Hanmi and Chong Kun Dang added half of Korea's 97.1 billion won drug R&D increase

Hanmi Pharmaceutical and Chong Kun Dang together spent 239 billion won on R&D in the first half, which is 42.6% of everything the 30 companies spent ^[1]. The other 28 averaged 11.5 billion won each ^[9]. Whanin Pharm's entire half-year R&D budget of 7.9 billion won comes to 6.3% of Hanmi's ^[7].

Concentration at that level usually means an industry total is really two companies, and the two did add 49.8 billion won of the 97.1 billion won increase, or 51.3% ^[2]. Strip them out, though, and the remaining 28 raised spending from 274.4 billion won to 321.7 billion won, up 17.2% ^[3]. The increase is broad.

The money did not go into researchers. Spending per R&D employee rose from 145.1 million won a year earlier to 173.4 million won this half, up 19.5%, because the spending rose 20.9% and the headcount 1.2% ^[4]. Purchases of tangible fixed assets rose 13.31 billion won, which is 13.7% of the R&D increase ^[4][5]. The analysis covers spending, R&D headcount and fixed-asset purchases, with no breakdown by category ^[18]. Dong Kook Pharmaceutical expanded on every line at once, lifting R&D 16.1% to 17.3 billion won and total headcount 7.3% to 1,362, the largest increase among the companies surveyed ^[11].

The pricing rules turn R&D into a qualifying cost. Since March, an innovative pharmaceutical company has had to run R&D at 7% to 9% of revenue depending on its sales size, and a semi-innovative one at 5% to 7% ^[7]. Policy is moving toward favourable pricing for firms that hold investment above those thresholds ^[6]. Because the test is a ratio, the absolute sum a small company needs is small. Korea Pharma spent 1 billion won in the half, and at that rate it clears the 5% floor only if annual revenue is at or below 40 billion won ^[13][8]. Chong Kun Dang, which lost its innovative designation in 2024, set up a specialist new drug development firm, Achella, last October ^[8][9]. An industry official told the Seoul Economic Daily that drugmakers have little choice but to strengthen R&D in order to reduce reliance on existing generics, secure price preferences and find new growth drivers ^[15].

The four companies cutting removed 6 billion won between them, 6.2% of the increase the group added ^[6]. An official at a small drugmaker said generics cost less to develop than new drugs but still require considerable spending on everything from bioequivalence trials to approval, production and quality control, and that as profitability declines because of the price cuts, more companies will weigh commercial viability from the development stage and abandon projects ^[16]. If that is what happens, it appears first as products dropping out of the reassessment lists ^[18]. Two other readings survive these same numbers. First-half R&D can be front-loaded clinical work that reverses by December, and a ratio test means a firm that cut this year can qualify again next year for a few billion won ^[7].