the statistics and economic perspectives of biotechnology ...ris.org.in/images/ris_images/pdf/101217...

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Dec. 16, 2010, Kandy, Sri Lanka

Dongsoon Lim, Ph. D., ProfessorDepartment of Economics, Dong-Eui University

Korea

The Statistics and Economic Perspectives of Biotechnology Industry in Korea

I. Introduction

II. Biotechnology Industry Statistics in Korea• Classification of Bio-industry Statistics in Korea• Establishment of the Biotechnology Classification System

III. Biotechnology Industry and Policies in Korea• Brief History of the Korean Bio-industry• R&D• Firms, Employment, Papers, and Patents• Bio-industry trade

IV. Concluding remarks

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I. Introduction

Biotechnology: transforming current industries into new ones in the world as well as in Korea Gradually realizing the economic potential of biotechnologyThis presentation: based on industry surveys with R&D, Firms’ economic activities, government policies

Korean biotechnology industry has been successful: - Enjoyed considerable scientific achievements and has grown to a substantial size - Mainly due to continuous effort from both the government and the private sector - Continuous increase in total sales, employment, private and public R&D, and

international trade - During the years 2002~2008, biotechnology sales almost doubled from the equivalent

of US $2.0 billion to US $4.9 billion, an annual increase of 15.6 percent- Employment of FTE increased from 8,604 (Biotech R&D employees, 5,030) to 20,236

(Biotech R&D employees, 10,178) an 18.7(15.1)% per year

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I. Introduction- The Korean government committed additional funds to state-based R&D projects

valued at US$957 million in 2008· Combined with higher education biotechnology total public R&D 1, 908 million US

dollar

- The leading private groups (Chaebol) contiuously established biotechnology firms and research institutes to pursue the business opportunities

· LG Life Sciences, Postech, SK, etc.

- Out of 857 biotechnology firms· 32 per cent are biopharmaceuticals; 22 per cent bio foods; 15 per cent, bio chemicals

- Estimated to rank 11th in 2008, 5,755 papers in SCIE from 29th (420 papers)

- Bio-statistics had been managed by BAK in 1992 ~2002, MKE since 2002 · Provide a stable and consistent set of annual statistics of biotechnology industry and

its activities· Recently the statistical system has been modified at a detailed level of disaggregation

and put more focus on trade statistics

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Introductory Case for Pharmaceutical industry

I. Introduction

South Korea has become an attractive destination for pharmaceutiSouth Korea has become an attractive destination for pharmaceutical cal ‘‘outsourcingoutsourcing’’• Show “a rapidly growing (marked by ‘double-digit’ growth – more than 10%) pharmaceutical industry comprising over 2,000 companies operating in the manufacture of drugs, quasi-drugs and cosmetics”;• Second only to Japan in terms of market potential in Asia for now,•Reflect a wealth of opportunitiesopportunities in market and R&D cooperation for foreign investors and future R&D partners”;

- Offer a large patient population and highly qualified pools of medical facilities and practitioners;- Has revised its relevant domestic laws & regulations in 2001 to meet International…WTO TRIPS standards –

-- Has moved to improve IPR protection, including the protection oHas moved to improve IPR protection, including the protection of pharma test data and to f pharma test data and to prevent the issuance of marketing approvals for patent infringinprevent the issuance of marketing approvals for patent infringing products. Has worked to g products. Has worked to improve drug pricing & reimbursement transparencyimprove drug pricing & reimbursement transparency

- Effective, Jan. 2008, Korean government offers a 7% tax credit on investments in in certain ‘qualified pharma facilities’ against corporate income tax. - But, “less than 10% of (pharma-biotech) segment constitutes domestic production.” See: See: The Changing Dynamics of Pharma Outsourcing in Asia: Are You ReaThe Changing Dynamics of Pharma Outsourcing in Asia: Are You Readjusting Your Sights?djusting Your Sights?, , PriceWaterhouseCoopers (2008).PriceWaterhouseCoopers (2008).

