Bio investments hit 3yr high...investor sentiment recovers

Quarterly new investments near KRW 400 billion, bio sector investment reaches 20%...highest in 11 quarters

Amid end of valuation correction and rising rate-cut expectations, capital concentrates on promising firms

Venture capital (VC) new investments in the biotech and medical sectors during the third quarter of this year reached their highest level in 3 years, both in scale and proportion.

 

Quarterly investment volume increased by 56% compared to the previous quarter, and the bio/medical VC investment share within the industry rose to 20%.

 

This is interpreted as a clear sign of recovery of the once-frozen biotech investment market.

 

According to the Korea Venture Capital Association on the 25th, new investments in the bio-medical sector during the third quarter totaled at KRW 396.9 billion.

 

This is a sharp 56% increase from the previous quarter and a 20% rise compared to the same period last year.

 

While overall new VC investments expanded by 33% quarter-on-quarter during the same period, the bio/medical sector's investment amount showed a much steeper growth trajectory, effectively driving the market’s rebound.

 

The trend of increased investment in the bio-medical sector is also evident in the share indicators.

 

The bio/medical sector accounted for 20% of all new VC investments in Q3, up 3 percentage points from the previous quarter.

 

The fact that the share of bio-medical investments expanded despite the overall new investment pie growing larger quarter-on-quarter indicates a strong shift in capital toward biotechnology over other industries.

 

As a result, new investments in the bio/medical sector this quarter reached their highest level in the past 11 quarters, both in absolute investment and share.

 

This signals a full revival of previously subdued investment sentiment, with analysts suggesting the bio/medical investment trend has moved beyond a short-term rebound and entered a phase of structural recovery.

 

(Source: Korea Venture Capital Association)

Investment in the biotech/medical sector peaked at KRW 1.677 trillion in 2021 during the COVID-19 pandemic and has been on a steep decline since.

 

Affected by interest rate hikes and economic uncertainty, investment fell to KRW 1.1058 trillion in 2022 and further declined to KRW 884.4 billion in 2023, marking two consecutive years of contraction.

 

The bio investment market began showing signs of a rebound last year.

 

New investment in the bio/medical sector in 2024 reached KRW 1.0695 trillion, a 20% increase year-on-year, marking a shift in the trend.

 

Looking at quarterly figures, the market's recovery became clearly evident last year when KRW 331.6 billion poured in during the third quarter.

 

This recovery became even more pronounced this year.

 

Quarterly investments have continued to rise, clearly showing that the market is in a full restoration phase.

 

Particularly significant is this third quarter's investment volume, which significantly surpassed the record set in Q3 2024 that drove last year's rebound, but also represents the largest quarterly figure since the downturn began in 2023.

 

The biotech industry attributes this surge in investment to: ▲ the completion of valuation adjustments, ▲ an increase in companies delivering clinical results, and ▲ expectations of interest rate cuts.

 

Specifically, it is analyzed that VCs, who maintained a conservative stance until the first half of the year, began betting on ‘high-quality companies’ with solid technological capabilities in the second half, driven by pressure to deplete their dry powder (uncommitted investment funds).

 

Some view the first-quarter investment cliff as having actually heightened valuation attractiveness, creating bargain-buying opportunities for companies with solid technology foundations.

 

Looking ahead, projections suggest VC funding will enter a more pronounced phase of ‘separating the wheat from the chaff,’ focusing squarely on technological prowess.

 

Unlike the past when investments were based solely on growth potential, the trend of capital concentrating on companies with verifiable substance—such as clinical data and commercialization feasibility—is expected to continue for the foreseeable future.