[Edaily Reporter KIM SAE-MI ] A mega-pharmaceutical company with a market capitalization of approximately $400 billion (about 570 trillion won) was on the verge of being formed. This came as AstraZeneca, a leading global pharmaceutical company based in the UK, had been discussing a merger with U.S.-based Bristol-Myers Squibb (BMS) over the past few months. The two companies even considered a deal involving a combination of cash and stock and advanced discussions with the goal of announcing the merger in August; however, it is reported that they ultimately called off the negotiations after investor backlash intensified following the leak of related information.

Although the negotiations were halted, the fact that even one of the world’s top pharmaceutical companies considered merging with a competitor to secure future growth momentum holds significant implications for K-Bio. While Chinese biotech companies are being acquired by global Big Pharma for trillions of won on the strength of their innovative new drugs, and Japanese pharmaceutical companies are acquiring U.S. biotech firms one after another, K-Bio is becoming an outcast in the global mergers and acquisitions (M&A) market—unable to act as either an acquirer or an acquisition target. Critics point out that while K-Bio has the “technology to sell,” it has yet to create a company that global firms would want to acquire in its entirety.

China Is “Being Bought,” Japan Is “Buying”… Where Does Korea Stand

? Even world-class pharmaceutical companies are actively considering the option of acquiring competitors’ assets and organizations outright, rather than relying solely on internal R&D for growth. This is because sales of existing blockbuster drugs are disappearing due to patent cliffs, while the cost and time required to develop a single new drug are increasing steadily. The total value of M&A deals in the global life sciences industry reached approximately $240 billion (about 341 trillion won) last year; while the number of deals decreased, the average deal size more than doubled compared to the previous year.

The M&A landscape is also changing rapidly in Asia. China stands out the most. AstraZeneca acquired the Chinese cell therapy company Gracel Biotechnology for up to $1.2 billion (1.7 trillion won), while Denmark’s Genmab acquired the Chinese antibody-drug conjugate (ADC) company Profound Bio for $1.8 billion (2.6 trillion won). BioNTech also acquired China’s BioTeus for an upfront payment of $800 million (1.1 trillion won) and up to $950 million (1.4 trillion won) in milestone payments to secure “BNT327,” a PD-L1/VEGF bispecific antibody candidate. In effect, Big Pharma companies have moved beyond simply licensing technology and are now on a shopping spree for Chinese biotech firms.

China’s growing presence is no coincidence. China’s share of global early-stage new drug development programs has surged from 8% in 2015 to over 32% in 2024. Analysts note that as the number of assets—which not only include a wealth of new drug candidates but also rapidly advance to the clinical stage, demonstrating potential efficacy in human trials—continues to grow, global pharmaceutical companies have increasingly strong justifications for acquiring entire companies.

Japan, on the other hand, is increasing its presence in the opposite direction. Japanese pharmaceutical companies are actively acquiring growth drivers overseas. In 2023, Astellas acquired Iveric Bio, a U.S.-based ophthalmology-focused biotech company, for $5.9 billion (8.4 trillion won), and in 2024, Ono Pharmaceutical acquired Desypera, a U.S.-based oncology drug developer, for $2.4 billion (3.4 trillion won). Otsuka Pharmaceutical also acquired U.S. new drug developer Znanana Therapeutics that same year for an upfront payment of $800 million (1.1 trillion won).

While China has emerged as a target for global Big Pharma, led by its innovative drug pipelines, Japan is pursuing a strategy of securing growth momentum by directly acquiring overseas biotech companies based on its solid financial strength. In contrast, domestic pharmaceutical and biotech companies are assessed as remaining on the “periphery” of the global M&A market, neither as acquirers nor as targets.

Selling Technology but Not Companies… The Paradox of K-Bio M&A

The situation in Korea is quite different. While domestic biotech companies are gaining recognition for their new drug technology by securing successive technology export deals with global pharmaceutical firms, it is rare for an entire company to be discussed as an M&A target by global Big Pharma. It has been pointed out that global pharmaceutical firms are content to purchase only the rights to use specific drug candidates or platforms they need from Korea, and do not yet feel a strong enough need to acquire the entire research organization and subsequent pipeline.

Ultimately, this means there is a significant gap between a “company with good technology” and a “company worth acquiring.” For Big Pharma to acquire an entire company, the potential of a single candidate compound is not enough. The company must possess multiple pipelines that have completed proof-of-concept (PoC) in clinical trials, a research organization capable of continuously generating follow-up candidates, and platforms that can be repeatedly applied to other drugs. There are also concerns that, given the structure where a significant number of domestic biotech companies opt for technology exports before reaching late-stage clinical trials due to a lack of funds, there are limits to growing their enterprise value.

A biotech industry official lamented, “Even top-tier global companies like AstraZeneca and BMS are seeking transformation to anticipate market changes and secure future competitiveness, yet domestic pharmaceutical companies remain complacent with their existing generic drug businesses,” adding, “Domestic companies often only consider M&A after being pushed to the brink of survival.”

There are calls for domestic M&A to differ from “survival-oriented” mergers, where merely troubled companies join forces to maintain their size. Instead, there is a need for “growth-oriented M&A,” in which pharmaceutical companies or large conglomerates with capital and global commercialization capabilities partner with biotech ventures possessing technological expertise to jointly develop products from clinical trials through approval and sales.

Yoon Seon-ju, CEO of APIT Bio, said, “What is needed in Korea is not a simple merger between generic-focused pharmaceutical companies, but a partnership between pharmaceutical companies with commercialization capabilities and biotech ventures with new drug pipelines.” She added, “If global pharmaceutical companies are combining their capabilities, technology, and capital to ensure survival and competitiveness, it is time for domestic pharmaceutical and biotech companies to consider why they must continue to go it alone.”