Bio Sector Stands Strong Amid Frozen Venture Market
Funding and R&D Challenges Remain, but Detailed Strategies Are Lacking
No Meetings Held Since Ministry's Advisory Group Launch in May
Even as the domestic venture investment market has frozen, large sums of money are pouring into bio and medical startups. Meanwhile, the government task force (TF) launched to support this sector has remained virtually inactive for nearly half a year, failing to deliver any results. Critics point out that while private capital is betting on the industry's growth potential, institutional support remains stagnant.
According to the Korea Venture Capital Association on October 2, new investments in bio and medical venture companies from January to August this year reached 735.2 billion won, an 8% increase compared to the same period last year. The share of bio and medical investments in total venture capital expanded from 16.6% to 18%. In September alone, bio and health startups raised 100.6 billion won, accounting for a significant portion of the total startup investment of 380.7 billion won.
In short, the current state of the venture investment market can be described as "a phase where only the bio sector is holding strong." Due to the economic slowdown, the overall market remains contracted for the second consecutive year, but funds are concentrated in the bio sector, which stands out for its technological capabilities and long-term growth potential. Based on venture investment funds, investment in the ICT service sector from January to August this year amounted to 1.1042 trillion won, more than 200 billion won less than last year’s 1.3439 trillion won.
A similar trend is observed in the statistics compiled by the Ministry of SMEs and Startups, which include the investment performance of new technology business finance companies. According to the ministry’s report on venture investment for the first half of the year, investment in the bio and medical sector increased by about 14.5%, from 852.7 billion won to 976.7 billion won. While the numbers differ depending on the scope of the data, the fact remains that bio shows the most pronounced growth rate across all sectors.
While bio companies are increasing their presence, discussions on government support are progressing slowly. The Ministry of SMEs and Startups launched the Pharmaceutical Bio Venture TF and an expert advisory group in May, but it is reported that no additional meetings have been held since the kickoff meeting.
The TF was originally established to support the "Measures to Create an Innovative Ecosystem for Pharmaceutical and Bio Ventures" announced by the government in January. At that time, the government pledged to promote the commercialization of original technologies, create a favorable investment environment, activate open innovation, and build an innovation base. However, the implementation of these measures has been delayed due to a change in administration and organizational restructuring. The only tangible achievement so far is the establishment of a new 11.8 billion won research and development (R&D) program dedicated to pharmaceuticals and bio in next year’s budget. Until now, the Ministry of SMEs and Startups has supported bio companies only through general R&D programs, without any dedicated support initiatives.
Although a separate bio track will be newly established next year, the industry still considers this insufficient. Many companies are forced to close down as they fail to overcome the so-called "death valley," and the lengthy and complex clinical trial and regulatory approval processes result in excessive time and costs before commercialization. Therefore, more proactive support is deemed necessary. In particular, there is an urgent call for the establishment of collaborative platforms for global expansion and the development of infrastructure that connects with major pharmaceutical companies and contract manufacturing organizations (CMOs).
There are also growing demands to strengthen the role of the Ministry of SMEs and Startups in supporting bio ventures and startups. An official from a pharmaceutical startup commented, "Other ministries are also creating funds, but supporting ventures and startups falls under the jurisdiction of the Ministry of SMEs and Startups. There needs to be a substantial increase in practical support programs."
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