Status of BioStatus of Bio--industryindustryyyin Koreain Korea

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Global Trend of Bio-industry

“There will be more pressure on drug prices in 2009, from employers and insurers, new generic drugs and p y , g gthe Obama administration possibly requiring discounts on drugs in the Medicare program.

The growing use of biologics and their high price tagThe growing use of biologics and their high price tag will put pressure on US legislators to establish a pathway to allow the FDA to approve generic versionsof such drugs (biosimilars). g ( )

With strong support from the Korean government, Korea’s biotechnology and pharmaceutical industry has been rapidlygrowing from $10 2billion in 2000 to $15 7 billion in 2005growing from $10.2billion in 2000 to $15.7 billion in 2005representing an 18% of annual growth rate. The KoreanGovernment formulated Bio-Vision 2016 in November 2006 to acquire competitive source technologies and expand industrial infrastructure over the next 10 years. As the g p yfuture growth engine industry, the Korean market of biotechnology industry will develop to $23.1 billion in 2010. “

- G. Steven Burrill, ceo of Burrill & Company

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Bi i d t i KOREABio-industry in KOREA

Market Value

Korean pharmaceutical market has been growing fast and expected to grow up to US$16.6 billion by 2010(10% of CAGR).Korean Bio related industry market is fast growing and predicted to reach

No of Employees Market Trade Global Market

Unit : USD Million, (USD 1=KRW1000)

Korean Bio-related industry market is fast growing and predicted to reachUS$6.5 billion by 2010 (20% of CAGR).

Year No. of Firms

Employees(Personnel)

Market Size Production Export Import Trade

BalanceGlobal Market

Share

Pharmaceutical Industry

(includes finished goods

2006781

(Manufacturers: 570)

70,681 13,882 11,473 863 3,272 - 2,409

(includes finished goods & raw materials,

excluding quasi-drugs)CAGR

`01~`06 4.6% 8.7% 10.1% 8.3% 3.1% 15.6% 21.4% 1.8%

2006 79417,316

(R&D – 8,715 (50 3%))

2,745 3,160 1,350 935 415Bio-related

industry

(50.3%))

CAGR`01~`06 12.5% 19.4% 18.7% 17.6% 9.1% 17.9% - 5.2% 2.2%

*S KIET 2007 KHIDI 2007 [2006 Whi P H l h I d ] MKE/ KATS/KIET/BAK [2006 S i i K Bi I d ] 2007*Source : KIET 2007, KHIDI 2007 [2006 White Paper on Health Industry], MKE/ KATS/KIET/BAK [2006 Statistics on Korean Bio Industry] 2007

3/22

Market Value

Korea recorded 1.8% of global market share, but its annual growth rate(’95~’05) is remarkable among OECD

◆ Global Pharmaceutical Market Share– Total Market Size US$607.9 Billion

7.13.6US

Total Health Expenditure Drug Expenditure

47.7%

29.9%

9.3% 5.8

5.8

6.4

6.6

7.1

3

3.4

3.2

4.7

4.3

S i

Mexico

Canada

Australia

Slovakia

KOREAKOREA

8.6%

4.5%

4 1

4.6

4.9

5.4

5.5

3.1

4

2.4

7.6

3

Netherlands

OECD

Austria

Korea

Spain

KOREAKOREA1.8%($14 billons)North America

Europe

Japan 3.1

3.3

3.5

4

4.1

3 2

2.3

2.8

1.8

3.4

France

Swiss

Germany

Norway

Netherlands

Japan

Asia Pacific&Africa (KOREA 1.8%)

Latin America

Source : IMS Health (2006) Source : OECD Health Data 2007 (Unit : %)

0.8

2.92.6

3.2

Japan

Italy

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2009 Governmental R&D Investment in BT

The government plans to invest US$2.1 billion in biotechnology in2009(16.9% of total governmental R&D investment).

