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Life sciences: a new real estate focus in South Korea

South Korea’s life science industry has been growing rapidly over the last few years. Life science companies focus on biotechnology, food science, and pharmaceutical research and manufacturing. A highly educated workforce and strong governmental support for local manufacturers have helped drug products to dominate Korea’s life science industry, accounting for about 90% of its production. Exports have also been one of the fastest-growing segments of the market, hitting an all-time high of $5.2 billion in 2019. They have also grown by an average of 15.2% each year since 2015.

The country has launched multiple initiatives to boost research and development (R&D), and commercial efforts in the life science sector. The goal is to capture 6% of the global pharmaceutical market by 2030 and to reach $50 billion in pharmaceutical exports.

The growth in biosimilars

South Korea’s pharmaceutical industry has become one of the most innovative in Asia-Pacific. This is important given the increasing demands for pharmaceuticals within the ageing Korean population.

Part of South Korea’s success has been gaining market share for a rapidly emerging drug development called biosimilars. These are drugs that are similar to the U.S. Food and Drug Administration-approved products, which are known as reference drugs. Biosimilars have a shorter time-to-market and less money is spent on trials, which translates into cheaper drugs. South Korean oncology biosimilars have gained a 28% market share in the EU and a 26% market share in the United States, respectively. Biosimilars are rapidly absorbing the market share of traditional oncology drugs. They are consider to be as effective as existing cancer drugs but they come with a lower price tag.

South Korea’s pharmaceutical industry has become one of the most innovative in Asia-Pacific.

A shortage of space for life sciences

With governmental support and continued success, there is no shortage of start-ups and established life science firms looking to expand their labs and manufacturing capabilities. But there is a shortage of suitable space. If we look at where life science firms have expanded in other countries, such as the United States, we notice a specific pattern. They tend to cluster around top universities and in close proximity to areas that support venture or investment capital, such as Boston, San Jose, San Diego and San Francisco. In South Korea, we’ve identified three ‘clusters’ that are of interest to life science firms, which will be investible over the next five years.

In the US life science sector, the big players like Pfizer and Bristol Myers Squibb had to move into a cluster before smaller companies followed. The same pattern is likely in South Korea for the Incheon-Songdo cluster and the MDB. When the big Korean players, such as SK Bioscience and Samsung Biologics, relocate and expand into new clusters, smaller research and manufacturing organisations will start looking for space in these areas too.

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