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I. Introduction

Bio-industry has a market size of approximately $5 billion/year and is growing at a constant year-on-year rate”

- Comprised largely of bio-venture companies, 50% of which were publicly listed within the last three-four years”

- Such listings have resulted in increase in stock market values of related pharmaceutical companies

The Korean Government has “initiated various support plans (programs) for bio companiesThe industry’s focus on “stem cell, cell therapy, and anti-cancer drugs” has resulted in a number of product approvals for new drugsThe South Korean bio industry’s strength is in its manufacturing and core technologies” See: Youngguk Cho, Korean Companies Ready to Take-Off”, BioSpectrumAsia.com (Jan. 1., 2008)

Pharmaceutical + bio-industry size – more than $13 billion (2008); Expected to grow to $15 billion by 2010 – 10% growth rate where industry average is 6%. See: Korean Pharmaceutical Industry Profile, Korea Drug Research Association (Aug. 2006). 14% average growth rate per year over the last three years. See: Bio Korea 08 Expects 350 Companies, 25,000 Visitors” BioSpectrum Asia Edition (July 18, 2008).

The South Korean biotechnology industry is poised to take advantage of the 21st Century Knowledge-based Economy

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II. Biotechnology Industry Statistics in Korea

Whether biotechnology-related activity could somehow be reflected in standard statistics classification in national as well as OECD and UN ISIC system?

With the continuous efforts of OECD and participating countries, the biotechnology and bio-industry, quite successfully compiled in conventional statistics system, so in Korea

In Korea, compiled as a distinct activity based on both rules of general statistical system in Korea, such as KSIC (Korea Standard Industry Classification) 8th rev. and SKTC (Standard Korean Trade Classification), a consistent trade statistics of SITC

The statistical system, in principle, decentralized in that each agency has the responsibilities for the particular fields

Managed and operated under the authority of cooperation of separate ministries, mainly MKE, with field work of KIET and BAK

For comparability and consistency of statistics, periodically review the standards of bio-statistical terms and classifications

Classification of Biotechnology and Bio-industry Statistics

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Classification of Bio-industry Statistics in Korea

Table 1. Structure of the biotechnology classification system in Korea


Biotechnology Classification system of 13 categoriesReflecting the status of the Korean Bio-industryStructure criteria: the main value-chains used & the object of the technology

Key BiotechnologiesPurpose of the technologiesValue chains

Safety and efficiency

Fusion

Biosecurity andsustainable development

Production

Bioinfornation analysis and application

Biological Material and Cell

Others

Evaluation

Production and Applications

R&D

G. Bioprocess

F. Metabolic engineering

M. Other biotechnology

L. Biosafety and bioefficiency

K. Bioelectronics

J. Nanobiotechnology

I. Envionmental and bioenergy

H. Bioresource production and utilization

E. Systems biology and bioinformatics

C. Other macromolecular engineering

B. Protein engineering

A. Genetic engineering

D. Cell and tissue engineering

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Table 2. Structure of the bio-industry classification system in Korea

Classification of Bio-industry Statistics in KoreaBio-industry Classification System of 8 categoriesFacilitate Analysis of the Bio-industry & the Economic Impact on the Various Industrial SectorsStructure Criteria: Goods & Services

8. Bioassay, Bioinformatics and R&D service

7. Bioenergy and Bioresources

6. Bioprocesses and equipment

5. Bioelectronics

4. Bioenvironmental

3. Biofoods

2. Biochemicals

1. Biopharmaceuticals

R&D and assay service

Resource and energy

Commodity

Services

Goods

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In 2008, Biopharma. and Biofood accounted for 53.9% (446 firms)With multiple answers, more than 90% firms in R&D, 60% in sales

Figure 1. Bio-firms’ activities

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II. Biotechnology Industry Statistics in KoreaFrom 2002 to 2008, total employment increased 15.1% annuallyResearchers increased 12.3% for 2002 to 2008. 18.5%; manufacturing and service workers at site, 18.5%

Figure 2. Employment in biotechnology industry

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In 2008, 61% of firms are in the stage of saleSales only with imports accounted for 47%; Domestic manufacturing and sales 8%

Figure 3. Bio-firms by business type

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In 2008, Kyunggi and Seoul are major places, accounting for 55.6%; followed by Daejeon.