16 8% of 16.9% 16.9% of 16.8% of

Governmental

Total R&D

i i

Governmental

Total R&D

investment in

BT 2008investment in

BT 2009

※※R&D Investment in IT : 17.1%R&D Investment in IT : 17.1%→→16.1%(US$1.9billion)16.1%(US$1.9billion)(not considering private sector)

1$=1000KRW, Source : Ministry of Strategy and Finance (2009)

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2009 Governmental R&D Investment in BT

The rate of government investment in biotechnology has been remarkable,comparing other sectors.

RANKSRANKS 20042004 20062006 20082008 20092009

1 IT(21.4%) IT(19.8%) IT(17.1%) BT(17.4%)

2 BT(15.6%) BT(17.4%) BT(16.6%) IT(16.2%)

3 Machines(9.0%) Machines(10.3%) Machines(11.8%) Energy(11.2%)

4 Energy(7.2%) Aero, space,marine(7.4%)

Energy(10.6%) Machines(11.2%)

5 Aero, space, marine(4 7%)

Energy(7.3%) Aero, space, marine(7 9%)

Aero, space, marine(7 8%)marine(4.7%) marine(7.9%) marine(7.8%)

Unit : % total government R&D budgets, Source : Ministry of Strategy and Finance (2009)

* Private investment s are excluded.

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Major pharmaceutical companiesK h ti l i t l i R&D th l b l fi h

Sales R&D Expenditure Sales R&D Expenditure

Korea pharmaceutical companies spent less in R&D than global firms, however

recently recorded 2-digit growth in R&D investments.

NO Name

Sales R&D Expenditure

2008 2007Growth

rate2008 2007

Growth rate

D A 702 571 10 4% 45 40 12 5%

NO Name

Sales R&D Expenditure

2008 2007Growth

rate2008 2007

Growth rate

1 J&J 24,567 24,866 -1.2% 5095 5265 -3.2%1 Dong A 702 571 10.4% 45 40 12.5%

2 Hanmi 558 422 11.4% 57 55 3.6%

2 Pfizer 48,296 48,414 -0.2% 7945 8089 -1.8%

3 GSK 35,183 32,819 7.2% 5318 4807 10.6%

3 Yuhan 596 411 23.7% 34 30 13.3%

4 Green Cross 516 442 16.7% 42 35 20.0%

4 Sanofi-Aventis 38,924 39,607 -1.7% 6459 6406 0.8%

5 Novartis 41,459 38,072 8.9% 7217 6430 12.2%

5 Choongwae 438 385 13.8% 20 18 11.1%6 AstraZeneca 31,601 29,559 6.9% 5179 5162 0.3%

7 Merck 23,850 24,198 -1.4% 4805 4882 -1.6%

6 Jeil 319 305 4.6% 9 8 12.5%

7 Chong KunDang 303 252 20.2% 27 22 22.7%

8 Roche 43,199 43,688 -1.1% 8376 7940 5.5%

9 Wyeth 22 835 22 399 1 9% 3373 3256 3 6%g

8 LGLife Science 282 256 10.2% 60 59 1.7%

9 Wyeth 22,835 22,399 1.9% 3373 3256 3.6%

10 Eli Lilly 20,378 18,633 9.4% 3841 3486 10.2%

7/22 Unit : Million USD, 1$=KRW1000, Source : KFDA 2007

Development of Innovative drug in Korea

14 new drugs were approved by the KFDA (1 by USFDA) since 1999More than 9 new drug candidates have received IND approval from the USFDA

Product Name Indication Company Development Status

FACTIVE Quinolone Antibiotics LG Life Science Market Launched

hGH, IFN-a Growth Deficiency LG Life Science PhaseⅢ

LB8038 Anti-HBV therapeutics LG Life Science PhaseⅡ

Zydena(DA-8159) Erectile Dysfunction Dona A Pharm PhaseⅡ

YKP509 Anti-epilepsy SK Corporation PhaseⅡ

YKP10A Anti-depression SK Corporation PhaseⅡ

PTH Facilitates the formation of bone density Green Cross Corp PhaseⅠ

VM202 Cardiovascular disease Viromed PhaseⅠ

Neu2000 Cerebrovascular disease Neurotech PhaseⅠ

Source : Korea Drug Research Association (2008)

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PatentsP i bi h h i d idl d k d K 2 d i A i■ Patents in biotech have increased rapidly and ranked Korea as 2nd in Asia.

