[Edaily Reporter Kim Jinsoo ] “The fact that global Big Pharma companies are actively pursuing M&A presents an opportunity for K-Bio as well. Since global Big Pharma companies focus heavily on ‘data’ to rapidly commercialize their pipelines, it is important for K-Bio companies to secure a large amount of proof-of-concept (PoC) data.”

Lee Seung-kyu, Executive Vice Chairman of the Korea Bio Association, made these remarks in a recent interview with Pharm e-Daily, e-Daily’s premium pharmaceutical and biotech content platform. “Rather than expanding their pipelines through in-house R&D, big pharma acquires entire pipelines and research teams through M&A,” he said. “This is because acquiring a company is more efficient than purchasing a single compound.”

The global M&A market is at an all-time high. According to data compiled by the Financial Times (FT) on the 21st of last month, 37 biotech companies have been acquired for more than $1 billion (approximately 1.4 trillion won) this year, already surpassing last year’s annual record of 35 deals.

Vice Chairman Lee explained, “Big Pharma’s biggest concern is the patent cliff. Analyses indicate that patent expirations through 2030 will result in losses ranging from 200 trillion to 400 trillion won. To fill the revenue gap, these companies are either acquiring pipelines through M&A or extending patents by changing formulations—such as switching from intravenous (IV) to subcutaneous (SC) injections.”

In particular, while China—which has recently emerged as a powerhouse in the biotech industry—is attracting attention as a target for M&A, there have been no instances of Korean companies being listed as acquisition targets. This has raised concerns that K-Bio may be sidelined in the global M&A landscape.

In response, Vice Chairman Lee said, “China mostly conducts deals based on proof-of-concept (PoC) data. From the perspective of Big Pharma, this is inevitably attractive. However, Korea is conducting deals based almost entirely on preclinical data, rather than clinical data. As China rapidly advances clinical trials with massive funding and speed, conducting deals based on clinical data, it has become a much more attractive partner.”

He continued, “Since global big pharma companies aim for rapid commercialization, they are keeping a close eye on pipelines where research is already well advanced, such as compounds in Phase 2 clinical trials. Accordingly, they often conclude that it is more efficient to acquire the entire organization and personnel who are familiar with the compound—rather than simply licensing technology for individual pipeline assets—and thus proceed with M&A.”

Proof of Concept (PoC) verifies the effects of a candidate compound and is typically obtained during Phase 1 or 2 clinical trials. While preclinical data comes from animal studies, PoC data serves as an indicator of safety and efficacy in actual humans and patients.

Opportunities for K-Bio… Securing PoC Data Is Key

Vice Chairman Lee emphasized, “Given that Big Pharma is currently actively pursuing M&A, this presents a good opportunity

for K-Bio as well

,” adding, “There aren’t many countries capable of supplying pipelines. China and South Korea are the two strongest.”

He explained, “The global community is well aware that South Korea’s healthcare system is excellent. Since our country manages clinical trials more effectively, if we can produce clinical data on par with China, the value of our companies’ compounds and data will be significantly higher.”

According to Vice Chairman Lee, even with only preclinical data, a company can become an M&A candidate if that data is truly outstanding. He noted that since Korean companies lag behind China—their biggest competitor—in terms of funding and speed, they must compete based on the quality of their data and the level of management.

Vice Chairman Lee stated that if domestic platform companies reverse their current strategy, they would actually become more competitive and could emerge as strong candidates for M&A.

He said, “To prove the excellence of platform technology, the underlying compounds must be validated, but domestic companies currently have only the platform,” adding, “While we are currently exporting the platform technology itself, once funds accumulate in the future, if we instead acquire compounds from Big Pharma, apply our own platform technology to them, and patent the results, we will be competitive on the global stage and become strong M&A candidates.”

He predicted that the NewCo model, which has been gaining traction recently, will become a strategic option for pursuing M&A. NewCo, short for “New Company,” refers to a model in which a specific compound is spun off from an existing pharmaceutical or biotech company to form a separate legal entity, which then raises capital from venture capital (VC) firms and other sources to pursue new drug development.

Vice Chairman Lee explained, “A NewCo is strictly project financing,” adding, “It involves intensively developing a single product, and since the goal is to pursue M&A or license out the product, I view it positively.”

Vice Chairman Lee also expressed a positive view of cross-sector M&A—such as Orion’s acquisition of Ligacem Bio and TKG Huchem’s acquisition of a controlling stake in April Bio—as opposed to M&A within the same pharmaceutical and biotech sector.

He said, “There are doubts about the sustainability of acquisitions when traditional pharmaceutical companies—which have not paid much attention to biotech based on their chemical drug backgrounds—acquire biotech firms. I do not believe that traditional pharmaceutical companies acquiring biotech ventures will necessarily lead to better outcomes. Rather, the innovation of the venture could actually decline. However, if the independence of the biotech firm is guaranteed, cross-sector M&A is not a bad thing.”

Regulatory Barriers Hindering M&A Must Be Addressed

He emphasized that for K-Bio to pursue M&A, institutional and structural improvements—which K-Bio is currently facing—must be implemented.

Vice Chairman Lee pointed out, “Recently, the basic requirements for technology-based special listings have included technology export performance and the number of pipeline candidates. To meet these requirements, companies tend to develop only simple small-molecule compounds or substances that are easy to advance to clinical trials. While the number of candidates may increase, after five or ten years, they will lose their competitiveness, the market will deteriorate, and since they will fail to secure Proof-of-Concept (PoC) data—a prerequisite for M&A—they will inevitably continue to be phased out.”

He continued, “In the comprehensive plan for improving disclosures in the pharmaceutical and biotech sectors recently announced by the Financial Supervisory Service, companies were required to present the probability of clinical success—but this is something that is truly impossible to know. It appears to be designed for the convenience of oversight and regulation rather than for the development of the pharmaceutical and biotech industry.”

Finally, Vice Chairman Lee stated, “The government must help companies secure clinical data quickly. It should establish funds to accelerate entry into clinical trials or enable companies to conduct their own trials, and it must propose regulations aligned with the overall flow of the ecosystem.”