With comprehensive end-to-end capabilities across research, clinical trails, licensing and production, Genuone Sciences, is strategically positioned for rapid expansion. This unique advantage extends to further penetrate the South Korean domestic market, which demands more pharmaceutical CDMO services, and the international market where the company already has a presence in South East Asia and Latin America.
South Korea currently faces a unique demographic situation. On top of becoming the world’s first country to see its fertility rate fall below 1.0, experts estimate that by 2025, more than 25% of the South Korean population will be over the age of 65, turning the nation into one of the first super-aging societies in the world. While this demographic trend presents challenges, it also provides the Korean medical & pharmaceutical sector with a unique opportunity. What challenges and opportunities does it create for Korean companies?
Certainly, I am acutely aware of the demographic trends in Korea. We are undergoing a rapid transition into an aging society, leading to a decline in the working-age population. Concurrently, there's an increased focus on medical expenditures due to a growing elderly population. These dual phenomena can be both an opportunity and a challenge for Korean society and the pharmaceutical sector.
As a company within the pharmaceutical sector, we contemplate how to navigate these challenges. Particularly, the elderly population tends to grapple with multiple adult illnesses, often requiring the intake of several medications simultaneously. Genuone Sciences aims to address this issue by enhancing the quality of life for the elderly taking medications. Taking multiple pills concurrently is challenging for the elderly for two primary reasons: the difficulty in swallowing and the complexity of managing various medications with different intake intervals. To address this, we are working on developing a complex pill that can deliver multiple effects and treat various symptoms with a single dose.
Another key focus for us is to develop pills that are easy for the elderly to swallow. While many pharmaceutical companies in Korea concentrate on developing drugs for diseases like Alzheimer's, osteoporosis, and cancer, our company, specializing in Incrementally Modified Drugs (IMD) and generics, prioritizes developing drugs that can address multiple symptoms and are easy for the elderly to consume.
In the broader context of the Korean pharmaceutical industry, the diminishing working-age population may result in a forecasted decrease in economic vitality. Nevertheless, the market is expected to expand concurrently. Consequently, pharmaceutical companies should intensify efforts to generate more job opportunities for seniors. There are indeed numerous roles that can be efficiently carried out by the elderly in the pharmaceutical field, making this a potentially lucrative avenue. By proactively preparing for the future and showcasing stellar performances, pharmaceutical companies can mitigate the potential negative consequences associated with an aging population.
To support the 10 to 15 years development of a new drug, with no overlap or omission of support at a certain stage, it is crucial to establish and manage a nationwide new drug development strategy by a single organization. In Korea, for example, dozens of research funding programs for drug development were run by nine different government ministries in 2019. In your opinion, how has the regulatory framework advanced since 2019?
Presently in Korea, the Korea Pharmaceutical and Bio-Pharma Manufacturers Association (KPBMA) has around 280 member pharmaceutical companies. The association has long recognized and sought to address the issue you mentioned. Recently, there has been a realization within the association that the Korean government's support is fragmented and overlaps across different ministries, leading to inefficiencies. Consequently, the association has advocated for the establishment of a control tower for the pharmaceutical and bio-pharma industry. While meaningful improvements or innovations have yet to materialize, ongoing discussions between the government and the private sector are in progress, aiming for ultimately positive outcomes.
South Korea has become an unquestionable powerhouse in biologics contract manufacturing as Korean names have become responsible for global supplies of four Covid-19 vaccines available. For example, companies like Samsung Biologics and Celltrion have had good success internationally. How do you explain the strength of Korean companies in biopharmaceutical drugs? Additionally, does Genuone Sciences have plans to expand its offerings into the biopharmaceutical realm?
With over 20 years of experience in the biopharmaceutical industry, I believe I have some insights into your question. South Korea initially lagged behind the U.S. and European counterparts in researching, developing, and producing biopharmaceuticals due to a lack of foundational infrastructure. However, a notable strength of South Koreans is their ability to adapt and rapidly progress. While it took time for South Korea to narrow the gap in the chemical sector, especially in new technologies like molecules, antibodies, or gene therapy, the country has swiftly secured the capabilities to catch up and even surpass existing players in the biopharmaceutical market. This rapid development is a key factor contributing to South Korea's prowess in the biopharmaceutical industry.
