"When will biotech come back to life?"
Many executives in the biotech industry recently expressed concern over stock prices in unison. Although the KOSPI index surpassed 9,000 this year, the "KRX Healthcare Index," composed of major domestic pharmaceutical and biotech companies, has fallen nearly 30% compared to the beginning of the year.
Companies that generate stable profits do not need to be swayed by short-term stock fluctuations. Biotech is different. It often cannot generate immediate revenue and may require over a decade of continuous new drug development. Due to its business nature, fundraising through capital markets is essential. This explains why recent poor stock performance is viewed seriously.
Recently, concerns are growing that investment in early-stage biotech ventures and startups is declining, potentially causing the foundation of the industry ecosystem to collapse. As investor sentiment toward biotech in the stock market has worsened, unlisted new drug development companies with relatively high risks have found it even harder to secure funding. The proportion of investments by domestic venture capital (VC) firms in early-stage companies within three years of founding dropped from 63.5% in 2002 to just 14.1% last year.
K-biotech stands at a crossroads: whether to leap forward globally or not. Currently, the global biotech market is in a fierce competition for dominance as blockbuster drugs (pharmaceuticals with annual sales exceeding 1 trillion won) face large-scale patent expirations. It is projected that exclusive rights for approximately 200 pharmaceuticals, including blockbusters, will disappear by 2030.
Global big pharma companies are actively pursuing new drug technology licensing and mergers and acquisitions (M&A) amid market turbulence. This environment could present opportunities for K-biotech, which has primarily attempted commercialization focused on technology exports rather than new drug approvals. South Korea is among the few countries capable of supplying innovative new drug pipelines to global big pharma.
China's biotech rise is threatening. China has rapidly developed its biotech sector through government-led active investment and support, along with regulatory easing. The scale of China's technology exports in the first half of this year reached approximately $110 billion (about 150.15 trillion won), marking a record high.
Last year, China conducted 2,997 clinical trials for innovative new drugs alone, accounting for 57.5% of the global total. Leveraging clinical trial data from numerous new drug pipelines, China has become a key pillar in global technology export transactions. This inevitably impacts K-biotech's global growth prospects.
Whether to leap forward or not, the current severe deterioration in investment sentiment poses a heavy burden for K-biotech at this critical juncture. Each company must restore market trust not only through research and development achievements but also via strict internal controls and transparent communication. For early-stage biotech companies where private investment is difficult, policy funds should be deployed urgently. Recovering investor confidence in biotech could become a crucial step toward achieving growth.
in OPINION
