['M&A Outcast' K-Bio] ① Over 276 Trillion Won Deployed in First Half, But 3rd-Ranked Korea Remains Sidelined

Amid a Massive Global M&A Reshuffle,
Pipeline Powerhouse K-Bio Remains Sidelined

Editor's NoteThe global pharmaceutical and biotech industries are experiencing an unprecedented boom in mergers and acquisitions (M&A). By August this year, more than 276 trillion won in investments have flowed into the global biotech M&A market, yet there has not been a single 'big deal' involving a Korean company. This is a disappointing reality for Korean biotech, whose industrial competitiveness is increasingly being recognized worldwide. With the third largest number of pipelines globally, after the United States and China, and with many novel drug companies receiving constant approaches at overseas conferences and exhibitions, the limitations of the funding and investment recovery market—relying solely on IPOs—are clear. We examine why Korean biotech technology companies are being overlooked, what fundamental improvements in competitiveness are needed, and how they can resolve issues in the capital market.

['M&A Outcasts' K-Bio]①Despite 276 Trillion Won in the First Half, Korea—World’s No.3—Remains Sidelined

['M&A Outcasts' K-Bio]②Korea Trapped by Data, Clinical Results, and Governance Issues

['M&A Outcasts' K-Bio]③"Streamline the Pipeline and Focus on Core Competencies and Single Technologies"

This year, the global pharmaceutical, biotech, and healthcare M&A market has entered a massive reshuffling phase, thanks to the resumption of mega-deals and increased investment in technology-driven assets. In contrast, Korean pharmaceutical and biotech companies, whose industrial competitiveness is said to be increasingly unique, are facing a growing trend of being sidelined in the global M&A market.

Global Biotech M&As Enter Super-Boom Era

According to a report by SK Securities dated August 3, the total global pharmaceutical and biotech M&A deal volume from the beginning of this year to the end of July reached $193.607 billion (about 276.4262 trillion won). This nearly matches last year’s entire annual total of $209 billion (approximately 298.0131 trillion won), when the market recovered from its previous slump. With leading pharmaceutical companies expected to maintain active M&A investments in the second half, it is highly likely that this year's record will surpass the all-time high of $254 billion (approximately 362.1786 trillion won) set in 2019.

According to the Firepower Report by EY, a global accounting and consulting firm, this year’s series of global biotech M&As have been driven by both the need to defend revenues and the desire to strengthen market dominance. Merck, facing imminent patent expiration of its flagship immuno-oncology drug 'Keytruda,' acquired Terns Pharmaceuticals, a developer of blood cancer treatments, for $670 million (about 988.25 billion won).

The key asset of Terns, 'TERN-701,' is a next-generation tyrosine kinase inhibitor (TKI) designed to overcome the side effects and resistance issues of existing treatments. AbbVie, even without the threat of imminent patent expiry, spent $1.09 billion (about 1.60775 trillion won) to acquire Apogee Therapeutics. Apogee’s main asset, 'Jumilokibart,' is a monoclonal antibody that increases dosing intervals for improved patient convenience, giving it a competitive edge in the dermatology market.

The most notable trend is that major pharmaceutical companies are increasingly acquiring early-stage assets that are only in Phase 1 or 2 clinical trials. About 60% of this year’s biotech M&A deal value has come from assets in Phase 2 or earlier, showing that companies are willing to take on pre-commercial development risk. Eli Lilly acquired Ayak Therapeutics, which is still in Phase 1, for $2.3 billion (about 3.3925 trillion won).

Gilead Sciences also acquired Tubiulis, a developer of antibody-drug conjugates (ADC) in Phase 1b/2, for $5.0 billion (about 7.375 trillion won). Novartis, meanwhile, focused on precision medicine by acquiring Sanovation Therapeutics, an early-stage developer of oral inhibitors, for $3.0 billion (about 4.425 trillion won). Global pharmaceutical companies are rapidly acquiring assets as soon as proof of concept (PoC) is established, provided the mechanism of action is clear—even in the early stages.

Third Largest Pipeline in the World... Yet Korea Is Far from M&A Mega-Deals

Factors driving this surge in M&A activity include the U.S. Federal Trade Commission’s (FTC) relaxation of antitrust regulations and the Inflation Reduction Act (IRA) exemption of certain rare disease treatments. With regulatory and policy uncertainties easing, major pharmaceutical companies have become even more assertive in pursuing M&A.

With the FTC shifting from its previous rigid stance to provide clear and pragmatic approval guidelines for M&A, major companies have been able to engage in acquisition negotiations with reduced legal risk.

In addition, rare disease treatments for single indications have gained special exemptions from IRA-related drug price negotiation requirements, even as pricing pressure mounts for many drugs. As a result, the value of rare disease and precision medicine pipelines has soared, with clearer prospects for investment recovery and profitability. The SK Securities report stated, "Given the increase in patent expirations and the impact of IRA drug price cuts, demand among global pharmaceutical companies for M&A to fill revenue gaps is bound to increase." The analysis continued, "As a strategy to offset revenue shortfalls, companies are increasingly focused on acquiring commercial-stage and late-phase pipeline assets."

However, despite having the third largest pipeline in the world—after the United States (11,662) and China (7,141)—Korea (3,259) has been thoroughly excluded from the M&A market. There has not been a single global 'big deal' (M&A valued at over $1 billion) led by or involving a Korean company, not just in the first half of this year, but since the industry's inception.

Large-scale M&As by Korean companies have focused mainly on securing overseas manufacturing infrastructure, such as Samsung Biologics’ acquisition of a plant in Rockville, U.S., or Celltrion’s acquisition of a plant in Branchburg. Cross-industry biotech acquisitions—such as Orion’s takeover of Ligachem Bioscience (formerly LegoChem Bioscience) for 548.5 billion won, and TKG Group’s acquisition of AprilBio for 346.8 billion won—have provided only a faint glimmer of hope in the domestic biotech M&A market.

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