hong said, "We hope that the opinions presented by pharmaceutical and bio corporations will be sufficiently reflected to create an opportunity for development across the entire pharmaceutical and bio industry ecosystem."
Meanwhile, there are currently 47 innovative pharmaceutical companies: 32 general pharmaceutical firms, 11 bio ventures, and 4 foreign pharmaceutical companies. Under the innovative pharmaceutical company certification system revised in Jul., applications for new certifications in the second half of this year are being accepted from the 18th of last month to the 18th of this month. After reviews, the ministry plans to finalize and announce the new certifications in Dec.