Figure 4. Regional distribution of bio-firms

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4 Clusters, 25 Centers based on regional characteristics

Seoul

Korea Bio-Hub

Daejeon/Chungcheong Area

Bio-medicine, healthcare, oriental medicine, livestock, functional food

Jeonlla/Jeju Area

New natural materials, biofood, agriculture, functional cosmetics

Gangwon/ Gyoungsang Area

Bio-electronics, process, fishery, marine environment, healthcare,

functional materials, bio-chemicals, marine life, oriental medicine

Based on their respective characteristics, biotechnology centers will be developed across Korea according to their areas of specializationA total of 25 biotechnology centers will be fostered as innovation clusters, which will create added value and serve as an incubator for world-class biotechnology companies

Fostering Regional Bio-Cluster

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II. Biotechnology Industry Statistics in KoreaIn 2008, firms with employment of less than 50 accounted for 60%

Figure 6. Employment in biotechnology industry

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III. Biotechnology Industry and Policies in Korea

1980~1989 : Technology Development Stage Introduction & Development of New Biotechnology Enactment of Biotechnology Promotion Law, 1983

Establishment of Biotechnology Departments & Research Institutes in Universities, 1984 Establishment of the Korea Research Institute of Bioscience & Biotechnology(KRIBB), 1985

1990~1999 : Product Manufacturing Stage Establishment of Bio-industry Association of Korea(BAK), 1991 Formalizing of Biotech 2000 Program(MOST), 1994 Proclaim of Bio-industry Vision 2000(MOCIE), 1994 Development of Bioprocess Technology & Launching of Bio-products

2000~Current : Bio-industry Introduction Stage Establishment of Korean Bio-industry Development Strategy, 2000 Key National Strategic Industry

Inauguration of National Bio-industry Action Plan Productivity Improvement of Generic Products, Development of New & Modified Bio-products Investment Increase in Public & Private Sector

Brief history of Korean Bio-industry

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Year 2002 2004 2006 2007 2008 CAGR(02-07)

Biopharmaceuticals 691 1,047 1,313 1,814 2,179 21.1

Biochemicals 122 154 218 252 298 16.1

Biofoods 957 1,137 1,463 1,416 1,460 7.3

Bioenvironmental 105 121 175 216 230 14.0

Bioelectronics 9 17 28 62 67 38.9

Bioprocesses and equipment 74 49 80 91 284 25.0

Bioenergy and bioresources 46 10 17 27 68 6.8

Bioassay, bioinformatics and R&D service 34 69 105 118 270 41.1

Total 2,038 2,604 3,400 3,997 4,856 15.6

Korean Bio-industry has been growing rapidly - CAGR 2002~2008: 15.6%

Major Driving Force - Support from the Government- Entrepreneurship of R&D Oriented Company

Table 3. Sales and Growth rate of the Korean bio-industry (mil. US$, %)

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2006 2007 2008

mil dollars % mil dollars % mil dollars %

IT 1696 18.6 1989 20.0 1800 15.7

BT 1358 14.9 1549 15.6 1799 15.7

NT 358 3.9 437 4.4 529 4.6

ST 703 7.7 621 6.3 836 7.3

ET 984 10.8 1101 11.1 1404 12.2

CT 50 0.6 65 0.7 70 0.6

Sum 5149 56.3 5763 58.1 6438 56.2

Others 3989 43.7 4164 41.9 5026 43.8

Total 9138 100.0 9927 100.0 11464 100.0

BT is increasing in total public R&D in recent years, accounting for 15.7% as same as IT in 2008

Table 4. Public R&D expenditures and providers (2007 ppp of US$)

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Figure 3. Professional papers of biotechnology and bio-engineering

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Number of domestic patents increased 6.5% per year from 2002 to 2007

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TS (Technology Specialization), as an index for measuring the competitiveness, determined by multiplying a country’s number of patents during the period by the current PII (patent impact index)The current patent impact index, a measure of how important a country’s patents: how often they are citedA PII ratio of 1.0, defined that the country’s patents were cited as often as the overall average The TS was ranked 17th in 1998 to 2001. The rank has been improved 15th in 2002~2005, 14th in 2006~2008, reflecting gradual gain of competitiveness in the biotechnology

