Most companies entering South Korea’s pharma or medical device space fail to fully utilize available government schemes simply because they don’t know which schemes apply to them. Multiple agencies run these programs, each with its own rules, paperwork, and funding source.
This article is the financing and regulatory map most companies wish they’d had earlier. It also covers pharma government incentives available through certification, R&D funding, and tax programs.
Healthcare Financing and Reimbursement Schemes In South Korea
Getting reimbursed in Korea isn’t the same as getting regulatory approval. Before a pharmaceutical product or medical device can enter the market, the Ministry of Food and Drug Safety (MFDS) reviews its quality and performance.
Reimbursement follows a separate process. National Health Insurance Service (NHIS) funds the system through mandatory contributions. HIRA reviews clinical and economic evidence and decides whether a product gets reimbursed. For medical devices, HIRA also sets the reimbursement price directly. For pharmaceuticals, HIRA’s decision is followed by a separate price negotiation between the manufacturer and NHIS. Before reimbursement decisions are made, products may undergo a clinical effectiveness review through NECA’s new Health Technology Assessment (nHTA) process.
Before recent reforms, this review process could take up to 490 days for medical devices, and drug reimbursement timelines involving both HIRA review and NHIS negotiation ran even longer in practice.
On January 26, 2026, MOHW and MFDS jointly introduced Market Immediate Entry Medical Technology. The program allows certain innovative medical devices to reach the market faster. Entry time now runs 80 to 140 days for the 199 categories covered, the majority AI based or digital health products.
Pharmaceutical companies can also receive support in specific cases. Companies certified as Innovative Pharmaceutical Companies gain preferential pricing treatment, priority access to national R&D programs, and tax benefits. Starting in the second half of 2026, certified companies also receive a preferential 60 percent reimbursement rate for one plus three years on new generic listings.
Certification does not guarantee HIRA will find a given product cost-effective, and the pricing benefits apply to specific product categories rather than across a company’s full portfolio
Government Authorities Supporting the Industry
Four key agencies manage many of South Korea’s pharma and medical device support programs. They are MOHW, MFDS, MOTIE and KHIDI.
MOHW (Ministry of Health and Welfare): Develops health policies, oversees drug pricing and reimbursement activities and manages the Innovative Pharmaceutical Company certification. It also administers the Innovative Medical Device Company certification, which recognizes qualifying device manufacturers.
MFDS (Ministry of Food and Drug Safety): Approves drugs and devices, runs GMP inspections and conditional approval routes. Its Innovative Medical Device Designation recognizes individual qualifying devices, separate from MOHW’s company-level certification above.
MOTIE (Ministry of Trade, Industry and Energy): Co-funds national R&D programs including KDDF, runs the foreign investment Cash Grant program through Invest Korea/KOTRA
KHIDI (Korea Health Industry Development Institute): Operates under MOHW as the medical device industry’s comprehensive support center; screens certification applications, runs export/registration support programs, manages the health industry funding portal.
Government Schemes for Medical Devices in South Korea
Five schemes cover medical devices in South Korea, and each one solves a different problem.
| Scheme Name | Initiation Year |
| Innovative Medical Device Designation System | 2020 |
| Integrated Review and Assessment System for Innovative Medical Devices (IRAS-IMD) | – |
| Innovative Medical Device Company Certification | 2020 |
| Market Immediate Entry Medical Technology | Jan 2026 |
| 1st Comprehensive Plan for Medical Device Industry Promotion (제1차 의료기기산업 육성·지원 종합계획) | 2023 – 2027 |
Innovative Medical Device Designation System
The program operates under the Medical Device Industry Promotion and Innovative Medical Device Support Act, which came into effect in May 2020.
Under this scheme, the MFDS can designate certain products as innovative medical devices. Devices built on AI, big data, VR, or robotics typically qualify, but only if they show a real improvement in safety or clinical value over what’s already out there. To qualify, a device must be evaluated against five criteria. These include innovation level, clinical benefit, need for government support, commercial readiness and whether the device was first developed in South Korea.
Both local manufacturers and importers can apply, as long as importers have a licensed local representative. No size restriction exists on paper, though most applicants end up being SMEs or start-ups
The goal of the program is to help innovative technologies reach the market faster and strengthen South Korea’s medical device industry.
Integrated Review and Assessment System for Innovative Medical Devices (IRAS-IMD)
IRAS-IMD is available only to devices that have already received innovative medical device designation.
