Roundup: Pharm multinationals call for S. Korea to build "bio cluster" to foster bio industry

Multinational pharmaceutical companies on Friday called for South Korea's government to help build a so-called "National Bio Cluster," proposed by a local business lobby group to foster the bio industry as a new growth engine.

The call was made during a press conference with foreign correspondents in Seoul by the Korean Research-based Pharmaceutical Industry Association (KRPIA), a lobby group composed of chief executives of 41 South Korean units of multinational pharmaceuticals such as Janssen Korea, AstraZeneca Korea and Sanofi-aventis Korea.

The proposal, initially made by the Federation of Korean Industries (FKI), demanded the National Bio Cluster serve as a complex for research and development (R&D) centers, bio startups, venture capitalists and prestigious universities offering talented bioengineers.

To encourage foreign players to join the proposed bio cluster, the KRPIA asked to provide a 15-year corporate tax exemption or a 5-15 percent cut for multinational pharmaceuticals directly investing in the local biomedicine industry that requires an advanced technology and has a potentially exponential influence.

Kim Oak-yeon, KRPIA chair and chief executive of Janssen Korea, told reporters that the world is waging a bio cluster war, in which South Korea still lacks policy supports like tax benefits despite infrastructure and research talents being secured.

The United States has cultivated bio clusters, including the Boston-Cambridge Bio Cluster and the San Francisco Bio Cluster that formed bio-pharmaceutical ecosystems comprised of universities, R&D centers and venture capitalists.

The Boston-Cambridge Bio Cluster accommodated venture capitalists, 400 registered bio startups, famous hospitals and R&D centers run by multinational pharmaceutical companies as well as Harvard and MIT universities providing talented bioengineers.

The San Francisco Bio Cluster is active in bioengineering research with 50,000 experts from 200 companies nearby and prestigious universities like UC San Francisco, UC Berkley and Stanford.

Singapore attracted about 100 multinational pharmaceuticals in its national bio cluster with aggressive tax benefits, while giving talented students a full payment to experience foreign pharmaceutical companies.

South Korea has also made efforts to develop its pharmaceutical industry in the global market, which is expected to increase to 1.29 trillion U.S. dollars by 2019 at an annual growth rate of 4.8 percent.

In its new year's report to President Park Geun-hye, the Ministry of Health and Welfare said it planned to develop the bio-health sector as a new growth engine. The country's pharmaceutical industry has been transitioning from a generic-oriented to new drug development especially centered on biosimilars and stem cell treatments.

Recent efforts at R&D investments by local pharmaceuticals came to light with the first successful case of Hanmi Pharmaceutical's licensing agreement for a targeted cancer treatment getting an initial 50 million U.S. dollars and being entitled to potential milestone payments of 640 million dollars.

Celltrion launched the world's first antibody biosimilar Remsima, a copycat of Johnson & Johnson's blockbuster rheumatoid arthritis medicine Remicade, in 2012. It has received approval for five products developed in South Korea, with 12 more currently in clinical trials.

Samsung Biologics, the bio-health unit of the country's largest family-run conglomerate Samsung Group, broke ground for its third factory with an annual production capacity of 180,000 liters in Songdo, Incheon, the western port city, in late 2015 to raise its total capacity to the world's largest 360,000 liters by 2018.

Biosimilars refer to near-copycats of biologic drugs that are produced from living cells. Those are generics for biologic drugs that lost patent protection.

South Korea's pharmaceutical market accounts for only 1.7 percent of the global market. The country has 894 pharmaceutical producers, among which 285 produce end drugs. It is the world's 10th largest new drug developer, with export volume ranking 23rd. The country's pharmaceutical exports surged 28.5 percent from a year earlier to a new record of 2.3 billion dollars in 2015. Endit