Innovative Drug Companies to Be Divided Into ‘Leading’ and ‘Growth’ Categories, With Tiered R&D Spending Requirements

The government will divide certification for innovative drug companies into “leading” and “growth” categories to encourage companies to advance in stages.

The Ministry of Health and Welfare approved an amendment to the Enforcement Decree of the Special Act on the Promotion and Support of the Pharmaceutical Industry containing these provisions on the 18th, according to Korea Policy Briefing.

The amendment divides innovative drug companies into leading and growth categories and sets different selection criteria based on innovation performance.

General innovative drug companies will be classified as leading if their review results meet or exceed the score announced by the minister of health and welfare; those that fall short will be classified as growth companies. Foreign-affiliated innovative drug companies will be classified in the same way.

R&D spending requirements will also vary by category. Companies with annual drug sales of less than 1000억원 must invest 70억원 annually in R&D or spend 9% of sales to receive leading-category certification.

For the growth category, the requirement in the same sales bracket is lower: 50억원 annually or 7% of sales. For companies with sales of 1000억원 or more, the requirement is 7% of sales for the leading category and 5% for the growth category.

For companies that have received approval for good manufacturing practice from a U.S. or European Union government or public institution, the requirements are reduced to 5% of sales for the leading category and 3% for the growth category.

The ministry said the aim is to give conventional pharmaceutical companies an incentive to progress from the growth category to the leading category.

The amended decree takes effect on the date of promulgation. However, provisions related to R&D spending levels will apply starting July 22, 2029.

Under a transitional measure, companies already certified as innovative drug companies will be considered leading-category companies until their certification expires.