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THE INVESTOR
September 20, 2021

Bio & Medicine

Why do S. Korean pharma companies fund bio startups?

  • PUBLISHED :April 30, 2019 - 15:35
  • UPDATED :April 30, 2019 - 15:35
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More and more South Korean pharmaceutical conglomerates are showing interest in funding small bio companies, as they see some merits in doing so.

According to the annual reports of local pharma companies last year, Yuhan was the most active in investing in bio firms.

“So far, we have invested in around 10 bio companies and we hope to continue to expand our investments,” a Yuhan spokesperson told The Investor.

Among other firms, GC Pharma, Hanmi Pharmaceutical, Daewoong Pharmaceutical and Chong Kun Dang Pharmaceutical have funded more than three bio companies each. 




Profits from withdrawing

One of the main reasons for funding is the profits they make from such investments.

Ildong Pharmaceutical announced on April 21 that it has sold off its entire stake in its strategic partner Cellivery Therapeutics -- 2.9 percent that it bought for 2 billion won ($1.71 million) in 2017.

Cellivery is a Seoul-based bio startup developing proprietary macromolecule intracellular transduction technology, or MITT, which allows functionally active macromolecules to rapidly transverse cellular membranes. Through this sale, Ildong profited around 8.7 billion won within a short period of time.

It is not the only one that has benefited financially from investing in bio companies. Bukwang Pharmaceutical, which bought Anterogen shares for around 4 billion won in 2002, also sold around 100,000 shares of the bio company last year and profited around 77.4 billion won.

“We will continue funding bio companies that can be profitable for us,” an Ildong spokesperson told The Investor.

“At the same time, we hope to fund bio companies that have pipelines that we can co-develop with to expand our business.” 


Synergies from working together

Like the case of Ildong, many pharma companies also seek a chance to work with small bio companies that have potential.

In 2011, Yuhan funded Ensol Biosciences, which develops new drugs including Alzheimer’s disease treatment using big data. Along with the funding, Yuhan -- which currently owns 11.8 percent stake -- in-licensed drug candidate YH14618 from the bio company.

Both the companies in 2018 successfully licensed out YH14618 for a potential profit of 240 billion won to US company Spine Biopharma, which specializes in developing treatments for spinal maladies.

“After our new CEO was appointed, we have been taking steps to see some fast results, to make up for our insufficient R&D funding in the past. So, we are looking at funding bio companies, which can shorten our development time by up to three-four years on average, compared with developing drugs from scratch on our own,” the Yuhan spokesperson said.

“Small bio companies also need some funding to grow. We are not aiming to take over the company management, so we are only buying less than 10 percent stake in bio firms,” he added.

Yuhan also emphasized that it most recently invested 6.5 billion won in bio startup Genesco’s R&D department and successfully co-developed its drug candidate YH25448.

By Song Seung-hyun (ssh@heraldcorp.com)

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