[비즈한국] It is not that there is no money in the biotech industry. The government is pouring massive R&D budgets to foster new drug development as a national strategic industry, and private capital, including venture capital (VC), is investing large sums in promising biotech firms. Recently, large-scale policy finance such as the National Growth Fund has also been supplying capital to the bio sector.
Nevertheless, biotech companies that are discovering candidate substances or are in the preclinical or early clinical stages are voicing that they "have no money." This is because before they can produce tangible results such as clinical data or technology exports to global pharmaceutical companies, they are being required to provide those very results as a condition for investment.
Cho Heon-je, Executive Director of the Korea Drug Development Association, stated at the CPHI/HI Korea 2026 Bio-Health Policy Forum held on the 26th of last month, "While it is said that there is an abundance of money in the bio sector at a national level, there is actually no money that can be used on the ground," adding, "Down in the venture startup area, they are almost on the verge of starvation."
Half of VC investment goes to late-stage… early-stage remains at only 20%
Looking at the actual flow of funds, the investment cold wave felt by early-stage companies is even more distinct. According to the Science and Technology Policy Institute (STEPI), as of 2024, VC investment by venture company lifecycle was approximately 1 trillion KRW for early-stage, 1.5 trillion KRW for mid-stage, and 2.9 trillion KRW for late-stage. The shares of the total were 20% for early-stage, 30.3% for mid-stage, and 50.2% for late-stage. While half of all VC investment went to late-stage companies, the share for early-stage companies remained at only one-fifth.
Early-stage bio investment has shrunk significantly even compared to the investment boom period. The seed investment amount for domestic unlisted bio-healthcare companies decreased by approximately 62% from 43.9 billion KRW in 2021 to 16.8 billion KRW in 2024, and the number of investments also dropped from 103 to 63 during the same period.
The total Series A investment amount also decreased by more than half from 863.2 billion KRW in 2021 to 401.2 billion KRW in 2024. On the other hand, the total Series B investment amount in 2024 was 515.8 billion KRW. Although investment amounts cannot be simply compared as the scale of required funds differs depending on the company's growth stage, it is clear that the center of gravity of capital is shifting toward companies where technology and business performance have materialized.
Government R&D is also seeing relatively more funds injected into the late stages. In 2024, government R&D input was 5.6 trillion KRW (27.6%) for early-stage, 5.1 trillion KRW (25.9%) for mid-stage, and 9.3 trillion KRW (46.5%) for late-stage.
Son Soo-jung, a senior research fellow at STEPI, analyzed, "There exists a 'Gap Fund' blind spot between the government's R&D lifecycle and the private VC's investment lifecycle where achievements cannot actually be transferred to venture companies and private capital," adding, "As laboratory technical risks overlap with capital market risk aversion, the funding disconnection is deepening in the critical transition period of technology commercialization."
Lee Seung-kyu, Vice Chairman of the Korea Biotechnology Industry Organization, also pointed out at the Moonjung Bio CEO Forum last May, "No matter how many policies and visions come out of the government, it is useless if the industry cannot feel them on their skin," and added, "Substantial funds must be able to be supplied to places facing an investment gap, such as Series B companies."
From academic papers and patents to 'investable new drugs'
The reason why such a funding gap appears particularly large in bio is because it takes a long time and enormous costs for laboratory technology to grow into actual investable new drug assets.
In the laboratory, the potential of a candidate substance is confirmed through papers, patents, and research data. However, to be evaluated as an investable asset in the market, it must possess clear indications, intellectual property (IP) strategies, preclinical/clinical data, and regulatory and market entry strategies. In between lies a long development process of translational research, preclinical, and clinical phases 1, 2, and 3.
Fellow Son explained, "A scientific discovery or patent from a lab does not immediately become an investable new drug asset; the core process is lowering risk by equipping it with clear clinical data and regulatory strategies."
