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Feb 15, 2009 (Vol. 29, No. 4)

S. Korean Gov’t Nudges Biotech Along

The Industry in This Country Is Slowly Being Transformed by Wise Use of Public Funding

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    Government action has been the driving force for restructuring the pharmaceutical industry and making biotechnology the basis for new business activities and firms.

    The development of a biotechnology industry has been a priority of the Korean government for awhile, as outlined in the January 1 issue of GEN. In the process, the emphasis has moved from the chaebols, a South Korean form of business conglomerate, to new start-up companies. According to the Korea Bioventure Association, the domestic biotechnology market is split into biopharmaceuticals (35%), biochemicals (30%), biofoods (20%), and others (15%).

  • Diversification of the Chaebols

    Encouraged by the government, the chaebols took an early lead in biotechnology. Some of the largest investments have been made by CJ (formerly Cheil Jedang), LG Life Sciences (LGLS), and SK Pharma. While most of the funds have gone into firms that are part of the conglomerates, some of the money has been used for new start-up firms.

    CJ was originally part of the Samsung group, the largest of the chaebols and a leading global electronics firm. It has many of the characteristics of a business in a traditional conglomerate. The company split off from Samsung in 1995, though the firms have remained close.

    CJ has two profit centers—food and pharmaceuticals. Its capabilities in fermentation technology have made it a leading producer of food flavorings and animal feeds. In addition to Korea, it has major feed-additive production facilities in China and Indonesia, and is establishing one in Brazil. CJ’s R&D Center for Bioproducts carries out studies on the genomics of microorganisms and develops high-yield strains while pursuing research in process technology and bioengineering.

    Research in drug development is carried out at CJ Pharmaceutical Institute. Recently, the company entered into a material transfer and technology evaluation agreement with Forticell Bioscience. As part of the agreement, it will explore the use of Forticell’s fibrin microbead technology for extraction and expansion of mesenchymal stem cells.  These cells have the potential for in vivo treatment to regenerate or repair damaged or diseased tissues.

    LG Life Sciences became one of the companies of the LG Group in 2002, one of the principal chaebols in electronics and chemicals. LGLS was one of the first Korean companies to apply genetic engineering to the production of a variety of bioproducts. LGLS has been active in establishing agreements worldwide. It has a distribution agreement with Sinovac for its hepatitis B vaccine in China, and a copromotion agreement with Sanofi-Aventis Korea for Stilnox/Ambien.

    LGLS is expanding its efforts on nephrology and endocrinology in India and plans to add manufacturing and R&D capacity there. The firm also has a global licensing and research collaboration with Takeda for LGLS’s program on antiobesity drugs. 

    SK Pharma is part of the SK Group, the third largest chaebol. The Group’s core business is energy production and distribution, though it has made a major drive into biotechnology.

    SK has three major R&D centers—Daedeok Science Town, New Jersey, and Shanghai. Its Shanghai Institute of Technology carries out research into new drugs based on traditional chinese medicine. SK uses its strengths in combinatorial chemistry, genomics, and drug target identification to generate candidate compounds for the treatment of neurologic and metabolic diseases, asthma, pain, and inflammation.

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