Source: Biotech Policy Research Center 2009

RANK Country # of Patents(‘08)

# 14 KOREA 55Source: Biotech Policy Research Center, 2009

#1 US 2424

#2 JAPAN 399

#3 GERMANY 198

178207

150

200Number of patents

14 World Ranking

#4 CANADA 117

#5 SWISS 72

#6 UK 854750

100Technological strength

145.7

73.3

17

21

Ranking

■ Growth rate of patent registration in Korea is higher than U S

#7 FRANCE 100

: : : Source: Korea Drug Research Association (2007)

0 '94~'97 '98~'01 '02~'0513.9

21

■ Growth rate of patent registration in Korea is higher than U.S.

Source: KIPO 2007 9/22

Number of publications for BT Korean scientists in biotech have rapidly increased the contribution ofresearch papers, particularly to Nature, Cell and Science.

2928

26

CELL

SCIENCE

NATURE

7

2

514

1918

NATURE

Total No.

142 5

4

5

1

35

24

7

4

7

1011

1413

1 1 2 2 3 26

4 4 57

9

1 01 0

32

2 112

34

95 96 97 98 99 00 01 02 03 04 05 06 07

3 Main journals (NSC for Bio) 2 papers95 19 papers07

SCI Expanded(for Bioscience)

933 papers(23rd )95 4,909 papers

(`2005:13th)07Source: MEST, Report of BioVision2016 , 2008

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Clinical TrialsIn 2007, total clinical trials were calculated for 281 cases.

Since 1993, the number of clinical trials has steadily increased in Korea, while

it in Japan decreased.

218

281

250

300

Multinational

108

134110

55

143 136

185

218

100

150

200

250Domestic

Total

5

18 17

46 6195

28 27 3897

75 90

14733

45 55

0

50

2000 2001 2002 2003 2004 2005 2006 2007

International Multi-centered Trials

Source: KFDA (2007.11)

11/22

Manpower of Bio-industry in KoreaKorea has plenty of creative biotech R&D personnel in both quality and

quantity.

US Europe Canada Asia- Pacific Korea

All employees 134,600 47,720 7,330 15,280 17,316

R&D employees 57,878 20,996 3,958 5,348 8,715

Percent 43 44 54 35 50

yBiotechIndustry 11.9% 44.4% 43.6%

OtherIndustries

1.7%

13% 86.3%Industries

PhD MS BS

12/22

fFuture of Korea Bio-industry

New growth engines for Korea since 2008

Establish high-value added new industry through development of

bio-pharmaceuticals, IT fusion medical devices with bio-fund of US$100 million.

Industrial Sectors Industrial Sectors Growth engines(22)Growth engines(22)

Energy, Environment Pollution-free fuel energy, Marine bio fuel, Solar battery, Fuel cell developing system, etc.

Transportation system Green Car, Vessel·Marine system

New IT Semiconductor, Display, Next-generation wireless communication, LED light etc.

Fusion new industryRobot, Material·nano fusionIT fusion system Broadcasting communication fusionFusion new industry IT fusion system, Broadcasting communication, fusion media.

BIO Biological drugs and medical-deviceSoftware Design Healthcare service

Knowledge serviceSoftware, Design, Healthcare serviceCulture contents

14/22

New growth engines for Korea since 2008

FINAL GOAL : “To be ranked among 5 leading countries in a sector of FINAL GOAL : “To be ranked among 5 leading countries in a sector of biotechnology and medical devices in 2018”biotechnology and medical devices in 2018”biotechnology and medical devices in 2018 biotechnology and medical devices in 2018

