Biotech ventures and smaller drugmakers with high growth potential will gain wider access to government drug pricing benefits and research and development support. The government plans to divide its existing innovative pharmaceutical company certification into a "leading" tier and a "step-up" tier, creating a staged support system to help promising firms grow into new drug developers.
The Ministry of Health and Welfare said it will seek public comment from the 18th through Oct. 28 on amendments to the enforcement decree and enforcement rules of the Special Act on the Fostering and Support of the Pharmaceutical Industry, as well as to the regulations on certification of innovative pharmaceutical companies, which would split the certification into the two tiers.
The core of the overhaul is to revise a system that had evaluated pharmaceutical and biotech companies of differing sizes and growth stages against a single standard. The aim is to build a growth ladder under which promising startups and biotech ventures enter as "step-up innovative pharmaceutical companies," advance to the "leading" tier and eventually become major drugmakers.
The government had initially reviewed introducing a "semi-innovative pharmaceutical company" category with a lower entry threshold than the existing certification. During discussions, it expanded and reworked the plan so that support would vary by a company's growth stage rather than simply widening the pool of eligible firms.
Under the change, companies scoring 65 points or higher in the detailed review will be certified as "leading," while those below 65 points will be certified as "step-up." Step-up companies will also receive some of the benefits previously reserved for innovative pharmaceutical companies, including bonus points in state R&D projects and preferential drug pricing, on a differentiated basis.
Even step-up certification, however, requires a certain level of R&D investment. Companies with average revenue of less than 100 billion won over the previous three years must invest at least 7% of their pharmaceutical revenue in R&D, with the amount exceeding a minimum of 5 billion won. Companies with revenue of 100 billion won or more must invest at least 5%, while those meeting current good manufacturing practice (cGMP) or European Union GMP standards must invest at least 3%.
Disqualification grounds also apply, covering rebates and unethical conduct by executives and employees. A company is disqualified if it has received administrative sanctions related to rebates two or more times, or if the amount provided was 5 million won or more. Certification is also restricted if a director or auditor has been sentenced to a fine or heavier penalty for embezzlement, breach of trust or stock price manipulation.
Certification for both the leading and step-up tiers is valid for three years. It can be extended after a reassessment, and firms can move between tiers, including a promotion from step-up to leading based on performance. Existing innovative pharmaceutical companies will retain the status and benefits of leading-tier firms until their current certification expires.
The ministry plans to finalize the amendments after gathering views from the industry and the public through Oct. 28. Once the revisions to the relevant rules are completed, it will begin a new open call for certification to select step-up innovative pharmaceutical companies.
