[Reporter’s Notebook] How Is a ‘Bio Champion’ Born?

Bio Startup Venture Department Jeong Donghoon Reporter

"The birth of a new German bio champion"

This was the commentary released by the German government as it celebrated the recent acquisition of CureVac by the German biotech company BioNTech for $1.25 billion (approximately 1.7201 trillion won). Once fierce competitors in the development of COVID-19 vaccines and cancer therapies, these two promising German biotech firms?both major players in the global mRNA (messenger ribonucleic acid) vaccine and therapeutics market?have now secured global market competitiveness through this massive merger and acquisition.

This model, in which a country protects and grows its own technology with domestic capital and strategy, originated in the United States. After global big pharma Bristol Myers Squibb (BMS) acquired the American biotech company Celgene for $74 billion (about 101 trillion won), the U.S. biotech startup ecosystem displayed unprecedented vitality. The background that allowed entrepreneurs to boldly take on the high failure rates of new drug development was the existence of an exit (capital recovery) model through large-scale mergers and acquisitions (M&A) by big pharma companies.

In contrast, South Korea still largely relies on the special technology listing system to raise capital, and has not significantly moved away from this structure. Even after listing, biotech companies walk a tightrope of survival until they turn a profit, as they are hindered by requirements such as continued operating losses before revenue and corporate tax deductions. In such a structure, there are neither major investors willing to fund the 'hypotheses' of new drug development, nor buyers to acquire future technologies.

However, the atmosphere has been changing recently. Orion, a company previously outside of the pharmaceutical sector, made a large-scale investment in LegoChem Bio (now LigaChem Bio), a leading domestic ADC technology company. As a result, LigaChem Bio secured a series of technology transfer agreements with companies such as Janssen, reshaping perceptions both inside and outside the industry. SK, Lotte, and OCI have also accelerated their entry into the pharmaceutical and biotech sectors, emerging as new major players in the bio ecosystem.

The fact that large corporations with significant capital are now emerging as growth partners for bio startups is evidence that Korea's bio industry, once sustained only by dreams, is now turning those dreams into reality.

Amid these developments, Samsung Epish Holdings is also set to launch in October. Samsung’s plan is to have Samsung Biologics, a global leader in CDMO (contract development and manufacturing organization), focus on its core business, while the newly established holding company 'Samsung Epish Holdings' will be dedicated to biosimilar and new drug development, as well as strategic investments, thereby establishing an independent growth axis in the bio sector.

This organization has announced plans for long-term investments in next-generation technologies such as ADC, AAV (adeno-associated virus) therapeutics, and cell and gene therapies, and, if necessary, will pursue venture investments and mergers and acquisitions. This structural shift toward "Samsung as an investor" could serve as a turning point for the domestic bio ecosystem.

Furthermore, it is encouraging that the Lee Jaemyung administration has pledged regulatory reforms and policies to promote M&A in the bio industry. Entrepreneurs and scientists should be able to focus on research, large corporations should provide capital and management frameworks, and the government should support the market with appropriate institutional improvements?this is the healthy structure we must now make a reality. Just as the German government celebrated the emergence of a bio champion, we hope that in the near future, our government will be able to issue a commentary stating, "Korea has produced a world-class bio champion."