[New Wave] Strengthening New Drug Development Capabilities through the Korean-style Three-party Division of Labor Model

The government announced the 'Biohealth Industry Innovation Strategy' in May 2019, which includes a plan to invest 4 trillion won in research and development by 2025 to foster the biohealth industry?one of the three major future new industries?to a world-class level. The goal is to triple the biohealth industry's share of the global market, achieve $50 billion in exports, and create 300,000 jobs. To transform the pharmaceutical industry from a domestic market focus to a new industry leading innovation by strengthening new drug development capabilities, it is important to establish an industrial ecosystem and secure global competitiveness accordingly.

Developing new drugs requires enormous costs and time, but the success rate is very low. It takes 10 to 15 years to develop innovative new drugs, which are technological innovations in the pharmaceutical field, and only one out of 10,000 candidate substances can succeed. The cost ranges from 300 billion won to as much as 1 trillion won. Therefore, it is practically difficult for a single company to handle the entire drug development process. Considering these characteristics, one of the key new drug development strategies is open innovation through collaboration.

One representative strategy of open innovation is the three-party division of labor model. In this model, a company with technological commercialization capabilities adopts new drug candidate substances at the initial development stage from universities (bio ventures), further develops them, and then exports (transfers) the technology to large global companies, promoting mutual growth and cooperation between companies.

So far, the global pharmaceutical industry has formed a division of labor structure where biotechnology venture companies, universities, and small and medium pharmaceutical companies create new drug candidate substances, and large global pharmaceutical companies receive technology transfers to conduct clinical trials, obtain approvals, and handle marketing.

Compared to advanced countries such as the United States and Europe, South Korea, as a latecomer in new drug development, needs to expand the collaborative model of open innovation to secure competitiveness. Universities and government-funded research institutes, which secure national R&D project funding and high-level researchers, acquire original new drug candidate substances, which domestic pharmaceutical companies then license and develop further, eventually exporting the technology to global giant pharmaceutical companies. This is a business model of three-party division of labor in new drug development.

If a cooperative relationship and division of labor structure are formed between universities, government research institutes, venture companies, and pharmaceutical companies, and technology is transferred to foreign pharmaceutical companies after the mid-stage clinical trials, the three-party division of labor cooperation structure of domestic universities/government research institutes/venture companies → domestic pharmaceutical companies → global giant pharmaceutical companies is considered a Korean-style open innovation cooperation model that can reduce the gap with pharmaceutical advanced countries such as the United States and Europe.

Recently, success stories based on the three-party division of labor model have emerged. LegoChem Biosciences licensed new drug candidate substances to Bridge Biotherapeutics and, through research cooperation, re-licensed the technology to the global pharmaceutical company Boehringer Ingelheim, signing a contract to receive royalties of 1.1 billion euros. Yuhan Corporation licensed new drug candidate substances from Oscotec and Ansoll BioSciences, developed them step-by-step, and signed technology transfer contracts with Janssen and Spine Biopharma, achieving technology export results worth $1.255 billion and $218.15 million, respectively.

To expand Korean-style open innovation and secure global competitiveness, the government's role will also be important. It seems necessary to expand specialized government R&D projects that support clinical trials and other activities for projects where technology transfer contracts have been signed between technology providers and technology adopters under the Korean-style open innovation-based three-party division of labor model for global new drug development. Through this, by fostering an ecosystem and providing infrastructure based on open innovation in global new drug development, it will promote division of labor among each entity, expand expertise in each field, and increase the success rate of new drug development.

Jung Yuntaek, Director of the Pharmaceutical Industry Strategy Research Institute

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