SectionSection PolicyPolicySectionSection PolicyPolicy

System Improvement

- Ease regulations on Clinical study/Pre clinical studies

and approvalsSystem Improvement pp

- Ease regulations on of listing KOSDAQ

Develop treatment of new concept

R&DDevelop New-generation Implant

Medi-bio diagnostic techinologies

Develop fusion medical devices

Human resource cGMP process, Risk assessment, HR training

15/22

u a esou ce p , , g

Future of Korea Bio-industry

“Quality of Life Oriented Society” with Prosperous “Bio-economy”

VISION 2018

- To achieve the 5th place Globally in BT arenas -

Objectives

Domestic Production of Bio USD 45 billionUSD 6 billion

2018201820082008

Objec es

Domestic Production of Bio

Scientific Publication

Patent Competitiveness

USD 45 billionUSD 6 billion

13TH Place 5th place

14TH Place 5TH Place

Job Creation 3,5000/year 244,000/year

Market Share 1.8 % 7.4 %

Expanding infrastructure forupgrading R&D

The innovative restructuring of the national biotech promotion system

StrategiesStrategies

1 2

Achieving the globalization of bio-industries

The regulatory and legal overhaul andthe enhancement of public acceptance

StrategiesStrategies

3 416/22

Korea’s Latest Technology Lisencsing Korean firms possess relatively sound drug development pipelines and have

successfully licensed out drug candidates

Comp. Purchase Comp. Indication

‘07. 7 Dong-hwa P&G Pharmaceuticals Osteoporosis

‘07. 7 LG Life Science TAKEDA Obesity

‘07. 7 Han-mi iNova Obesity

‘07. 9 Green Cross VABIOTECH Chicken pox

‘07. 11 LG Life Science Gilead Science Liver disease

‘07. 12 Green Cross Abraxsis Bioscience Inc rec. Factor VIII

‘07 12 CTC BIO Di h I t ti l BV Ob it‘07. 12 CTC BIO Disphar International BV Obesity

‘08. 1 SK J & J Epilepsy

‘08. 2 Crystal Genomics Proquest Anemia

Source : Bioindustry Association of Korea, 2008

‘08. 3 Viromed Cordis Myocardial infarction, Angina pectoris

17/22

K Bi h lKorea BiotechnologyIndustry Organizationy g- Your access to success

KoreaBio

HistoryHistory

1982. 1982. Korea Biotechnology Research Association(KBRA) founded1991.111991.11 Bio-industry Association of Korea(BAK) founded y ( )

2000. 72000. 7 Korea Bio-venture Association(KOBIOVEN) founded

2008.112008.11 BAK, KOBIOVEN and KBRA merged into KoreaBio

MissionMission

ToTo becomebecome anan interfaceinterface ofof governmentgovernment andand pharma/biotechpharma/biotech companiescompanies

TT tt KK bibi i d ti d t ii l b ll b l bibi i d ti d t ititToTo representrepresent KoreanKorean biobio--industryindustry inin globalglobal biobio--industryindustry communitycommunity

ToTo serveserve membermember companiescompanies withwith variousvarious supportingsupporting programsprograms

19/22

KoreaBio

Main Business AreaMain Business Area

Industry development and support

International cooperation

Information support and public relations

Policy cooperation and member company support

Training

Establishment of Pangyo Bio Center

20/22

KoreaBio

Supporting CompaniesSupporting Companies

Chong Keun Dang, Han-mi, Dong-A Pharm Co., LG Life Science,Green cross, Choog-wei, Macrogen Inc, Dea-sang, Bo-ryung Pharm,Sam-yang Genex, Dea-woong, Cell trion, Dong-kook, Meditox, Viromed, Medipost, Bioneer… (total 302 companies)

Business ObjectivesBusiness Objectives

ToTo assistassist KoreanKorean governmentgovernment toto executeexecute thethe policypolicy “New“New GrowthGrowth Engine”Engine”

ToTo establishestablish aa BioBio centercenter withwith USUS$$100100 millionmillion ofof fundfund raisingraising

ToTo developdevelop “BIO“BIO KOREA”KOREA” asas aa representativerepresentative biobio--relatedrelated eventevent inin KoreaKorea

21/22

Thank you !y