[Edaily Reporter Hong Ju-yeon ] Government policy funds are being channeled through a two-track approach to address the late-stage clinical funding gap, which has been the biggest challenge facing the domestic pharmaceutical and biotech industry. Following the launch of actual investments in biotech companies by the 150 trillion won National Growth Fund led by the Financial Services Commission, the Ministry of Health and Welfare is accelerating the formation of a 1 trillion won mega-fund by selecting the lead manager for the Phase 3 Clinical Trials Specialized Fund—the final component of the fund. The government’s plan is to directly support the Phase 3 clinical trial stage, which has been dubbed the “Valley of Death” due to its enormous costs.

National Growth Fund Disburses 885 Billion Won to the Biotech Sector

The National Growth Fund

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a public-private policy finance program established to foster the nation’s cutting-edge strategic industries—including AI, semiconductors, biotech, and rechargeable batteries—was launched last December. The Financial Services Commission proposed support measures for the second round of mega-projects, including the construction of next-generation biotech and vaccine facilities and research and development (R&D), as well as direct investment and low-interest loans for companies conducting global Phase 3 clinical trials and the establishment of joint ventures (JVs). The fund’s total size amounts to 200 trillion won, with a total of 11.6 trillion won allocated to the biotech and vaccine sectors.

Support that had previously remained at the level of expectations is now translating into actual implementation. LigaChem Biosciences, an affiliate of the ORION Group, received approval for a 500 billion won direct investment from the National Growth Fund’s Fund Management Deliberation Committee last June. This marks the first instance of a biotech company securing direct investment from the National Growth Fund. The High-Tech Strategic Industries Fund is providing 250 billion won, while the remaining 250 billion won will be covered by LigaChem Biosciences’ major shareholders and domestic institutional investors. LigaChem Biosciences is currently conducting global clinical trials for eight antibody-drug conjugate (ADC) drug candidates, one of which—a breast cancer treatment—is in Phase 3 clinical trials.

Earlier, in May, SK BIOSCIENCE received a 300 billion won low-interest loan. The funds will be used for the global Phase 3 clinical trial of “GBP410,” a 21-valent pneumococcal protein-conjugate vaccine being co-developed with Sanofi, as well as for the expansion of the L-House vaccine production facility in Andong, North Gyeongsang Province. That same month, BTGen (formerly STGen Bio), a CDMO subsidiary of Donga ST Group, also secured a low-interest loan of 85 billion won to expand facilities at its Plant No. 1 in Songdo, Incheon. To date, funds disbursed or approved for the biotech sector alone have reached 885 billion won.

Ministry of Health and Welfare’s 1 Trillion Won Mega Fund: The ‘Final Piece’ as a Phase 3 Clinical Trial-Specialized Fund

The Ministry of Health and Welfare’s policy fund track has also entered the final stages of completion. The Ministry had previously announced plans to establish a 1 trillion won “mega fund” to propel the domestic pharmaceutical and biotech industry into the global top five. The plan is to establish funds totaling 900 billion won this year—including a “Phase 3 Clinical Trial Specialized Fund”—and to add another 100 billion won fund next year.

As part of this effort, the Ministry announced on the 27th that it had selected Korea Investment Partners as the lead manager for the Phase 3 Clinical Trial Specialized Fund. Korea Investment Partners has set a fundraising target of 170 billion won, exceeding the initial target of 150 billion won. The plan is to use these funds to provide concentrated support for the successful completion of new drug development for approximately 10 companies in late-stage clinical trials.

The Phase 3 Clinical Trial Specialized Fund was launched to address the investment gap in the late-stage clinical phase, which requires substantial funding and carries high investment risk during the new drug development process. It is a policy fund aimed at providing support through to the completion of clinical trials and commercialization.

In particular, the Ministry of Health and Welfare plans to allow a “priority formation method,” under which investment can begin early once at least 120 billion won—80% of the target amount—is secured, enabling rapid funding for companies in urgent need of capital. If this fund is successfully established following the K-Bio and Vaccine Fund, which has been in the works since last June, a total of 949.6 billion won will be secured, bringing the ministry closer to its goal of creating a “1 trillion won mega-fund.”

The Common Denominator Is “Phase 3 Clinical Trials”… Stopping the Outflow of Technology at Bargain Prices

Both tracks are focused on

Phase 3 clinical trials

. Unlike early-stage basic research, global Phase 3 clinical trials require costs in the hundreds of billions of won, and there have been repeated cases where promising new drug technologies were transferred overseas even after completing Phase 2 trials. According to the National Foundation for New Drug Development, there are currently 57 new drug pipelines undergoing Phase 3 clinical trials in Korea. Industry insiders cite the following companies, currently in Phase 3 clinical trials, as expected beneficiaries: △HanmiPharm(128940) △CHONGKUNDANG(185750) △ Onconic Therapeutics Inc. △curacle co., ltd.(365270) △ Ensol Bio.

Sung Chang-hyun, Director General of the Health Industry Policy Bureau at the Ministry of Health and Welfare, stated, “This fund will serve as a springboard for companies that possess excellent new drug pipelines but have hesitated to proceed with late-stage clinical trials due to a lack of funding.” Noh Yeon-hong, Chairman of the Korea Pharmaceutical and Bio-Pharma Association, remarked, “This Phase 3 clinical trial-specialized fund, the first of its kind established by the government, serves as a solid pillar to ensure that the development of innovative new drugs is not halted due to a lack of funding,” adding, “It is expected to be a turning point that takes the investment ecosystem of the domestic pharmaceutical and biotech industry to the next level.”