[KR-China Bio Contrast] ④ Accelerating Clinical Trials and Easing Delisting Regulations Will Narrow the Gap

Clinical Trials from Home, Expanded to All Diseases

"Revising Beopchasohn That Strangles New Drug Developers"

Editor's Note
In the first half of this year, Korean bio-technology companies have consecutively secured technology export contracts worth trillions of won with global big pharma, fueling optimism across the industry. However, a closer look at the details of these deals reveals a reality that differs from appearances. Particularly notable is that the payments received by Korean companies are significantly lower compared to the "technology value" paid by big pharma to Chinese companies, which have been making strides on the global stage with their characteristic speed. Bio-technology is considered a future national strategic asset, making it essential to examine where the gap arises between Korea and China, which is striving to leap from a competing nation to a global leader. The Asia Business Daily sheds light on this reality and explores its background and possible solutions.

① Same Promising Technology, but Upfront Payments Are Only One-Third of China’s

② Korea Sells at Phase 1, While China Goes to Phase 3

③ Raising Funds for Clinical Trials Leads to Delisting... The Double Burden Strangling K-Bio

④ To Close the Gap: Accelerate Clinical Trials and Ease Delisting Regulations

Amid growing threats from China, calls are mounting for Korea’s bio industry to overhaul regulations and clinical trial systems that are overly tied to capital market principles if it is to broaden its base and secure future growth. Specifically, there is a need to correct the calculation basis of the "Pre-tax Loss from Continuing Operations" (PTLCO) requirement—which treats new drug development costs as losses and pushes companies toward delisting—and revise regulations that hinder the speed of clinical trials, in order to strengthen clinical capabilities.

According to financial authorities and the pharmaceutical·bio industry as of June 16, two key reform tasks stand out: adjusting the calculation formula to exclude or offset clinical and R&D expenses from the PTLCO requirement, and expanding Decentralized Clinical Trials (DCT), where patients participate from home, to cover all diseases.

Not "Abolition" but "Correction" of PTLCO... Parallel Calls to Develop the M&A Exit Market

According to the "Analysis of the Appropriateness of Listing Maintenance Requirements for Biohealth Companies Listed under Technology Evaluation Exemptions" report published in 2023 by the Korea Health Industry Development Institute, about 84% of biohealth companies listed through the technology exemption had annual PTLCO exceeding 1 billion won, far surpassing the 22% among generally listed biohealth companies. The report found that only tech-exempt biohealth firms tend to reduce R&D investment in their third to fifth years after listing to avoid being flagged for management, and recommended easing the PTLCO requirement. One biotech Chief Financial Officer (CFO) said, "To avoid being designated as a management issue, we have no choice but to delay clinical schedules or scale them down. The rule that prevents us from spending on clinical trials is essentially a structure that devalues our technology."

The Korea Exchange currently maintains that the PTLCO requirement is necessary to prevent marginal companies with little prospect of recovery from remaining on the exchange and harming investors. There is also a need to maintain fairness with other industries. If the PTLCO requirement is lifted without caution, there are concerns it could become a means for "zombie companies" to survive. They argue that exceptions to loss regulations cannot be granted simply because a company is engaged in new drug development.

Therefore, even if the PTLCO requirement itself is not abolished, there are increasing calls for reforms to ensure that the unique characteristics of new drug development are not unfairly reflected in the calculation. An accountant with experience auditing pharmaceutical companies said, "New drug development costs are investment expenditures that build future assets, but the current criteria treat them as simple business losses. Distinguishing the nature of losses should be the starting point for correcting the PTLCO requirement."

In political circles, extending the current three-year grace period for PTLCO or creating exceptions has been discussed. Although the Financial Supervisory Service allows clinical development costs to be treated as assets if certain conditions are met in its supervisory guidelines, industry insiders point out that the burden of proving technical feasibility is high, making practical use limited in the field.

Platform Technology as a Negotiation Lever... "AI and Healthcare Data: Korea’s Hidden Weapons"

To strengthen clinical capabilities, experts point to expanding the scope of Decentralized Clinical Trials (DCT), which allow patients to participate remotely from home, to all diseases. According to an analysis of over 60 clinical trials by the Center for the Study of Drug Development (CSDD) at Tufts University in the United States, clinical trials adopting DCT saw patient enrollment rates increase by 200% and costs decrease by 50%. Lower clinical costs would, in turn, reduce the PTLCO burden.

Currently, Korea is in the pilot phase for DCT in only four diseases: depression, lung disease, sleep apnea, and obesity. The government is considering including DCT regulatory exemptions in the Mega Special Zone Act, which is set to be pursued during the regular National Assembly session in September 2026, with plans to gradually expand the scope. Song Youngjoo, economic advisor at Pacific Law LLC, recently commented at an event, "Taiwan has already allowed decentralized clinical trials, and the United States is even further ahead, while Korea has only recently begun to introduce the system. Although Korea got a late start, DCT will become an opportunity to increase the speed and efficiency of domestic clinical trials."

Experts also advise that if companies combine efforts to invest proactively in platform technologies—not just single candidate substances—to build negotiation leverage, a virtuous cycle can finally be established: technology development, fair value assessment, subsequent reinvestment, and the expansion of the industry’s foundation. Alteogen’s subcutaneous injection formulation platform "ALT-B4" and ABL Bio’s blood-brain barrier penetration platform "Grabody-B" are representative success stories of platform technology. In a media interview, Alteogen Chairman Park Soonjae stated, "The strength of a platform lies in the ability to repeatedly and sustainably transfer a single technology." Through ALT-B4, Alteogen has secured technology transfer contracts worth over 10 trillion won in six years. A validated platform brings big pharma to the negotiation table, giving Korean companies a position of strength.

Alongside system reform, there are also calls for Korea to convert its data assets into clinical competitiveness. A prime example is the National Health Insurance data, where about 97% of the Korean population—around 50 million people—have their treatment, examination, and claim records stored in a single institution. Combining this with artificial intelligence (AI) could reduce the biggest bottleneck in clinical trials—patient recruitment—and differentiate Korea as a "clinical testbed" for global pharmaceutical companies. An executive at a pharmaceutical company that achieved multi-trillion won sales through in-house new drug development and direct sales in the United States said, "If the government properly establishes an AI infrastructure, we can build an AI-based clinical platform that finds the right patients for trials faster than any country in the world. Rather than competing with China on volume, Korea should create a specialized clinical ecosystem and become a global testbed."

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