As for Genuone Sciences, currently a chemical-based CDMO without biotechnology capabilities, we are actively exploring sectors that could synergize with our expertise. If the opportunity arises, we plan to venture into the bio CDMO sector through potential avenues such as mergers and acquisitions or open innovation.
South Korea has witnessed significant successes in the pharmaceutical sector in the last five to six years. Notably, in 2019, South Korea joined the EU drug whitelist, highlighting that its manufacturing and safety standards align with European standards. During the COVID-19 pandemic, Korea emerged as the leading exporter of in vitro testing kits, significantly influencing the market. More recently, Korean pharmaceutical companies have achieved substantial growth, marked by an exponential increase in the number of pipelines and a record-breaking 33 new drugs out-licensed to global pharmaceutical groups in 2021 alone. Despite these successes, Korean firms face a relative lack of experience in global product commercialization compared to counterparts in North America and Europe. How do you foresee the trend of internationalization evolving for Korean companies, and what are the primary challenges they must overcome when exporting to the global market?
Many biopharmaceutical companies in Korea are increasingly recognizing the imperative of globalization. While the degree of intensity varies, a substantial number of companies are actively pursuing global expansion. However, developing an end-to-end in-house cycle for the entire drug development process remains a formidable challenge for pharmaceutical companies in Korea. Consequently, many Korean firms have adopted a strategy of division of labor and specialization in specific sectors. For instance, numerous venture companies specialize in discovering lead compounds in the early stages of drug development, focusing on defining early efficacy or competence. Additionally, there is a rise in NRDO (No Research Development Only) companies that concentrate solely on the development process rather than research.
The primary reason Korean companies haven't evolved to the level of multinational corporations (MNCs) is the high cost and risk associated with independently conducting phase-three clinical trials. Consequently, South Korean companies often opt to license out their technologies and form partnerships with overseas pharmaceutical firms for clinical trials as part of their globalization strategy.
Recognizing these challenges, the Korean government and industrial circles are actively supporting the industry. They have established a mega fund to enable Korean pharmaceutical companies to conduct phase-three clinical trials and potentially engage in sales in overseas markets. Over time, these collective efforts are expected to yield positive results, propelling Korea towards the creation of global pharmaceutical companies.
Genuone Sciences offers a one-stop solution, assisting customers throughout the entire process until the final production. Could you elaborate on how your company evolved to meet the needs of your customers, particularly in adapting your manufacturing processes for different stages and enhancing your Research and Development (R&D) capability?
Genuone Sciences operates as a total solution company, providing comprehensive support from the initiation of the process to its conclusion. Our clientele spans from venture companies to more established pharmaceutical firms. Venture companies often possess the capability to develop lead compounds but lack expertise in areas such as formulation study, stability, and scale-up. Consequently, they seek our assistance in these specific areas. As these venture companies progress and achieve success, they typically extend their collaboration to include clinical trials and production. In cases where larger companies are involved in the development process, they may only request our services for production. Alternatively, some companies opt for our end-to-end capabilities, covering development, production, and the approval process, leveraging Genuone Sciences' expertise, following a feasibility study conducted internally.
Genuine science can combine multiple drugs or active ingredients in a single package, particularly with a focus on the elderly, such as Lidcap technology, involving liquid-filled hard capsules, essentially a shell containing liquid. Could you clarify whether this technology is already developed, or is it a work in progress? Additionally, can you elaborate on the advantages of Lidcap compared to other liquid-filled hard capsules (LFHC)?
In the market, most liquid-filled gelatin capsules are typically produced using spray-drying technology. This involves spraying binder to the seam of capsules and then drying them. Genuone Sciences employs a distinctive bending technology, simplifying and expediting the process, ultimately enhancing productivity. While our filling technology aligns with other LFHCs, the sealing method distinguishes us – bending as opposed to spraying. This streamlined approach allows for increased production due to its simplicity and repeatability, along with superior shaping.
