Health ministry overhauls innovative drug company certification system

The Ministry of Health and Welfare announced Thursday a comprehensive overhaul of the innovative pharmaceutical company certification system, raising research and development spending thresholds to encourage greater investment in new drug discovery. The revision marks the first major update to the framework since its introduction 14 years ago.

Under the new rules, the required ratio of pharmaceutical R&D expenditure to sales will increase by 2 percentage points. Companies with average annual sales below 100 billion won must now allocate 9 percent of revenue to R&D, up from the previous 7 percent, while larger firms face a hike to 7 percent from 5 percent. Enforcement of these higher ratios is deferred for three years from the implementation date.

The reform streamlines the certification review process by reducing detailed evaluation indicators from 25 to 17. A new category for foreign-affiliated innovative pharmaceutical companies was established, adjusting scoring weights to favor domestic facility investment and open innovation partnerships.

Transparency measures include mandating the public disclosure of detailed review results and specific reasons for certification failures, alongside a fixed minimum passing score of 65 points. The ministry also shifted the review timeframe for disqualifying illegal rebate activities from the date of administrative disposition to the end date of the violation.

Applications for the newly certified status will be accepted from Aug. 18 to Sept. 18, with the ministry planning to finalize the first round of approvals within this year.

"This revision aims to allow domestic pharmaceutical and bio companies to focus entirely on new drug development research and grow into globally competitive entities," said Sung Chang-hyun, director general of the health industry policy bureau.