Funds are needed for everything from verifying the efficacy and toxicity of a candidate substance and determining indications to building manufacturing processes, producing drugs for clinical trials, and preparing documents for submission to regulatory agencies. However, at this stage, it is difficult to guarantee the probability of success since efficacy in humans has not yet been confirmed.
On top of this, there is a fundamental problem where the time required for new drug development and the time of capital differ from each other. Fellow Son explained, "The time for technology to mature, the time capital can wait, the time it takes for regulations to understand and grant trust to the technology, and the time for the market to adopt it are all too different," adding, "The gap is very severe, especially in the bio field."
In fact, STEPI identified the misalignment in time required for technology maturation, capital recovery, regulatory agency trust formation, and market adoption as the main 'time gap' in bio technology commercialization.
It takes at least 10 years, and up to several decades, for technology to reach the market. It took over 30 years from the discovery of the first mechanism to the approval of a treatment for CRISPR (gene editing), and it also took a long time for the mRNA vaccine platform's basic research to lead to an actual product. Conversely, private capital such as VCs must recover their investments within the fund's maturity, which is around 7 years on average.
The cost burden is also significant. Fellow Son said, "Based on the top 20 biopharmaceutical companies, when clinical costs and failed project costs are combined, it takes approximately 2.67 billion USD (3.5714 trillion KRW) for one asset to go from discovery to launch," adding, "It means that about 3 to 4 trillion KRW worth of resources are put into one new drug until it is launched on the market."
The disappeared middle ladder: "Investment follows technology export"
The reality that early-to-mid-stage biotech companies face in the investment field is even more desperate. Yoon Sang-soon, CEO of Cyran Therapeutics, pointed out at a panel discussion at the CPHI/HI Korea 2026 conference on the 25th of last month, "Although Series A is originally a funding stage to smoothly proceed with preclinical or very early research, recent domestic VCs are making backwards demands, saying they will only invest if we first produce tangible results such as a technology export contract with global big pharma."
From the VC's perspective, investing in bio is not easy. It is difficult to predict the timing of IPO or technology export after investment, and if subsequent fundraising fails, existing investments can be tied up for a long time. In the end, the reality is that they have no choice but to select companies where the possibility of recovery is visualized rather than early-stage companies with high uncertainty.
Bio company CEO 'A' lamented, "Currently, a significant portion of VC capital is concentrated on pre-IPO and stages nearing listing where results are visible, such as having passed technology assessment or meeting technology transfer requirements," adding, "Since it is difficult to recover investments from early-to-mid-stage companies, FI (financial investor) investment has effectively been cut off."
He added, "Because FIs are not coming in, bio ventures have no choice but to focus on attracting SIs (strategic investors) such as pharmaceutical companies," and, "However, even the pharmaceutical industry is in a situation where it is not easy to expect active investment due to management uncertainties such as drug price cuts."
The problem is that even to reach the pre-IPO stage, companies need massive funds beforehand. CEO 'A' said, "Even if one wants to move to the pre-IPO stage that has fulfilled listing requirements or technology transfer performance, tens of billions of KRW in development costs must be injected before that, and now the follow-up investment ladder to bridge that middle process has effectively been cut off."
It is a rational choice for investors to prefer verified companies. However, if all investors move to companies where performance is confirmed, a problem arises where the capital to raise a company to the stage of producing that performance disappears.
Hundreds of billions in policy funds also go to companies showing results
Apart from private investment, the government has set out to supply large-scale policy finance, but this too is leaning toward companies that have secured development achievements above a certain level.
The National Growth Fund approved a loan of 300 billion KRW to SK Bioscience, which is conducting global phase 3 clinical trials for a pneumococcal vaccine, last May. In June, it participated in a 500 billion KRW fundraising round for LegoChem Biosciences, which possesses multiple global technology transfer achievements. The microbiome company HEM Pharma also succeeded in attracting 54 billion KRW in investment with the participation of the National Growth Fund and others.