As for the Lidcap, it indeed has the capability to contain liquid or even another capsule, and this technology has already been developed. However, a crucial consideration revolves around ensuring the compatibility and safety of various drugs housed within the Lidcap. At present, the Lidcap technology is limited in usage as we are actively working on understanding how to safely combine different drugs. Our ongoing efforts aim to accumulate the necessary knowledge to commercialize this technology successfully.
The founding story of Genuone Sciences is intriguing, involving the acquisition of the pharmaceutical division of Kolmar Korea and Kolmar Pharmaceutical by IMM Private Equity. Could you provide a brief overview of the company's history, shedding light on the reasons behind its establishment? Additionally, how do you anticipate the brand evolving in the next five years?
The pharmaceutical division of Kolmar Korea was established in 2002, and Kolmar Pharmaceutical was founded in 2012. In 2020, IMM Private Equity acquired both entities, giving rise to Genuone Sciences. IMM's decision rested on two primary considerations. Firstly, they recognized Genuone Sciences as possessing exceptional capabilities in Contract Development and Manufacturing Organization (CDMO). While the global CDMO penetration rate stands at 35%, South Korea lags slightly at around 24%, indicating ample room for growth in the domestic market. Secondly, IMM foresaw the significant expansion of the Korean pharmaceutical market driven by the aging population. By consolidating these two companies, IMM aimed to wield substantial influence in the Korean pharmaceutical landscape. Looking ahead, the integration positions Genuone Sciences for a pivotal role in the domestic market's growth.
Your extensive drug pipeline covers various fields, and this year, you introduced the antipeptic ulcer drug "Munals Suspension" into the Southeast Asian market, particularly in countries like the Philippines, Vietnam, and Thailand, where the drug-making industry is limited. Considering your overall drug pipeline, which international region do you find more favorable for your business? Additionally, what are your thoughts on more advanced countries such as Europe, the U.S., and Japan?
Presently, Genuone Sciences is strategically targeting the Southeast Asian and Latin American markets. We have also initiated business ventures in Japan, engaging in CDMO for Pariet Tab (rabeprazole) with the Japanese global company Eisai. Furthermore, we are exporting some of our products to Japan. While our immediate focus is on Southeast Asia and Latin America, we harbor a keen interest in the U.S. and European markets for the long term. Although entry into these markets will require thorough preparation and development, I am optimistic about our success in becoming a multinational company in due course.
In March 2023, your company entered into an agreement with IAMDT, a vet platform specializing in products for veterinary use. Can you provide insights into the diversification strategy of your company, particularly with this veterinary platform?
The pharmaceutical market for pets in Korea is experiencing significant growth. However, there is a notable shortage of companies dedicated to producing drugs exclusively for pets. Currently, pet drugs are often adapted from human formulations, involving adjustments to dosage or changes in packaging. This approach proves costly and inconvenient for pet owners. Historically, there was a regulatory restriction preventing the manufacture of drugs for humans and animals in the same facility. However, this regulation has been lifted. Recognizing the substantial potential in the animal drug market, we proactively pursued opportunities to enter the pet pharmaceutical market, leading to our collaboration with IAMDT.
Genuone Sciences, despite being relatively young with just three years of existence, has experienced substantial growth, particularly in the past year. Given that you are relatively new in your role, are there specific goals or ambitions you aim to achieve as the CEO of Genuone Sciences before embarking on your next professional journey?
I've been with Genuone Sciences for about a year and a half now. Prior to joining, I served as the representative director of Boryung Pharmaceutical. Personally, wherever I am, I aspire for the company I'm associated with to thrive and become a leader in the industry. To achieve this, my focus is on enhancing and maximizing the company's capabilities and investing in the training and education of our employees to ensure everyone performs at their best. Consequently, my ongoing efforts are directed towards positioning our company as a leader in the field.
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