The COVID-19 outbreak appeared to help the growth of Korean bio companies in 2020 as they succeeded in attracting investors by swiftly launching diagnostic kits for the novel coronavirus and securing drug and vaccine-making contracts from overseas biopharmaceutical firms.
Industry analysts have forecast the upward trend in the local bio-healthcare industry will continue through 2021 given demand for diagnostic kits will remain stable as the risk of multiple waves of the pandemic still hangs over most countries.
With global biopharmaceutical companies rushing to launch vaccines and treatments for COVID-19, they also anticipate the country’s contract-based drug manufacturers will get many drug production deals.
In addition, makers of newly developed drugs utilizing microbiomes will gain attention as the growing convergence of DNA sequencing and gene therapies with artificial intelligence technology will accelerate their use to develop new treatments for diseases such as cancer and diabetes.
“Due to the pandemic, attention toward the bio industry was greatly enhanced throughout 2020,” Chae Su-chan, vice president at KAIST and director of the university’s Center for Bio-Healthcare Innovation and Policy, told The Korea Times.
“Forecasting the industry’s future in 2021 ― demand for medical equipment including diagnostic kits, drugs and vaccines ― and medical services will continue to increase,” he said.
In contract-based drug manufacturing, Samsung Biologics is expected to sign multiple deals this year ― the company has already secured two contracts to manufacture COVID-19 treatments for global biopharmaceutical companies.
The company currently operates three plants in Incheon, west of Seoul, with the third one being the largest manufacturing plant in the world with an 180,000-liter capacity. The company is investing 1.74 trillion won ($1.6 billion) to construct a fourth plant.
“In 2021, we will try to make sure there are no issues in constructing the fourth plant. When it is completed, our manufacturing complex will have a combined capacity of 650,000 liters, which accounts for about 30 percent of global contract manufacturing facilities,” a company official said.
Makers of diagnostic kits will also enjoy stable demand for COVID-19 test kits, given the virus’s uncontrolled spread around the world.
Seegene, a local molecular diagnosis company, became one of the world’s leading diagnostic firms in 2020 with its COVID-19 test kits. The company rolled out the testing kits just three weeks after it started to develop them as it used advanced technology to quickly analyze a vast amount of virus data and the classification of patients.
Seegene recently achieved a sales milestone of 1 trillion won, due to it winning the trust of customers with its quality molecular diagnostic reagents. The company plans to increase test kit production capacity to meet the growing demand, estimated to be worth 5 trillion won in the first quarter of 2021, up from the current 2 trillion won. Proving that officials have confidence in the company’s future growth potential, 26 senior executives purchased 16,299 treasury stocks on Dec. 29.
Major investors are recently betting big on local genomics firms as they are expected to have strong returns over the next few years, according to stock market analysts.
Genome & Company is one firm receiving attention from investors. Founded in 2015, the company develops innovative therapeutics in immuno-oncology, mainly utilizing microbiomes. The company aims for its microbiome therapeutics to be used in cancer and diabetes. The firm also plans to develop other business models using microbes and probiotics, advancing into the cosmetics and dietary supplements markets.
The company is set to secure more funding opportunities as JPMorgan invited its leaders to make a presentation at the 39th Annual JPMorgan Healthcare Conference, which will run from Jan. 11 to 14.
“Genome & Company will explore chances for strategic partnerships through various one-on-one meetings with top-level institutional investors who will attend the event. Specifically, we will introduce the specifics of a product pipeline being developed and also we are seeing progress in discussions of possible licensing agreements,” the company said.
Gov’t urged to draw up long-term plan
Despite the strong performance of local bio-healthcare players in 2020, industry analysts stressed they are being left behind global biopharma giants in terms of developing new drugs and vaccines.
To help them succeed in developing new drugs, which requires an enormous amount of money and time, they have called on the government to deliver proper measures to support their long-term research projects.
They said the COVID-19 outbreak was a chance to confirm the local bio industry’s technological capability as several companies agilely rolled out coronavirus test kits and the government’s healthcare and quarantine measures worked properly in a timely manner.
But at the same time, the virus pandemic also proved their lack of capability in new drug and vaccine development, lagging way behind overseas biopharma giants in terms of launching treatments or a vaccine for COVID-19.
“After the virus outbreak, Korean companies gave promise of potential to become noteworthy players in the global bio industry. But the virus crisis also showed there was a great gap between them and foreign bio firms in terms of drug and vaccine development capabilities,” Chae said.
“This stems from the government policy, which pushed local companies to come up with tangible results in a short time. Given that new drug development requires an enormous amount of time and money ― more than 1 trillion won and a decade for development ― the government is urged to come up with a long-term support plan to help local companies with their drug-making activities,” the KAIST vice president added.