Biotech Firms Must Manage, Not Avoid, Drug Development Risks

Risk is an inescapable fate for biotech companies. With success rates of just 1%, failure is more natural than success in new drug development. Technology licensing deals—the core business model for Korean biotech firms—always carry the risk of technology reversion. Drug valuations can shift instantly based on external variables such as China's aggressive catch-up efforts and strategic changes by global pharmaceutical companies.

Risk is not something to eliminate but something to manage. The key to biotech management lies in how well uncertainty is controlled. This explains the growing industry consensus that "companies must secure at least three drug candidates." When a firm goes all-in on a single candidate and fails in clinical trials, it can collapse overnight.

Funding constraints are a real challenge. However, given that Korean companies often lack the resources to independently advance drugs through Phase 3 trials, continuously identifying candidates for early-stage licensing deals is not optional—it is essential. For publicly traded companies, consistently demonstrating business results is also a responsibility to investors.

A biotech CEO with venture capital background whom I recently met emphasized: "Since we don't know which compound will succeed, it's crucial to run multiple pipelines and execute technology licensing deals as quickly as possible when opportunities arise. Proving the company's potential to secure funding is the executive's job."

That said, following trends should not substitute for strategy. While reading global trends matters, accumulating proprietary technology and maintaining focus is more important. Sustainability emerges when expansion is pursued on that foundation. Alteogen's subcutaneous injection reformulation platform is an extension of the "biobetter" philosophy it has pursued since its founding. The recent spotlight on long-acting platforms also results from years of technology accumulation converging with the obesity treatment "megatrend."

Biotech may be an industry that "lives on dreams," but dreams alone cannot sustain it. Companies must prove their potential in reality. If uncertainty cannot be eliminated, at minimum, mechanisms to manage it must be in place.