Table 8. Biotechnology Patents and Competitiveness

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Patents Patent Impact Index (PII)98~01 02~05 06~08 98~01 02~05 06~08

178 207 152 0.440 0.637 0.651Technology Specialization (TS)

98~01 02~05 06~08TS value Rank TS value Rank TS value Rank

78 17 131 15 109 14

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Table 9 Biotechnology Patents and Competitiveness

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CountryTechnology Specialization (TS)

94~97 Rank 98~01 Rank 02~05 Rank 06~08 Rank

USA 12,111 1 24,497 1 11,809 1 11367 1

Germany 403 3 804 5 837 2 708 5

UK 384 4 948 3 837 5 1055 3

Japan 687 2 1,050 2 738 3 1131 2

Canada 311 5 562 4 424 6 591 6

France 223 8 519 6 367 7 371 7

Netherlands 306 6 355 8 608 4 882 4

Italy 61 14 97 15 118 13 54 18

Israel 61 13 207 11 107 14 150 13

Korea 13 21 78 17 85 15 138 14

Finland 36 17 79 16 76 17 55 17

India 8 20 33 20 76 16 79 16

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III. Biotechnology Industry and Policies in KoreaTable 10. Exports and Imports of the Korean bio-industry (2007 millions of US$)

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Import1998 2002 2008 98~'08,% 02~'08,%

Biopharmaceutical Ind. 84 219 911 2.4 26.9 Biochemical Ind. 22 62 98 1.5 7.9 Biofood Ind. 4 7 23 1.8 22.6 Bioenvironmental Ind. 2 2 3 0.4 11.3 Bioelectronics Ind. 0 6 1 - -24.8 Bioprocess and equipment Ind. 55 188 181 1.2 -0.6 Bioenergy and bioresource Ind. 16 0 17 0.1 153.8 Bioassay, bioinformatics and R&D 0 0 0- 37.5 Total 183 484 1,234 1.9 16.9

Export1998 2002 2008 98~'08,% 02~'08,%

Biopharmaceutical Ind. 200 190 603 1.1 21.2 Biochemical Ind. 242 18 54 -1.5 19.9 Biofood Ind. 62 752 1,014 2.8 5.1 Bioenvironmental Ind. 0 9 12 5.5 4.5 Bioelectronics Ind. 0 9 39 - 26.9 Bioprocess and equipment Ind. 3 11 197 4.4 62.0 Bioenergy and bioresource Ind. 12 1 0 -4.7 -33.9 Bioassay, bioinformatics and R&D 0 3 131 - 86.3 Total 518 993 2,049 1.4 12.8

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III. Biotechnology Industry and Policies in KoreaSub sectors of bio-industry show consistent in trade specialization; Biopharmaceutical, Biochemical, Bioprocess and equipment, net importers; Biofood and Bioelectronics, net exporters GL index for overall biotechnology industry becomes higher, reflecting the industry is getting more specialized as sub-sectoral level within the industry; relatively higher specialization in Biochemical sector and Bio-environmental industry

Figure 6 Glubel-Lloyd Index in the bio-industry in Korea

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S&T Related MinistriesS&T Related Ministries

Ministry of Knowledge Economy (MKE)Agency for Technology and standardSmall & Medium Business AdministrationIndustrial Property Office

Ministry of Health & WelfareFood and Drug AdministrationNational Institute of Health

Ministry of Construction & TransportationNational Railroad Administration

Ministry of Education, Science and Technology (MEST) National Universities and Colleges Basic and Leading-edge Technologies Promotion of Biotechnology-supporting Systems Education Assistance of Basic Researches on Life Science

Ministry of National Defense

Ministry of EnvironmentNational Institute of Environmental Research

Ministry of Finance and EconomyNational Tax ServiceCustoms ServicePublic Procurement ServiceNational Statistical Office

