Innovative pharmaceutical companies to be divided into ‘leading’ and ‘growth’ categories, creating a pathway for expansion

The Ministry of Health and Welfare will divide certification for innovative pharmaceutical companies into “leading” and “growth” categories.

On Sept. 18, the Ministry of Health and Welfare announced that it would open for public comment from that day through Oct. 28 proposed amendments to the enforcement decree and enforcement rules of the Special Act on the Promotion and Support of the Pharmaceutical Industry, as well as the notification on the certification of innovative pharmaceutical companies, to provide phased support by dividing innovative pharmaceutical companies into leading and growth categories.

The restructuring aims to establish a pathway through which promising startups can grow into leading pharmaceutical companies by progressing through the growth and leading categories. Although the discussion initially began with the introduction of a “quasi-innovative pharmaceutical company” category, the system was enhanced to support new drug development by small and midsize companies and biotech ventures with high growth potential, beyond preferential drug pricing.

Companies with a review score of 65 points or higher will be certified as leading companies, while those scoring below 65 points will be certified as growth companies. Growth companies must meet the required ratio of research and development (R&D) spending to pharmaceutical sales and must not have any grounds for disqualification.

Under the growth-category certification criteria, companies with average annual sales of less than 100 billion won over the previous 3 years must have an R&D ratio of at least 7% (at least 5 billion won), while companies with sales of 100 billion won or more must have a ratio of at least 5%. Companies that meet cGMP and EU GMP quality standards qualify with a ratio of at least 3%.

The government plans to extend some benefits previously provided to leading companies, including additional points in national R&D projects and preferential drug pricing, to growth companies on a differentiated basis according to the characteristics of each category. Existing certified companies will retain their restructured leading-company status and benefits until their current certification validity period expires.

Certification is valid for 3 years for both categories and may be extended following reevaluation every 3 years. Companies may also change categories based on reevaluation results, including being promoted from the growth category to the leading category.

After gathering opinions from the pharmaceutical and biotech industries and the public during the public-comment period, the Ministry of Health and Welfare plans to finalize the amendments and, after the legal revisions are completed, begin a new certification application process to select growth companies.

Comments may be submitted by Oct. 28 to the Pharmaceutical and Biotech Industry Division of the Ministry of Health and Welfare or the Public Participation Legislative Center.