Hankyung Research Institute: "Korean Bio Cluster Must Learn Success Secrets from Boston, USA"

Success Factors and Implications of the Boston Bio Cluster in the USA

[Asia Economy Reporter Dongwoo Lee] There is a call to secure the competitiveness of the domestic bio industry through the success case of the Boston Bio Cluster, a global bio complex.

The Korea Economic Research Institute under the Federation of Korean Industries defined the success factors of the Boston Bio Cluster as three key elements: "concentration," "investment," and "hospital collaboration" in its report titled "Success Factors and Implications of the Boston Bio Cluster in the U.S." released on the 30th.

It emphasized that in order for Korea to create a bio-industry ecosystem like Boston, it is necessary to ▲ attract excellent universities, hospitals, and companies around the cluster ▲ activate private investment in venture companies by improving merger and acquisition (M&A) systems ▲ establish support systems for the commercialization of hospital research results.

The Korea Economic Research Institute explained that the Boston Bio Cluster, which has organically developed since the 1980s, is the world's largest bio industrial complex with over 1,000 companies, creating more than 74,000 jobs and generating economic effects exceeding $2 trillion.

The institute analyzed that the influx of talent, capital, and companies into Boston is due to the concentration of prestigious universities such as Harvard and MIT, large hospitals like Massachusetts General Hospital, and a variety of companies ranging from startups to global pharmaceutical firms.

Universities supply talent, hospitals conduct clinical research, and companies gather to commercialize these results, thereby organically forming a bio ecosystem.

On the other hand, Korea is facing difficulties in building a bio ecosystem as there is a lack of research-oriented hospitals essential for clinical trials and translational research around its seven bio clusters nationwide, and these are concentrated in the Seoul metropolitan area, the Korea Economic Research Institute diagnosed. It also pointed out that while venture investment is active and investment recovery is easy in the Boston cluster, this is not the case in Korea.

The institute evaluated that in 2018, venture capital investment in Massachusetts, where Boston is located, reached a record high of $4.8 billion, and private investment in venture companies is active through various investment recovery methods such as initial public offerings (IPOs) and M&As.

In contrast, Korea relies heavily on government funding for venture capital, has a weak M&A market limiting investment recovery methods, and the scale of IPO and M&A amounts per company in Korea is only about 1 to 2% of that in the U.S., the Korea Economic Research Institute explained.

While hospitals in the Boston area actively commercialize research outcomes through collaboration with universities and companies, Korea faces structural difficulties in establishing subsidiaries for technology commercialization due to medical law and tax laws, and the Korea Economic Research Institute argued that improvements are necessary.

The institute added that to secure the competitiveness of domestic bio clusters, research-oriented hospitals concentrated in the metropolitan area should also be fostered in regional areas, and M&A systems should be improved to promote active private investment.

It also added that allowing large corporations to hold corporate-led venture capital to induce startup investment and establishing systems for installing industry-academia-hospital cooperation groups within hospitals are necessary.

This content was produced with the assistance of AI translation services.