UTT TT 2020 Seegene was a mid-sized South Korean supplier of medical diagnostics with annual sales of around $ 110 million. On January 27 of the same year, Chun Jong-yoon, the boss of Seegene, and his counterparts from other biotech companies were called to an emergency meeting by the government. Officials asked if they could produce tests for a new coronavirus that had spread rapidly in Wuhan, China. The Seegene test kit has received the green light from regulators. When cases began to spike soon after in Daegu, southeastern South Korea, the company went into emergency mode. “We stopped all other activities and just threw away whatever we had at covid-19,” says Chun.
Seegene employees worked around the clock, snatching a few hours of sleep in hotels near the office. Dozens more were hired overnight. Within weeks, the company was exporting millions of test kits to dozens of countries around the world. He ended the year with revenues of $ 1 billion and net income of $ 440 million. Other South Korean biotech companies have experienced an equally good pandemic. Five of the ten most valued companies in the KOSDAQ of the index of mid-sized companies now come from the biotechnology sector, compared to two at the end of 2019. The same is true of two of the ten largest companies in the benchmark. KOSPI index.
In addition to testing, they produce treatments and vaccines for covid-19. SK Bioscience began manufacturing the AstraZeneca jab this year and signed an agreement in February to manufacture the Novavax. The following month, he raised $ 1.3 billion in an initial public offering; Its share price jumped 30% on the first trading day, which it finished with a market cap of nearly $ 12 billion. In May, Samsung Biologics, a publicly traded subsidiary of South Korea’s largest conglomerate, signed an agreement to help distribute hundreds of millions of shots of Moderna starting next month. It is building a new plant in Incheon which the company says will leave it with a third of the global contract manufacturing capacity of “biosimilars,” generic versions of biotech drugs.
Before even calling on biotech companies to fight covid-19, successive administrations have used tax incentives, partnerships and research and development grants to boost the industry. Thanks in part to such largesse, it had grown nearly 7% a year before the pandemic, twice as fast as South Korea GDP. But it was from a weak, concentrated base at the less lucrative end of the market. South Korean companies have yet to offer a successful licensed treatment around the world. As such, they represent less than 2% of the global biotechnology market, says Lee Seong-kyou of the Korea Biotechnology Industry Organization, a trading group.
Industry boosters believe that, in the words of Kwon Oh-sung of the Korea Institute of Industrial and Trade Economics, a government think tank, “the pandemic has been a turning point.” Companies have probably “learned more and accumulated more technology in the past year than in the previous ten years,” Lee believes.
Some lucky ones, like Seegene, have also accumulated profits that they can put to use. Mr. Chun had long hoped to develop diagnostic kits that could test more diseases with less complex equipment. This would allow it to expand its clientele from governments and large hospitals to smaller clinics and even individual practices. “We always had the plan, but we never had the money to work on it,” he says. “Now we are doing it. “
Can the money keep flowing? Some investors can be cold-eyed. After skyrocketing in 2020, South Korean biotech stock prices have faded somewhat (see chart). Earlier this year, six of the KOSDAQthe top ten biotech companies: one has since joined them but two have given up. Seegene shares are worth half the price of their peak last August. The market value of SK Bioscience has plunged below what it was after its sparkling debut. Shares of Samsung Biologics and Celltrion, the two industry giants, are trading below their recent highs.
With the relatively simple technology involved in products like test kits, companies like Seegene now find themselves exposed to intense competition, especially from industry giants like Roche in Switzerland. Startups complain that funding is hard to come by. Everyone complains about a shortage of skilled labor. The pandemic has given the industry a boost. For a boost, companies must look to themselves. ■
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This article appeared in the Business section of the print edition under the title “Booster shot”