LegoChem Biosciences is already conducting multiple technology transfers and global clinical trials, and HEM Pharma is also in a stage of generating revenue from its analysis services and health functional food business and expanding production facilities after its KOSDAQ listing.
The National Growth Fund is not policy finance created solely to support early-stage bio. As its main role is to supply large-scale funds to large projects of national strategic industries and growing companies, it is difficult to see supplying funds to late/growth-stage companies as a problem in itself.
However, the fact that the representative bio support cases released so far are companies that have secured results above a certain level, such as global phase 3 clinical trials, large-scale technology exports, and listing and commercialization, contrasts with the funding situation felt by early-to-mid-stage biotech companies.
CEO 'A' said, "Although large-scale policy funds such as the National Growth Fund and Bio-Vaccine Fund have been created, seeing funds being supplied to companies that already have fundraising capabilities or visible results, early-to-mid-stage bio ventures don't feel many benefits," and added, "Policy funds should also play a role in supplementing the void of high-risk innovative technologies where funds do not flow well through general market logic alone, but in the field, they do not sufficiently feel such functions."
It is not that the government does not support early new drug development. The National New Drug Development Project has support programs ranging from projects to discover substances transitioning from candidate/preclinical to clinical, to phase 1 and 2 clinical trials, and technology commercialization and manufacturing/production stages.
However, R&D support funds and a company's growth capital have different roles. While government research projects are funds used in accordance with set research goals, companies continuously need funds in non-research areas such as labor costs, patent maintenance, clinical preparation, production, business development, and overseas partnering.
There exists a middle section where the company must endure until the technology born from government R&D is sufficiently verified to be accepted by private investors. The nature of the bio industry, where technology evaluation by general investors is difficult due to high risks of failure and information asymmetry, and follow-up VCs and institutional investors follow only after pharmaceutical companies or specialized CVCs have invested first, also increases such voids.
"Harvesting fruits without sowing seeds"
The concern about the early-to-mid-stage investment gap is not just a matter of survival for a few bio ventures, but because the foundation of the new drug development ecosystem could be shaken.
In the beginning, numerous companies and candidate substances exist, but most drop out in the process of going through preclinical and clinical phase 1, 2, and 3. For a small number of new drugs to finally reach the market, many more early candidate substances must exist beneath them.
CEO Yoon emphasized, "For the massive pyramid of the new drug development ecosystem to be maintained, the early startups that silently discover candidate substances and dedicate themselves at the very bottom must survive," and, "Not all bio ventures can be top-tier performers hitting big deals right in front of them."
CEO 'A' also compared the current situation to 'only harvesting fruits planted in the past.' He said, "In the end, it is a reality where we are not sowing seeds for the future, but only harvesting what was planted in the past or what is already bearing fruit, and not even doing the rice planting," and, "New drug development also needs to have many early-to-mid-stage companies and pipelines laid at the foundation like a pyramid structure for results to go up." He continued, "If we don't sow seeds like now, in 3 to 5 years, the companies and pipelines themselves that can go up will be depleted."
It is not that every early-stage bio company must survive. It is part of the new drug development process for candidate substances with low technical potential to drop out as they go through research and clinical trials. However, it is a different matter for a technology to fail after sufficient verification versus research being halted because one cannot even find the funds to verify it.
Currently, it may look like the domestic bio pipeline is continuing as companies that secured funds during the past investment boom are entering clinical trials and producing technology export results. But if new candidate substances and companies are not created sufficiently beneath them, the number of companies challenging late-stage clinical trials and global technology exports in a few years will inevitably shrink.
There is government R&D, there is private VC capital, and there is large-scale policy finance like the National Growth Fund. Nevertheless, voices from the industry say, "There is no money to use on the ground." In the end, more than the absolute scale of funds, it is important at what stage, and for how long, capital that bears risk is supplied.
If the capital to endure the most uncertain section until technology born in a lab grows into an investable asset equipped with clinical data and global contracts disappears, the seeds of innovation that should be harvested a few years later may wither behind the fruits the bio industry is harvesting now.