Where are the next-generation growth engines that will drive South Korea's economy? In the midst of global technological competition, advanced biotechnology has emerged as a strategic field that influences national security and the economy. This technology innovates not only in healthcare and disease diagnosis but also in food, materials, and energy.
Grand View Research projects that the global biotechnology market will grow from approximately $1.55 trillion in 2023 to $3.88 trillion by 2030. The domestic biotechnology industry's production scale is also expected to expand from 17.2 trillion won in 2020 to 22.9 trillion won by 2024. There is a solid foundation to seize opportunities, as the scale of technology export contracts in the domestic pharmaceutical and biotechnology sector reached about $14.5 billion in 2025, according to publicly available data.
In September, South Korea approved its 46th new drug. This reflects the country's world-class capabilities in contract development and manufacturing of biopharmaceuticals (CDMO) and the clinical trial infrastructure built through collaboration between academia and industry.
However, there is still a lack of foundational technologies that can change the market and experience in developing global blockbuster drugs. Even when promising candidates are identified, the clinical and commercialization stages are fraught with enormous costs and uncertainties, making it difficult to cross the 'valley of death.' Investment conditions are also challenging. South Korea lacks a sufficient big pharma base to lead research outcomes to the global market, and the characteristics of the biotechnology industry, which often yield short-term results, limit the ability of early venture investments to support long-term challenges.
To compete with the massive capital investments from the United States and China, bold investments that can withstand failures are necessary. As technology investments increasingly focus on AI, the government's role in creating an 'accumulation ecosystem' that shares initial risks and builds experience in research, clinical trials, manufacturing, and commercialization has become even more crucial.
The 2027 government R&D budget proposal allocates approximately 4.4 trillion won to the biotechnology sector, a more than 30% increase from the 3.3 trillion won allocated in 2024, when investments were subdued. This reflects a commitment to steadily nurture biotechnology and supports the 'Second National Research and Development Mid- to Long-Term Investment Strategy' aimed at creating an innovation foundation, securing leading technologies, and expanding market entry.
However, merely increasing the budget will not ensure survival in the competitive landscape. Focus must be placed on areas of strength and technologies that can seize future markets. The 'Seven Major SEED Projects,' including advanced biotechnology, and the 'K-Moonshot' initiative will serve as critical turning points. The government has established a foundation for presenting challenging goals and connecting capabilities from research to commercialization to enhance competitiveness.
The first investment pillar is AI transformation (AX). This involves establishing research hubs for AI in new drug development and precision medicine, supporting the standardization and integration of bio-data, AI models, research facilities, and interdisciplinary talent. When combined with the rapid experimentation and validation capabilities of biofoundries, this can broaden researchers' exploration scope and reduce development time and costs for companies.
Investments will also target frontier-challenging technologies that open future markets. Brain-computer interfaces (BCI) will link precise brain mapping and preclinical validation with core technology development, while cell and gene therapies will support securing foundational technologies and clinical entry. In these high-uncertainty innovation fields, public initiatives will drive private sector challenges.
The second pillar focuses on supporting the industrialization of research outcomes. This includes expanding the joint use of pharmaceutical process development, quality control, and production facilities, as well as enhancing the regulatory science and medical product evaluation framework to reduce the commercialization burden on companies and assist market entry. AI-based research in regional and essential healthcare and caregiving will also be supported to pursue both industrial growth and public health improvement.
The third pillar aims to ensure the sustainability of investments through financial connections. The establishment of a future response fund will support investments in future growth drivers, while the National Growth Fund will aid in corporate growth and production capacity expansion. New investment-type R&D initiatives utilizing special purpose companies (SPC) will promote a virtuous cycle where research and development profits are reinvested into subsequent research and commercialization. By linking policy finance and private capital to share initial risks in government R&D, a pathway for investments leading to global expansion will be created.
Biotechnology is an area that requires long-term patience and perseverance, often referred to as 'patient capital.' When the government consistently invests and researchers and companies boldly take on challenges within a robust research and process infrastructure, the ecosystem will be completed. If strategic focus on accumulated capabilities aligns with private sector challenges, biotechnology could become a solid heart that positions South Korea at the center of the global stage, succeeding the semiconductor industry.
* This article has been translated by AI.
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