Yoon government vows to nurture bio, focuses on cell cultures, AI diagnostics


Yoon government vows to nurture bio, focuses on cell cultures, AI diagnostics 


President Yoon Seok-yeol and the government have announced their intention to foster bio through the creation of bio clusters, and the industry has shown considerable expectations. On the other hand, it is pointed out that more realistic and specific support measures are needed for proper development. However, it is analyzed that companies in the fields of cell culture media, artificial intelligence (AI) diagnostics, and digital therapeutics will benefit if the government has the will and properly implements the fostering plan.


According to the pharma-bio industry on the 5th, President Yoon Seok-yeol and the Ministry of Strategy and Finance announced a plan to foster and revitalize the bio sector cluster through the Global Cluster Strategy Conference for High-Tech Industries on the 1st. The plan aims to create a bio cluster ecosystem where companies, universities, research institutes, and medical institutions are integrated by the central government and local governments. To this end, it promises to ease regulations, activate R&D of original and commercialized technologies, attract excellent companies and talents, and expand tax benefits.


Industry "welcomed" but "critical of practical solutions"


The government aims to create a Korean bio cluster comparable to the Boston Cluster, the world's largest bio cluster, to provide comprehensive support from basic bio research to companies. Specifically, it will include bio core technologies as national strategic technologies, expand the scope of cash support for foreign-invested companies related to bio manufacturing process technologies to 50% (previously 40%), and create a KRW 1 trillion mega fund by 2025 to invest in the entire life cycle of innovative biopharmaceuticals, including R&D, clinical trials, exports, and M&A. 


In this regard, the bio industry has expressed both welcome and concern. An official from the Korea Pharmaceutical and Biotechnology Association said, "In Boston, U.S., innovative value is being created, such as new drugs being developed through bio clusters." "Bio clusters have high competitiveness because they are densely populated with not only corporate research institutes but also medical institutions and venture capital (VC). The plan to foster bio clusters is expected to become an innovation hub."


On the other hand, a senior bio company executive pointed out that practical solutions should be provided. "The government's continued announcement of policies to foster the bio industry is certainly hopeful and can serve as an opportunity to change the atmosphere, as investment in the bio sector has shrunk a lot recently," he said. "Currently, there are clusters in many regions, but it is very difficult to attract talent except for Pangyo. The creation of clusters in non-metropolitan areas may have limitations." He also pointed out, "Expanding tax benefits is good, but a system that enables natural exchanges between similar research companies, associations and the government, government support organizations, research institutes, and university and hospital-level medical institutions should be created to create practical effects." 


Cell culture media-AI diagnosis benefits, Amicogen-Lunit and others in the spotlight


Separately, the inclusion of biopharmaceutical core technologies as national strategic technologies and the promotion of seven leading R&D projects in digital bio are analyzed to have a significant impact on related companies and industries. "The plan to foster the bio cluster will benefit many companies in the bio sector and digital healthcare," said a venture capital bio investment judge. "The plan to simplify the IRB review process in the digital healthcare industry is expected to benefit many companies in the process of conducting clinical trials."


In fact, the animal cell culture technology included in the National Strategic Technology belongs to a small-scale technology, and the core of the technology is the medium, also known as cell meal. Media is essential for the production of biopharmaceuticals, and only a few companies, including Amicogen and Excelsior Pharmaceuticals, have secured localized technology. Amicogen (092040) began joint development with Target (001680) and Korea Institute of Advanced Industrial Science and Technology in 2020 to localize medium production technology, and since February last year, it has been building a medium factory with a gross floor area of 23,140㎡ (2 basement floors and 7 floors above ground) in Songdo with an investment of about 61 billion won. Excelsior Pharmaceuticals is a powerhouse in the cell culture field, having developed not only the second-generation animal cell culture medium but also the third-generation chemical composition medium. As animal cell culture technology is included in the national strategic technology, related companies can receive a 15% tax credit for large and medium-sized enterprises and a 25% tax credit for small and medium-sized enterprises when investing in facilities.


A representative from the cell culture media industry said, "We welcome the government's decision to include animal cell culture technology as a national strategic technology. We believe that the tax incentives for facility investment will be very helpful." However, in order for this support plan to lead to the actual revitalization of the industry, it is necessary to strictly select companies with advanced technologies and specify a plan for intensive support."


In addition, as the government announced plans to upgrade the data-based digital healthcare industry (△AI-based new drug development innovation, medical field innovation, national mental health management innovation, and aging response innovation), diagnostic and drug development companies using AI are expected to benefit. AI diagnostic companies Lunit (328130) and Buno (338220), rare disease diagnostic company Threeillion, AI drug development company Standardim, and digital therapeutics companies Aimmed and Rowan are also classified as companies to watch. In fact, Lunit's stock price has increased for three consecutive trading days since the government's announcement, rising from 80,000 won to 98,700 won (as of May 2). Similarly, Buno's stock price increased by about 19% from 19,800 won on May 31 to 23,650 won on June 2.


An AI industry insider said, "This government support plan is expected to be an important momentum for the AI diagnosis industry. Especially in the AI industry, there is a shortage of talent, and it is significant that the government is actively cultivating talent." The Chief Business Officer (CBO) of a rare disease diagnostic company said, "The plan to create a digital bio infrastructure emphasizes collective competition rather than individual competition. It is essential to create synergy to increase national competitiveness." He added, "Although it is improving a lot, there is still a big gap between the speed of technological advancement and the speed of application. Every year, voices are raised to improve regulations, but the slow pace is regrettable. We believe that competitiveness will be strengthened if industry, academia, and research institutes take this opportunity to meet each other's needs and lead to practical industry revitalization."