Pharmaceutical Firms Reach Out to Biotechs Struggling With Capital Raising

Daewoong, Hanmi, Boryung, and SK Biopharmaceuticals Expand Equity Investments
Biotech Firms Secure Funding, Pharmaceutical Companies Gain Early-Stage Technologies

Major pharmaceutical companies have been actively acquiring shares in unlisted bio and healthcare companies during the first half of this year. This trend is seen as a result of shrinking fundraising opportunities for biotech firms through initial public offerings, combined with pharmaceutical companies’ search for new growth pipelines.

According to the semiannual reports released by each company on September 2, Boryung invested 4.5 billion won in LucasBio, a company specializing in immune cell therapy; SK Biopharmaceuticals invested 4.4 billion won in Full Life Technologies, a radiopharmaceutical company. Hanmi Pharmaceutical invested 3.0 billion won and 1.0 billion won in Intera and MolzenBio, respectively, totaling 4.0 billion won; Dong-A ST invested 2.0 billion won in People & Technology, a smart hospital platform company.

Daewoong Pharmaceutical invested a total of 7.4 billion won across six companies, including Inmeddata (1.5 billion won), TR (1.0 billion won), Promedius (3.0 billion won), iCoop (1.5 billion won), Immunocelix (200 million won), and AlterionBio (200 million won). It is notable that their investment targets range from medical AI, data, and digital health companies to new drug development companies. The approach involves spreading smaller investments across early-stage companies, leaving the possibility open for future joint development or business collaboration.

These new investments are known to be serving as a financial lifeline for biotech firms that currently face difficulties going public. In the first half of this year, there were only six newly listed bio-healthcare companies, which is just half of the eleven that went public in the first half of last year. The number of companies submitting preliminary review applications this year was also nine, down from thirteen last year. This is seen as a result of the Korea Exchange raising the standards for review by specifically requiring tangible results such as technology exports and sales, as well as tightening regulations on dual listings.

To qualify for a technology-special listing, companies must now prove not only technological capability but also specific growth potential, such as tech exports and clinical or commercialization achievements, making it more burdensome for early-stage companies to go public. A biotech industry source commented, “Even with a track record of technology licensing, it has become difficult to pass reviews if the project remains at the preclinical stage.”

Pharmaceutical companies are under similar pressure. The industry projects a slowdown in the growth of flagship products due to drug price cuts and intensified prescription competition, making the cost burden of new drug development even heavier. As a result, investing capital in early-stage companies to secure preferential negotiation rights or joint development opportunities is emerging as an alternative to in-house development. An industry source explained, “If you secure access before a candidate compound enters clinical trials, it can also reduce cost burdens.”

The industry sees that the ‘rich-get-richer, poor-get-poorer’ phenomenon among biotech firms has also fueled this trend. In the first half of this year, new venture investments totaled 8.8676 trillion won, up 54.3% year-on-year to reach an all-time high for the period. Of this, 1.5041 trillion won was invested in the bio and medical sectors. The issue lies in the distribution of funds. With large-scale deep tech investments such as AI and semiconductors drawing more capital, early-stage bio companies have not seen a meaningful improvement in fundraising conditions. There is a prevailing view that, especially depending on clinical trial stage and technology licensing performance, investment money is flowing selectively, deepening the funding gap for early-stage biotechs.

Of the 30 new paid-in capital increases by major bio and healthcare companies in the first half, 28 used third-party allotments that designated specific investors. While listed companies can directly raise funds from institutions without a public offering to shareholders, unlisted companies lack this channel. An executive at a biotech company remarked, “For companies with a market cap of 100 billion won or more, fundraising is relatively easy,” adding, “However, because funds that are required by deadlines—such as those in KOSDAQ venture funds that must be invested in new shares or convertible bonds of venture companies—tend to flow into listed firms, it creates a structure where capital is concentrated there.”

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