After that, MFDS, HIRA and NECA conduct their reviews at the same time rather than sequentially. This helps to shorten the overall timeline.
Based on MFDS information, the process can take about 80 days instead of roughly 390 days.
Approved devices may be used in clinical practice for three to five years while additional evidence on safety and effectiveness is collected. Depending on the case, they may be available without reimbursement or under limited reimbursement arrangements.
Innovative Medical Device Company Certification
The Innovative Medical Device Company Certification is managed by MOHW, with KHIDI handling application reviews.
The certification is divided into two categories based on company revenue. A business generating more than 50 billion KRW annually enters the Innovation-Leading tier and must spend at least 6% of its revenue on R&D. Below that mark, the Innovation-Leap tier applies, with an R&D requirement of 8% of revenue or 3 billion KRW.
New certifications last for two years. Renewed certifications remain valid for three years. Certified companies may receive support for R&D, exports and government backed financing programs.
Market Immediate Entry Medical Technology
The goal of this program is to reduce delays in market access. Introduced in January 2026, it allows eligible devices to move into clinical use after completing an MFDS recognized clinical evaluation. The program covers 199 device categories, including 113 digital health technologies, many of them AI-based.
Timelines have fallen considerably. What once took up to 490 days can now take around 80 to 140 days.
1st Comprehensive Plan for Medical Device Industry Promotion (제1차 의료기기산업 육성·지원 종합계획)
South Korean law requires the Ministry of Health and Welfare to publish a new industry development plan every five years, along with annual implementation plans. So this program was announced by the MOHW in April, 2023, the plan covers the period from 2023 to 2027.
The plan includes four main strategies and twelve priority tasks. Companies planning long-term investments in South Korea may find it useful for understanding future policy directions.
SME Policy Fund
There is no government grant in South Korea that is specifically designed for medical equipment purchases. Companies looking for funding for medical equipment will find the options are general rather than healthcare specific. The SME Policy Fund offers loans for buying medical equipment, provided the company meets standard SME eligibility criteria.
Because program conditions can change each year, it is important to check the latest requirements before making plans.
Nonprofit medical institutions can also treat medical device purchases as spending under their proper-purpose business reserve (고유목적사업준비금) for tax purposes, under Korea’s Corporate Tax Act. These benefits can reduce tax costs but do not provide direct funding.
Government Schemes For Pharma Industry In South Korea
| Scheme Name | Initiation Year |
| Innovative Pharmaceutical Company (IPC) Certification | 2012 |
| National New Drug Development Project (successor to KDDF) | 2021 |
| GIFT (Global Innovative Products on Fast Track) | 2022 |
Innovative Pharmaceutical Company (IPC) Certification
The MOHW manages the Innovative Pharmaceutical Company Certification under the Special Act on Pharmaceutical Industry Promotion and Support. It is the main support program for the pharmaceutical industry.
South Korea revised this certification program in 2026, making the evaluation process simpler. The number of evaluation criteria has been reduced from 25 to 17. Companies are assessed on a 100-point scale, and those that score at least 65 points may qualify for certification. Unlike the previous system, there is no limit on the number of companies that can be certified. Any company that meets the certification requirements may qualify.
The program also increased its R&D requirements. Companies with revenue above 100 billion KRW must spend at least 7% of revenue on R&D. For smaller companies, the requirement is 9%. Companies holding US FDA or EU GMP certification qualify for a reduced 5% threshold.
Older rebate violations are treated differently as well. Rebate violations that occurred more than five years ago are no longer considered during certification assessments.
Application starts in August and MOHW expects to publish the final certified list around December.
National New Drug Development Project (successor to KDDF)
The original Korea Drug Development Fund operated from 2011 to 2020 and supported a wide range of drug development projects. In 2021 it was replaced by the National New Drug Development Project. Managed jointly by the MOHW, MOTIE and the Ministry of Science and ICT, the program provides funding for clinical development and commercialization.
Today, the NNDP serves as South Korea’s main government funding program for new drug development.
GIFT (Global Innovative Products on Fast Track)
The GIFT program is helpful because it makes certain medicines get approved faster.
It is meant for medicines that help people with serious health problems like cancer or diseases that hardly anyone gets and bad infections that can be deadly. Review timelines are reduced from 120 to 90 working days. The MFDS can also begin reviewing information before the complete application is submitted.
As of September 2025, 55 products had received GIFT designation, with the total continuing to grow. The program is only available for pharmaceutical products and does not apply to medical devices.
