[KR-China Bio Contrast] ① Despite Similar Promising Technologies, Upfront Payments Are Only One-Third of China’s

Upfront Payment Lilly Gave to a Chinese Company
About Nine Times What Was Paid to a Korean Company

Editor's Note
In the first half of this year, Korean biotechnology companies have consecutively signed KRW-trillion-level technology export contracts with global big pharma, raising expectations throughout the industry. However, a closer look at the contracts reveals a reality that differs from what appears on the surface. Notably, the payments received by Korean companies are significantly lower compared to the 'technology value' received by Chinese firms from big pharma, despite the latter making their mark on the global stage with their characteristic speed. As biotechnology is considered a future national strategic asset, it is crucial to examine where the gap with China—now striving to leap from a competitor into a global leader—originates. The Asia Business Daily highlights this reality, exploring its background and possible solutions.

① Despite Similar Promising Technologies, Upfront Payments Are Only One-Third of China’s

② Korea Sells at Phase 1, China Advances to Phase 3

③ Raising Funds for Clinical Trials Leads to Delisting... K-Bio Faces a Double Whammy

④ Accelerating Clinical Trials and Easing Delisting Regulations Are Needed to Narrow the Gap

Although Korean biotechnology companies have consecutively achieved trillion-won-level technology exports in the first half of this year, the corresponding upfront payments were found to be less than one-third of those received by Chinese companies. It is increasingly pointed out that, in the field of biotechnology—now emerging as a key technology after semiconductors, batteries, and displays—the negotiating power gap between Korea and China is widening further.

According to Evaluate, a market research firm, the average upfront payment received by Chinese biotech companies from global big pharma for technology exports soared from $52 million (about KRW 7.94 billion) per contract in 2022 to $170 million (about KRW 25.97 billion) in 2026, nearly a threefold increase. In contrast, the average upfront payment for the eight technology export deals made by Korean companies in the first half of this year remained below $50 million (about KRW 7.74 billion).

Same Lilly Contract, But a Ninefold Difference in Upfront Payments

The contract with global pharmaceutical company Eli Lilly is a representative example. Last year, Lilly signed a technology transfer and joint research & development (R&D) agreement with ABL Bio for Grabody-B, a bispecific antibody platform capable of crossing the blood-brain barrier (BBB), setting the upfront payment at $40 million (about KRW 5.85 billion). Three months later, in February this year, Lilly entered into a contract with the Chinese company Innovent Biologics to co-develop new anticancer and immunology drugs, in which the upfront payment reached $350 million (about KRW 54.42 billion)—about nine times the amount paid to ABL Bio.

Both contracts involved platform-based, multi-year collaborations rather than a single candidate, making their nature similar. Nevertheless, the industry points out that the large difference in upfront payments stems from the disparity in 'valuations' assigned by the global market. The upfront payment is a key indicator that reflects the true value of the technology in a technology transfer deal. While the total contract amount includes milestone payments that are received only when clinical, regulatory, and sales targets are met at each stage, much of this amount often remains an 'unfulfilled promise,' given the success rates of new drug development.

In contrast, the upfront payment is a non-refundable, guaranteed cash paid by big pharma at the time of contract, most honestly reflecting how highly the technology is valued at present. An industry insider explained, "The fact that a single buyer placed such a large difference in upfront payments for similar assets around the same time means that Korean companies' technologies are not being properly valued."

Based on the first half of this year, a single upfront payment from a Chinese company’s contract exceeded the total upfront payments received by all Korean companies, making the gap even more striking. Even when looking at the largest contract amounts, the disparity is significant. The largest domestic technology export contract made public in the first half of this year was between AriBio and Fuson Pharmaceutical, totaling $4.7 billion (about KRW 7.1806 trillion). In China, however, the scale of the contract between BMS and Hengrui reached $15.2 billion (about KRW 23.2225 trillion), while the deal between AstraZeneca and CSPC amounted to $18.5 billion (about KRW 28.2643 trillion).

This content was produced with the assistance of AI translation services.