Korean Ministry of Health and Welfare to Create a $150MM “Global Healthcare Fund”

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The Korean government plans to invest in and actively support the growth of domestic healthcare companies as they look to become bigger players in the global market. Target industries include pharmaceuticals, medical equipment, cosmetics, as well as established medical institutions.

The Ministry of Health and Welfare, headed by Minister Jin-yeop Jeong, announced on January 25th that the Ministry’s $30MM investment, alongside $120MM from ten private entities, will comprise the new ‘Global Healthcare Fund’.

The Ministry has been pooling together public funds since 2013 to serve as a catalyst for further private investments in the pharmaceutical, medical equipment and overseas expansion of medical institutions. This initiative aims to reduce the disincentives that private investors face, which often include high risk, relatively long investment recovery cycle, and difficulties in early market shaping. The potential upside is significant, and the Ministry seeks to give birth to some early success cases with these investments.

Unlike the first three public funds, the ‘Global Healthcare Fund’ combines health/medical products (pharma, equipments) and healthcare services (institutional) into a single fund to diversify its portfolio and improve investment efficiencies–past vehicles have held the two categories in separate buckets.

Ultimately, the fund will invest in firms specializing in pharma/equipment/cosmetics/CRO (50% of fund) and those looking to expand their services overseas (20% of fund).

Furthermore, the fund structure will follow that of Korea Venture Fund, supporting small and medium-sized ventures and startups that lack capital despite strong core competencies. Lasting for eight years, the fund will allow a longer-term perspective into the industry.

Dongguk Lee, Director of Healthcare Industry Policies at the Ministry commented that “last year was an exciting year for the Korean healthcare industry, most notably with Hanmi Pharmaceutical, a local pharma company, entering a record $8B contract in technology exports, and the passing of the ‘legislation regarding healthcare exports and foreign patient attraction’, all of which gave us significant confidence boosts”.

Lee also noted that “the expectations are high for the $150M fund to jumpstart the budding healthcare industry, and as much as the President herself has shown strong will to make Korea one of the top seven bio/health countries, the government is also determined to successfully operate the fund.

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