Last year, the expense for research and development (R&D) by domestic large corporations in the pharmaceutical sector increased compared to the previous year, while it decreased for medium-sized and small enterprises.
The Korea Bio Association announced the results of its survey on the trends of public biohealthcare (pharmaceutical and medical device) corporations for the fourth quarter and annual figures of 2024 on the 28th. This survey was conducted among 91 companies listed in the biohealthcare sector of the Korea Exchange (KRX) industry index. The number of surveyed corporations decreased by two compared to the previous year (2023).
According to the trend survey, the total R&D expense of 91 listed biohealthcare corporations last year was 3.5311 trillion won, which is a 5.4% increase from the previous year. Over the last three years, the total R&D expenses were 3.2936 trillion won in 2022, 3.4424 trillion won in 2023, and 3.5311 trillion won in 2024, showing an increase each year.
However, there are temperature differences according to industry and corporation size. Last year, the R&D expense in the pharmaceutical sector increased by 2.8% compared to the previous year, while in medical devices, it rose by 22.9%. In 2023, R&D investments in pharmaceuticals and medical devices increased by 4.3% and 6.2%, respectively, compared to 2022. While the growth rate of pharmaceutical R&D investments slowed, medical devices surged.
By corporation size, last year, large corporations increased their pharmaceutical R&D expenses by 11.2% compared to the previous year, whereas medium-sized and small enterprises decreased their R&D investments by 0.9% and 3.8%, respectively. In the field of medical devices, R&D investments by medium-sized corporations increased by 26.9%, while small enterprises rose by 19.6%.
Currently, there are no large corporations among domestic medical device companies. Large corporations are defined as those with total assets of over 5 trillion won. Medium-sized enterprises are defined as those with assets between 500 billion won and 5 trillion won, while small enterprises are defined as those with assets less than 500 billion won.
There are calls for support measures, such as activating the funding market, as R&D is directly linked to the innovation capabilities of corporations. A representative of a domestic listed bio corporation noted, "Many corporations are struggling to secure funding as the securities and investment market is frozen," adding, "For biohealthcare corporations to bear fruit, they need to become 'a relay runner' that can continue to develop R&D, but the financial difficulties the corporations are facing is a significant problem."
The total revenue of the 91 surveyed corporations last year was 32.5173 trillion won, which is a 13.1% increase from the previous year's 28.7503 trillion won. Both pharmaceutical and medical device corporations saw an increase in revenue. Among this, domestic sales amounted to 21.6996 trillion won, which is an increase of 11.4% from the previous year, and exports were 10.8176 trillion won, up 16.8% from the previous year. Domestic sales accounted for 66.7% of total revenue, while exports accounted for 33.3%.
The growth of the biohealthcare industry is attributed to the increase in sales of biosimilars (replica drugs) and contract development manufacturing (CDMO) from large corporations such as Samsung Biologics and Celltrion.
However, overall profitability did not increase as much as revenue. Last year, the operating profit margin of the 91 corporations was 14.3%, which is only a 1.3 percentage point increase from the previous year. The equity ratio (stability) was 75.4%, down 1.2 percentage points from the previous year.
The total workforce of listed biohealthcare corporations is 49,388, an increase of 1,838 people (3.9%) from the previous year. Among them, the research and development workforce is 7,706, up 2.6% from the previous year. However, the workforce in the pharmaceutical sector increased by 4.7%, while that in the medical device sector decreased by 7.6% compared to the previous year.
Kim Eun-hee, head of the industry statistics team at the Korea Bio Association, said, "Listed biohealthcare corporations are showing a healthy financial status with overall revenue expansion and sustained high equity ratio," but cautioned, "Small and medium enterprises in the pharmaceutical sector are still operating at a loss, so continuous efforts to improve profitability are necessary."
The biohealthcare industry expects that the U.S. tariff policy under the Trump administration will greatly impact their performance this year. Team Head Kim stated, "This year, we plan to assess quarterly how the U.S. tariffs will affect exports of Korean pharmaceuticals and medical devices."