[New Wave] Need for Development Fund to Foster Leap to Global New Drug Power

The demand for pharmaceuticals continues to increase amid the global trend of an aging population leading to a rise in chronic disease patients and the transition to a welfare society. Furthermore, the importance of the pharmaceutical and bio industries has grown significantly due to the COVID-19 pandemic, drawing attention as a next-generation strategic industry.

Major pharmaceutical and bio powerhouses such as the United States and Europe are focusing on fostering new drug development businesses as advanced industries that drive national wealth creation and ensure national security. Particularly notable is the movement in the United States, which leads new drug development. President Joe Biden elevated the White House Office of Science and Technology Policy (OSTP), responsible for science and technology, to a cabinet-level position and appointed a geneticist who co-led the Human Genome Project to this post. Since the OSTP advises the U.S. president on issues including nuclear weapons and atomic energy, the position has traditionally been held by physicists. Appointing a biotechnologist to this role signals a commitment to overcoming the COVID-19 pandemic and a clear intention to place greater emphasis on life sciences sectors such as biohealth as next-generation growth engines.

Our government has also been focusing on new drug development as one of the ten core future strategic sectors since 2009. In May 2019, it announced three new industries?next-generation semiconductors, future automobiles, and biohealth?and unveiled the ‘Biohealth Industry Innovation Strategy,’ which includes plans to invest 4 trillion won in research and development (R&D) by 2025 to strengthen new drug development capabilities.

Humira, AbbVie’s autoimmune disease treatment, which is the world’s top-selling pharmaceutical, generated annual sales of $20.5 billion (approximately 25 trillion won) as of 2018. However, developing a global new drug is a high-risk field, requiring an estimated 10 to 15 years of R&D and costs exceeding $1.3 billion (approximately 1.556 trillion won), with an average success rate of only 0.01%. This underscores the need for long-term and continuous investment in new drug development.

The total R&D investment in the pharmaceutical sector in South Korea was about 3 trillion won in 2020 based on listed companies, which is only about 2% of that of the United States. While global new drugs attract our attention, we are at an absolute disadvantage worldwide in terms of financial capacity. Government R&D investment inevitably has limitations, and its sustainability cannot be guaranteed due to policy variables. Although provisions for a fund to foster the pharmaceutical industry were discussed during the enactment of the Pharmaceutical Industry Promotion Act, they were ultimately removed during the legislative process.

The Pharmaceutical Industry Promotion Act has now been in effect for 10 years. The industry has made remarkable progress to the extent that it is difficult to find traces of the past pharmaceutical and bio industry levels in various indicators. However, it is now time to face a new decade different from the past. The pharmaceutical and bio industry ecosystem has undergone significant changes, and the foundation for securing global competitiveness has been established. The Ministry of Health and Welfare has operated various specialized pharmaceutical and bio industry funds, which have shown better-than-expected returns, increasing trust in fund management and prompting considerations for reinvestment.

It is now time to establish a Pharmaceutical Industry Development Promotion Fund based on the Pharmaceutical Industry Promotion Act and operate a mega fund to support large-scale global expansion. The profits generated should be reinvested as a fund to explore virtuous cycle development that supports public interests and the advancement of the pharmaceutical and bio industries through insurance support for ultra-high-priced drugs and medical expense funding.

Jung Yuntaek, Director of the Pharmaceutical Industry Strategy Institute

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