South Korea’s Bio and Pharmaceutical Industries Look for Ways to Recover Trust Lost from Invossa Incident

Jun 07, 2019

Past three to four years was a preparatory period for opening of the golden age of bio industry. Bio industry has grown rapidly as it broke new records in every category every year. Stocks of bio-related businesses increased even more as President Moon Jae-in declared bio industry as well as future vehicle and non-memory semiconductor as the nation’s three new industries that would be promoted.
However, ‘Invossa issue’ by Kolon Life Science was like a bolt for bio industry that had been cruising. As there are illegal and immoral problems with this issue continuously, some are concerned that it may lead to ‘second Hwang Wook-seok incident’.
Biggest problem is ‘distrust’. Bio industry has struggled to resolve distrust issue ever since the incident involving Professor Hwang Woo-seok fabricating research paper. Due to distrust, there has been lack of support such as investment and regulatory improvement that assist with growth of bio industry. Bio industry needs to earn its trust back by securing professionalism.
◊Continuous controversies in midst of rapid growth
South Korea’s bio and pharmaceutical industries have made rapid growth since 2016. Hanmi Pharm. Co., Ltd. proved potential of success by transferring $848 million (1 trillion KRW) worth of technology to a global pharmaceutical business called Genentech. In biosimilar industry, Celltrion entered world’s biggest market by obtaining an authorization from FDA. In addition to success of their follow-up products, Yuhan and Samsung Bioepis also succeeded in exporting their products leading to bio and pharmaceutical industries becoming the most promising industries in South Korea.
However, there have been side-effects as national attention and financial resources started to focus on these industries. Starting with delayed public announcement controversy and an incident involving swindling of unfair profits by Hanmi Pharm, there was a suspicion of accounting fraud by Samsung Biologics. This suspicion grew into a bigger issue as Financial Supervisory Service carried out a special inspection in March of 2017. Financial Supervisory Service is also investigating Samsung Group as South Korean prosecutors believe that Samsung Biologics was used as a tool to merge Samsung C&T and Cheil Industries.
There have been many negative incidents within bio and pharmaceutical industries that started to grow at a high level.
◊Invossa incident delivers a major blow to bio industry
Biggest blow to bio and pharmaceutical industries was ‘Invossa incident’ by Kolon Life Science. Distribution and sale of Invossa was stopped immediately as it was revealed at the end of March that one of major ingredients was actually renal cell (293 derived cell) not cartilage cell. After Ministry of Food and Drug Safety carried out an investigation, it was found out that Kolon did not report this fact to authorities even though it knew about it and that it actually fabricated information and hid actual information to receive an authorization. As a result, authorization for Invossa was cancelled and Kolon was charged with a crime.
This incident is different from other controversies and incidents that happened as most of these issues were related to accounting and stock. Impact of Invossa incident is huge as Kolon has shown illegal activity and immorality to obtain an authorization for a medicine that is used for patients. Trusts by the people in South Korea collapsed as authorities who are supposed to prevent such issue was seen helpless.
“Invossa incident clearly showed lack of professionalism, lack of moral qualification, and limitations to authorization process that only depend on given information.” said a representative for the pharmaceutical industry. “Although illegal financial acts stirred problems as bio industry started to gain attention, Invossa incident’s impact is much higher as it is directly related to safety of possible patients.”

South Korea’s Bio and Pharmaceutical Industries Look for Ways to Recover Trust Lost from Invossa Incident

◊Bio and pharmaceutical industries focus on preventing side-effects of Invossa incident
Professor Hwang Woo-seok incident in December of 2015 completely threw South Korea into a state of confusion. As ‘Hwang Woo-seok syndrome’, which was the cause and the driving force of bio industry boom in South Korea, turned out to be a lie, financial support and institutional support for bio industry were cut off. Bio industry had practically lived ‘meaningless lives’ for ten years until Hanmi Pharm and Celltrion started to show success.
As a result, some are concerned that ‘Invossa incident’ may lead to ‘second Hwang Woo-seok incident’. Comparing their issues alone, Invossa incident is more serious than Hwang Woo-seok incident from a standpoint that it has led to actual victims such as patients and shareholders. Currently, there are 85,000 minor shareholders and more than 1,000 patients that injected Invossa. String of group lawsuits started to take place against Kolon Life Science.
“We raised issues regarding sudden deregulation and safety of medicine for genes even before Kolon received an authorization for Invossa.” said Director Choi Sung-cheol of Korea Association of Patient Associations. “Lack of verification by South Korean Government has led Invossa incident to current state.”
Biggest problem of Invossa incident is that it shattered many trusts. Bio industry had huge expectations as it prepared to take off as a new driving force for South Korea. However, Invossa incident broke many trusts from South Korean Government and patients. Lack of trust from the people in South Korea towards South Korean Government has grown as it was not able to prevent this issue in advance when it needed to prioritize safety of people.
“We are most concerned about trust towards out industry.” said Vice-Chairman Lee Seung-kyu of Korea Biotechnology Industry Organization. “Our main task is to prevent any distrust spreading towards entire bio industry.”
◊Bio and pharmaceutical industries focus on creating successful cases to recover any lost trust
Due to continuous issues involving bio and pharmaceutical industries, level of distrust towards them has grown. Impact of broken trust is enormous for them as they grow based on possibilities.
However, they believe that a possibility of reoccurrence of ‘meaningless ten years’ that had taken place after Hwang Woo-seok incident is low. This is because level of South Korea’s bio industry has grown significantly compared to 2005 when foundation of bio and pharmaceutical industries was weak. Foundation of these industries will not be shaken just from Kolon Life Science.
Also, there is a low chance that South Korean Government will reduce amount of its support when it needs to promote bio industry. It has no choice but to continue to promote bio industry that has shown growth that is faster than any other industry.
Securing professionalism towards new technologies is needed urgently in order to continue growth of these industries. New technologies on cell therapy, gene therapy, microbiome, and gene editing are developed very quickly. Although development capability of a business is also important, professionalism is also required for authorities who will investigate and improve any possible issue.
“We need to make visible and tangible results as soon as possible to recovery any lost trust.” said Vice-Chairman Lee. “While we show value of our industry through successful cases, businesses and authorities both need education and system that will create professionalism within them towards new technologies.”
Staff Reporter Jung, Yongcheol |

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