S. Korea to form 2 tln won fund for drug industry

SEOUL, Feb. 7 (Yonhap) -- South Korea said Sunday it will run an expanded fund to
provide more investment support for drug companies, a move aimed at bolstering
the competitiveness of the local pharmaceutical industry and securing new growth
engines for the overall economy.
According to a press release jointly released by the finance ministry, the
welfare ministry, the science ministry and other agencies, the government will
form a fund worth 2 trillion won (US$1.7 billion) within five years in order to
invest in research and development (R&D) activities by the bio and medical
equipment industries.
The fund to be in operation for 10 years is in addition to the 70 billion won
fund unveiled by the government in September last year. This year alone, the
amount is expected to grow to around 300 billion won with 10-20 percent to come
from the government's direct contribution, the release showed.
"Development of new drugs requires a large-scale investment but many of our
pharmaceutical companies have difficulty in securing necessary funds," the report
said.
"Against this backdrop, we will expand the fund in cooperation with the private
sector to provide support and investment for R&D and drug commercialization
efforts by local companies," it added.
The move is part of the government's comprehensive blueprint intended to bolster
the competitiveness of the local drug industry and help nurture new growth
engines for the nation's future economy.
The government's plan is mostly focused on encouraging R&D activities in the
pharmaceutical industry through expanded investment support, more tax incentives
and better industrial infrastructure, the release showed.
Support will be made in nurturing talented researchers needed in the drug
industry that will include luring skilled foreign workers by easing regulations
and giving permits for "selective" dual citizenship, according to the release.
The government will also install an industrial complex where drug companies can
receive diverse state support in the overall process of their research,
development and commercialization of new products, it showed.
According to the release, the local drug industry's combined production amounted
to 13.9 trillion won in 2008, accounting for 1.5 percent of the global total. But
its R&D investment lags behind as their spending stood at a mere 5 percent of
total sales compared with 17 percent for the world's top-class pharmaceutical
companies.
"New drugs can result in high profits but the chances (of success) are relatively
low compared with the investment and time put into their development," the
release said, explaining why R&D investment here has been sluggish in past years.
kokobj@yna.co.kr
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