Ministry of Agriculture & Forestry

Rural Development Administration Agricultural Research Institute

Forestry ServiceForestry Research Institute

Agency for Defense DevelopmentMilitary Manpower Administration

National Science & Technology Administration System

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Establishing of Legal and Institutional Frameworks

Bioethics

Bio-safety

IPR

Protection

International

Agreement

The Act on Bioethics & Biosafety(2004)To ban human cloning/cross-species experiments

To allow research for therapeutic purpose on frozen

eggs left unused from fertility treatment and somatic cells nuclear transfers

Strong protection for IPRKorea is an IP safehold – Regional Head, Leading

Multinational Corporation

The Act on Cross-border Movement of Living Modified Organisms(2001)

To Implement Cartagena Protocol to the Convention

on Biological Diversity

Importation and manufacturing of GMOs requires

safety check and government authorization

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As a responsible member of the international community, Korea is contributing to technological advance and solving global problems by participating in a number of multinational cooperative projects, OECD, APEC and GBIFThe Korea government is offering tax benefits and financial aid to foreign companies and institutes conducting research activities in Korea. More and more international biotechnology research institutes such as Pasteur Research Center and RIKEN (The Institute of Physical and Chemical Research) are establishing research branches in Korea

International Cooperation

Institute Research Area Organization Type ProgressPasteur Research Institute,France

Biotechnology Independent Corporation(IP Korea)

Opened a research center in 2004

Cavendish Laboratory, University of Cambridge

Basic Science Joint Research Center(KAIST)

"

Photronnics Semiconductor Photomask

Corporate Research Center(PKL Central Research Center)

Opened a research center in 2005

The Institute of Physical and Chemical Research

(RIKEN) Nanotechnology Cooperative Research Center

(Hanyang University) "

State Optical Institute, Russia

Optics SOI Korea Corporation(Korea Electrotechnology Research

Institute) A research center to be

opened in November 2005

APEC e-IMBL Biotechnology International Organization(Seoul National University)

"

APEC Climate Center Weather & Climate International Organization(Korea Meteorological

Administration) "

National Institutes of Health, USA

Biotechnology (Tuberculosis)

Joint Research Center(Korea Research Institute of

Chemical Technology) "

Battelle Research Center, USA

Inhalation Toxicity Joint Research Center(Korea Institute of Toxicology)

A research center to be opened in 2006

Major Research Institutes

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2nd Bio-Economy Basic Strategy 2007~2016

Intensive Promotion of Bio-industry as a National Strategic Industry Active Lead toward Development of Bio-industry

Creation of Bio-Society for the 21st Century

Healthy Bio-Society

Wealthy Bio-Society

Clean Bio-Society

Strategic Vision of Bio-industry Policy

Growth of Bio-industry

3 Goals : R&D, Infra, Business Environment

12 Programmes : Bio-Star Project, Biocluster, etc.

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Development of Core Technology- Technology for Mid-term & Next generation

Growth Engine Industry for Next generation- New Bio-Drug / Artificial Organ, Bio-Chip

Bio-Star Project- Innovative Biotechnology & Bio-Product

Establishment of Bio-product Manufacturing - International authorization of GLP System- Establishment of GCP system for Functional Active Compound- Expansion of cGMP and Improvement of Management

Implementation of LMOs- Biosafety Information Center- Foundation of Bio-hazard Evaluation Center

Expansion of Industrialization

Infrastructure

Development of Core Technology

& Bio-Product

Strengthening Strategy of Competitiveness on Bio-industry

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Strengthening Strategy of Competitiveness on Bio-industry

Activation of Biocluster- Construction of Korea Bio-Hub- Strengthening of existing Biocluster- Promotion of using Micro-biochip production platform- Establishment of platform for supporting Industrialization of BIT technology

Establishment of Investment / Consulting Company- Participation from public company, private & foreign companies- Support of long-term investment

Construction of Complex - Advanced Biopharmaceutical production complex - Bulk Vaccine production complex

Joint R&D with Foreign Countries Training International Standard Specialist

Networking among Domestic & Foreign association, companies and government

Strengthening & Promoting of Bio-cluster

Promoting Global Network

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