Korea to introduce quasi-innovative pharma certification within the year

Health ministry and KPBMA launch 21-member public-private council

Agenda includes higher R&D thresholds for innovative pharma certification and controls on multi-tier CSO subcontracting

A legal framework for a new “quasi-innovative pharmaceutical company” designation carrying preferential pricing benefits for generic drugs will be legislated this year.

The government intends to create a two-tier support framework, including generic pricing incentives, by classifying existing certified innovative pharmaceutical companies as “leading” companies and those qualifying for the new quasi-innovative designation as “growth” companies.

Also, a separate certification track will be introduced for foreign pharmaceutical companies, allowing them to choose between the criteria for domestic companies and those specifically designed for foreign companies.

Regulatory oversight of contract sales organizations (CSOs), which provide outsourced pharmaceutical sales and promotion services, will also be tightened. The proposals emerged from discussions between the government and pharmaceutical companies on strengthening the competitiveness of Korea’s pharmaceutical industry.

On the 2nd, the Ministry of Health and Welfare held the inaugural meeting of the Public-Private Council for Pharmaceutical Industry Innovation at the Koreana Hotel to begin substantive discussions on the reforms. The council is co-chaired by Second Vice Minister of Health and Welfare Hyeong-hun Lee and Korea Pharmaceutical and Bio-Pharma Manufacturers Association (KPBMA) Chairman Yeon-hong Noh.

The council will meet monthly, with additional meetings as needed depending on the agenda.

A comprehensive reform package will be developed by November based on the council’s discussions and submitted to the Pharmaceutical Industry Development Committee for deliberation and approval.

A ladder that supports growth of startups into global companies… New certification tier for quasi-innovative companies introduced

A central proposal is the introduction of the “quasi-innovative pharmaceutical company” designation (provisionally the growth-type category). The government plans to replace the existing single-tier certification system with two categories: “leading” (covering the previous innovative pharmaceutical company certification) and “growth” (covering the new semi-innovative category).

The ministry aims to encourage R&D investment by promising small and medium-sized pharmaceutical companies and venture firms, establishing a pathway for startups to grow into quasi-innovative companies, then innovative companies, and ultimately grow into globally competitive pharmaceutical businesses.

Under the drug pricing reform approved by the Health Insurance Policy Deliberation Committee, companies that are granted the new designation will qualify for preferential pricing levels of 50% for newly listed generics for up to four years and 47% for already listed drugs for three years.

Eligibility will depend on meeting basic requirements—an R&D expenditure threshold and the absence of disqualifying grounds—without a complex qualitative assessment.

Companies with average annual sales of less than KRW 100 billion over the preceding three years must have an R&D-to-sales ratio of at least 7% (R&D expenditure of at least KRW 5 billion). Those with sales of KRW 100 billion or more must meet a 5% threshold, while companies meeting cGMP or EU-GMP standards must meet a 3% threshold.

The ministry plans to complete amendments to the enforcement decree and enforcement rules of the Pharmaceutical Industry Act by November and accept applications in December. Certification will be valid for 3 years.

R&D thresholds raised by 2 percentage points…applications open for innovative pharma certification

The government also detailed implementation plans for reforms to the existing innovative pharmaceutical company certification system (now categorized as “leading”), completing amendments to the relevant subordinate legislation in July.

R&D-to-sales thresholds have been raised by 2 percentage points across all categories (below KRW 100 billion: 9%; of KRW 7 billion to KRW 100 billion: 7%; KRW 100 billion or more; meeting cGMP standards: 5%)

A time limit has also been introduced for rebate-related disqualification. In line with the General Act on Public Administration, rebate violations will no longer constitute grounds for disqualification once 5 years have passed since the conduct ended. However, to prevent companies from running out of the 5 years during administrative litigation, a proviso allows certification to be revoked within 1 year of a final court judgment. Enforcement has also been strengthened, including immediate revocation of certification when the underlying administrative sanction is imposed.

The evaluation system has been reorganized into 17 criteria on a 100-point scale. Greater emphasis has been placed on quantitative indicators, including the number of clinical trials and export volume. A new category worth 10 points recognizes contributions to supply stability, including the supply of drugs covered by the withdrawal-prevention program and national essential medicines. Separate assessment criteria will apply to foreign pharmaceutical companies.

Applications for new certification in the second half of 2026 will be accepted through September 18. The Korea Health Industry Development Institute will conduct reviews from October through December, with final certification decisions to be announced in late December. The minimum passing score is 65.

The separate track for foreign pharmaceutical companies includes adjusted scoring weights and revised assessment criteria. Foreign companies may choose to apply under either the domestic or foreign-company criteria.

Under the foreign-company criteria, points for establishing research and manufacturing facilities in Korea have been increased from 5 to 8. Points for partnerships and collaboration, including open innovation, have risen from 8 to 14.

For this, points for developing drug candidates for nonclinical and clinical testing have been reduced from 12 to 10. Those for technology transfers involving pharmaceutical patents have fallen from eight to three, while points for overseas market expansion have been reduced from 12 to 10.

Council targets multi-tier CSO subcontracting and greater specialization among generic manufacturers

The 21-member council brings together representatives from the MOHW, the MFDS, KPBMA and academia, as well as executives from major pharmaceutical companies including Yuhan, Chong Kun Dang, HK inno.N, Dongkook Pharmaceutical and Dong-A ST.

The council will meet monthly through November to develop proposals for submission to the Committee for Pharmaceutical Industry Development and Support, chaired by the MOHW minister, for deliberation and approval.

In addition to ▲ fostering innovative and semi-innovative pharmaceutical companies, priority issues include ▲stronger CSO oversight through controls on multilayer subcontracting and greater accountability for pharmaceutical companies; ▲helping generic-focused companies achieve scale, specialize, and expand into export markets; ▲promoting the development of novel biologics, incrementally modified drugs, and natural product drugs; and ▲advancing AI-driven new drug discovery and manufacturing innovation.