The bio-medical industry, which was the largest investment destination for venture capital (VC) companies from 2018 to 2020, slumped to third place in the first half of this year.
According to a report by the Biotech Policy Research Center, new VC investment in the bio-medical industry was 675.8 billion won ($486.2 million) as of June 2022, ranking third after the ICT (1.49 trillion won) and distribution and services industry (760.3 billion won).
VC investment in the bio-medical industry first began to increase after the Korea Exchange (KRX) introduced the special technology listing system in 2005.
The system alleviates certain listing requirements, such as having to satisfy certain profit requirements, for Kosdaq listing applicants based on their technological power and growth potential.
In 2018, the bio-medical sector became the most heavily invested field by VC firms after recording an investment of 841.7 billion won. During that time, 17 of the 21 firms (80.9 percent) that went public through the special technology listing system were bio-medical-related companies.
The bio-medical field ranked first in VC investment for three consecutive years after receiving 1.10 trillion and 1.07 trillion won in 2019 and 2020, respectively.
However, the sector fell behind the ICT industry in 2021, despite new VC investments increasing to 7.68 trillion won, a sharp increase of 78.4 percent from the previous year.
VC companies invested a total of 2.42 trillion won in the ICT sector in 2021, almost double the 1.76 trillion won invested in 2020. The amount of new VC investment in the bio-medical industry in 2021 was 1.677 trillion won.
The report attributed the declining VC investment trend in the bio-medical industry to the recent decrease in bio-medical companies going public through the special technology listing system.
The number of newly listed companies on the Kosdaq using the special technology listing system continued to increase annually, with 39 going public through the system in 2021.
However, in contrast to the high proportion of bio-medical companies going public through the system in 2018, only 14 out of 39 companies (35.9 percent) were bio-medical companies in 2021.
Such companies include VUNO, Prestige Biologics, NeoImmuneTech, BIODYNE, Life Semantics, Genesystem, curacle, DEEPNOID, ViGenCell, ABION, From Bio, CHA Vaccine Research Institute, GENINUS, and ToolGen.
“Recently, the bio-medical sector has been hit by a series of negative issues such as the controversy over accounting irregularities and clinical failures,” the report said. “It is expected that the screening technology special listing system will be more strictly conducted, which, in turn, will affect listing and investment.”