Lower venture capital investments in the biomedical sector

The biomedical industry, which was the biggest investment destination for venture capital (VC) firms from 2018 to 2020, fell to third place in the first half of this year.

Investments in the biomedical industry from venture capitalists are declining.

According to a report by the Biotech Policy Research Center, new venture capital investments in the biomedical industry amounted to 675.8 billion won ($486.2 million) in June 2022, ranking third after ICT (1.49 trillion won) and distribution and service industry (760.3 million won). billion won).

Venture capital investment in the biomedical industry began to rise after the Korea Stock Exchange (KRX) introduced the special technology listing system in 2005.

The system mitigates certain listing requirements, such as meeting certain profit requirements, for Kosdaq listing applicants based on their technological strength and growth potential.

In 2018, the biomedical sector became the most invested area by venture capital firms after registering an investment of 841.7 billion won. During this period, 17 of the 21 companies (80.9%) that went public through the Special Technology Registration System were biomedical-related companies.

The biomedical field has ranked first in venture capital investment for three consecutive years after receiving 1.10 trillion and 1.07 trillion won in 2019 and 2020, respectively.

However, the sector lagged behind the ICT industry in 2021, despite the increase in new venture capital investment to 7.68 trillion won, a strong increase of 78.4% from the previous year. ‘last year.

Venture capital firms invested a total of 2.42 trillion won in the ICT sector in 2021, nearly double the 1.76 trillion won invested in 2020. The amount of new venture capital investment in biomedical industry in 2021 was 1.677 trillion won.

The report attributes the downward trend in venture capital investment in the biomedical industry to the recent decline in the number of biomedical companies made public through the Special Technology Listing System.

The number of newly listed companies on the Kosdaq using the Special Technology Listing System has continued to grow each year, with 39 going public through the system in 2021.

However, unlike the high proportion of biomedical companies that went public through the system in 2018, only 14 out of 39 companies (35.9%) were biomedical companies in 2021.

These companies include VUNO, Prestige Biologics, NeoImmuneTech, BIODYNE, Life Semantics, Genesystem, curacle, DEEPNOID, ViGenCell, ABION, From Bio, CHA Vaccine Research Institute, GENINUS and ToolGen.

“Recently, the biomedical sector has been hit by a series of negative issues such as controversy over accounting irregularities and clinical failures,” the report said. “The filter technology special listing system is expected to be enforced more strictly, which, in turn, will affect listing and investment.”

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