The South Korean government is overhauling its certification system for innovative pharmaceutical and biotech ventures to help them grow into leading global companies. The new system will differentiate between 'leading' companies focused on blockbuster drug development and 'growth' companies aimed at nurturing startups, creating a structured 'growth ladder' tailored to the stages of company development.
On September 18, the Ministry of Health and Welfare announced that it will propose amendments to the enforcement decree and rules of the Special Act on the Promotion and Support of the Pharmaceutical Industry, as well as regulations on the certification of innovative pharmaceutical companies, for public comment until October 28.
The core of this reform is to enhance the system so that promising startups can progress from 'growth' to 'leading' status, ultimately becoming anchor companies in the pharmaceutical sector. Initially, discussions began with the introduction of a 'quasi-innovative' category, but the dual system was established to assist promising small and biotech ventures in developing new drugs.
According to the proposed amendments, innovative pharmaceutical companies will be certified as 'leading' if they score 65 points or higher in detailed evaluations, while those scoring below 65 will be classified as 'growth' companies. Both types will have a certification validity period of three years, with the possibility of renewal through re-evaluation. Notably, companies can transition from 'growth' to 'leading' based on re-evaluation results.
To achieve 'growth' certification, companies must meet stringent research and development (R&D) investment criteria. Firms with average annual revenues below 100 billion won must invest at least 7% of their revenue (minimum 5 billion won) in R&D, while those with revenues above 100 billion won must invest at least 5%. However, companies meeting cGMP and EU GMP quality standards are subject to a reduced requirement of 3%.
Disqualifying factors are also strict. Companies that have received administrative penalties more than twice or have been found guilty of illegal rebate practices involving amounts over 5 million won will be excluded from certification. However, violations occurring more than five years prior to the certification evaluation will not disqualify a company. Additionally, executives found guilty of embezzlement, breach of trust, stock manipulation, assault, or sexual crimes resulting in fines will also be disqualified from receiving certification.
Benefits such as additional points for national R&D projects and price advantages will be tailored to the characteristics of each company based on their certification type. The proposed amendments will legally establish the basis for differentiated support for leading and growth companies, allowing the Minister of Health and Welfare to determine the scale of customized support.
To prevent confusion during the transition to the new system, measures have been put in place. Existing innovative pharmaceutical companies that have already obtained certification will retain their status and benefits as 'leading' innovative pharmaceutical companies until their current certification expires.
The Ministry plans to finalize the amendments after gathering feedback from the industry and the public during the comment period and will promptly initiate a new certification application process for 'growth' innovative pharmaceutical companies.
* This article has been translated by AI.
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