Though it is not just Korea feeling the sting of low investor sentiment in the bioindustry, it is clear that swift government intervention is crucial to help refuel investment in Korea’s bioindustry.

The Korean government provides incentives such as tax support, eased rules in building R&D facilities, and state R&D projects to innovative pharmaceutical companies.

Still, there are only four domestic vaccine manufacturers on the list of 47 “innovative pharmaceutical companies” designated by the government. 

This includes GC Biopharma, Genexine, Ildong Pharmaceutical, and HK inno.N. 

Also, there are not many domestic vaccine manufacturers in Korea.  Among them, only GC Biopharma, SK Bioscience, and EuBiologics possess a dedicated vaccine portfolio. 

Most other pharmaceutical companies seem to maintain their main business and only pursue vaccine candidates on the side when profitable, proving that there are few incentives for vaccine manufacturers.

Korea is looking to the bioindustry as a future growth engine with heavy investments in digital health technologies to take advantage of Korea’s prowess as a technology giant. 

Like vaccines, the semiconductor industry is also recognized as a national strategic technology. 

However, semiconductor manufacturers are expected to receive expanded tax credits as a Special Taxation Act was submitted to the National Assembly with discussions carded for this month.

But again, vaccine manufacturers are left out of these discussions.

KoreaBIO calls for tax credit for vaccine manufacturers

In response to this, the Korea Biotechnology Industry Organization (KoreaBIO) recently called for the expansion of tax credits for vaccine manufacturers. 

As of 2021, only 11 out of 28 vaccines were produced domestically and Korea's vaccine self-sufficiency rate stood at a mere 39.3 percent.

KoreaBIO made a case for two vaccines that are currently being imported which can be supplied by domestic vaccine manufacturers in the future. 

The two are the intradermal tuberculosis vaccine for which GC Biopharma is currently developing and a meningococcal vaccine which is supplied by GSK but is also under development by EuBiologics.

KoreaBIO said in January the nation recorded a human vaccine trade deficit of $800 million (991 billion won) in 2022.

The bioindustry group pointed out that Korea would have to succumb to the whims of countries with high bargaining power in public health emergencies, risking delayed vaccine supply in a pandemic. 

At the same time, outside of public health emergencies, vaccines would not be supplied free of charge and again be at the mercy of the private market.

Already, Covid-19 vaccine manufacturers, Pfizer and Moderna, have announced a painstakingly high price point for the Covid-19 vaccines between $110 to $130. 

Moderna’s CEO Stephane Bancel is expected to discuss the company's pricing strategy in U.S. Congress on March 22.

In other words, the risk of Korea not being vaccine self-sufficient is high. KoreaBIO said the global vaccine market excluding Covid-19 is expected to expand from $41.37 billion in 2021 to $67.17 billion in 2026.

Korea Biomedical Review tried reaching out to the National Tax Service and various divisions of the Ministry of Economy and Finance for comments but they gave no responses to KoreaBIO’s tax credit request for vaccine manufacturers.

Domestic vaccine manufacturers’ perspective

Offering a different perspective, we asked EuBiologics, a Korean vaccine manufacturer, how tax credits could affect its current vaccine portfolio and what kind of incentives are necessary to steer Korea away from vaccine dependency.

“The reason why domestic bio companies are somewhat passive in the vaccine business is that it is not easy to find a market to sell even if they develop products,” the EuBiologics official replied. “We are also receiving support from the government in our various vaccine pipelines and we are positive about the government's support.”

When the development of vaccine products is completed, the government must purchase a certain quantity from a Korean vaccine maker if there is no significant difference in vaccine price or efficacy, he explained.

An official at another vaccine manufacturer who wished to be unnamed noted that it was possible to develop a Covid-19 vaccine very quickly during the pandemic in the U.S. and other major countries because U.S. companies had excellent financial power and clinical experience but also because the FDA was quick to grant approval for clinical trials.

“Of course, the Ministry of Food and Drug Safety (MFDS) in Korea gave faster approval for Covid-19 related products compared to other drugs, but it was still not as fast as the U.S.,” the official said.

In a pandemic situation such as Covid-19, a government-led policy is needed to guarantee immunity from rapid clinical approval to employees of the MFDS so that clinical trials can proceed quickly, he said.

In March last year, Genexine terminated its Covid-19 vaccine candidate, GX-19N, citing that they missed the timing for the Covid-19 vaccine development. 

Besides Covid-19 vaccines, non-seasonal vaccines like cholera vaccines which are needed only in emergencies appear difficult to manufacture, even when backed by large conglomerates like Sanofi. Shantha Biotechnics, a wholly owned subsidiary of Sanofi, also announced in October last year that they would stop producing cholera vaccines at the end of 2022, citing low demand. 

Although company officials said the decision to stop was made in 2020, the announcement came at a time when cholera vaccines were again in great demand due to the resurgence of cholera in Africa.

Comparing strategies of other markets

According to a report from KoreaBIO, advanced countries are establishing a rapid development system for vaccines against infectious diseases after Covid-19. For example, the U.K. government and CEPI announced the 100-day mission to prepare for future infectious diseases in June 2021.

Meanwhile, the U.S. established the Advanced Research Project Agency for Health (ARPA-H) to promote innovative projects in the healthcare field including vaccine projects. This program aims to facilitate high-risk, high-reward capabilities or platforms to drive biomedical breakthroughs for patients.

Korea needs to develop something similar. In Korea, the RIGHT Foundation provides 4 billion won (approximately $3 million) grants to companies developing vaccines, biologics, and diagnostics with unmet health needs in low- and middle-income countries (LMICs). 

However, further incentives like tax credits could encourage more domestic pharmaceutical companies to enter the vaccine market and help reduce the country’s dependence on vaccine imports which cost the nation greatly in 2022, industry watchers said.