R&D, Innovation & Clinical Research Incentives
Several government-backed programs support innovation in South Korea’s pharmaceutical and medical device sectors. Each program focuses on a different part of the product development journey.
Government Grants for R&D
Companies developing new drugs can apply for support through the National New Drug Development Project (NNDP). Funding is available across multiple stages, including discovery research, preclinical development, clinical trials and commercialization. NNDP is operated by the Korea Drug Development Fund (KDDF), the same foundation named earlier as a co-funder of national R&D programs.
Medical device companies may qualify for support through the Korea Medical Device Development Fund (KMDF), a program dedicated to device development and commercialization.
Another option is KEIT, which funds industrial R&D projects across multiple sectors. Healthcare companies can apply, although they compete with applicants from other industries.
Clinical Trial Support Program
Clinical research support is provided through KoNECT (Korea National Enterprise for Clinical Trials). The organization focuses on strengthening South Korea’s clinical trial environment by training professionals, supporting research sites and promoting high-quality clinical research practices.
Public–Private Collaboration Initiatives
Additional KHIDI programs help companies prepare for international expansion by supporting regulatory and market-entry activities.
Tax Incentives & Financial Support Programs
The pharmaceutical and medical device companies can receive tax incentives in South Korea, but the support comes through the general tax system rather than a healthcare-specific program.
R&D Tax Credits
Companies may claim tax credits for eligible research and development activities. The available credit depends on how the project is classified. South Korea uses three categories:
- General R&D
- New Growth and Source Technology
- National Strategic Technology
Biopharmaceutical projects may qualify under the higher-tier categories, which generally provide larger tax benefits. Small and medium-sized companies often receive higher credit rates than larger businesses.
Facility Investment Tax Credits
Tax credits are also available for certain investments in manufacturing facilities and equipment. These incentives can often be claimed in addition to R&D tax credits.
Location-Based Tax Benefits
Companies operating in designated areas, such as Special R&D Zones, may qualify for additional tax reductions. These benefits may be combined with certain other tax incentives, subject to exclusivity rules under the Tax Restriction Act.
Export and Financing Support
The KOSME Export Voucher Program helps SMEs cover costs related to export activities, including certification, customs compliance and overseas marketing.
For equipment purchases, there is no dedicated medical equipment grant. However, eligible SMEs may apply for general business loans through KOSME to support facility and equipment investments.
The tax benefits available to a company often depend on how its technology is classified. Companies should confirm the correct category before filing to avoid receiving a lower tax credit than expected.
Support for Foreign Companies & Market Entry
South Korea offers several healthcare investment incentives to attract foreign investment in the pharmaceutical and medical device sectors. Support may include financial grants, tax benefits, financing programs and regulatory assistance.
Invest Korea Support
Foreign companies can receive free guidance through Invest Korea, a division of KOTRA. The organization helps businesses identify available incentives and navigate the application process.
Cash Grant Program
The Cash Grant Program provides financial support for eligible investment projects. Funding may be available for land, construction, equipment, infrastructure and employment-related costs.
Biopharmaceutical projects are included among the eligible sectors. The amount of support depends on the project’s characteristics and evaluation results.
Tax and Customs Benefits
Corporate income tax exemptions for foreign-invested companies were phased out for new applications starting 2019, and property and acquisition tax exemptions were similarly phased out after 2019. Customs duty, individual consumption tax and VAT exemptions remain available for eligible imported capital goods and equipment brought in within five years of the investment report.
Location-Based Incentives
Companies investing in designated areas such as Foreign Investment Zones (FIZs) and Free Economic Zones (FEZs) may receive additional incentives.
Financing Support
Certain public financing programs offer loans at reduced interest rates to eligible foreign-invested businesses.
Regulatory Support
South Korea also introduced a dedicated evaluation pathway for foreign-invested pharmaceutical companies under the Innovative Pharmaceutical Company certification program in 2026.
Regulatory & Compliance Considerations
Many government programs in South Korea are tied to regulatory requirements. A company may qualify for a funding program or certification, but products still need to meet MFDS expectations for approval, quality and supporting evidence.
For this reason, regulatory planning should begin early. Key areas include:
- MFDS approval requirements
- Product classification
- Quality management systems
- Clinical documentation
- Reimbursement planning
- Post-market compliance
When these elements are planned together, companies may face fewer delays later in the process.
Entering the South Korean market involves more than product approval alone. Artixio supports pharmaceutical and medical device companies with regulatory planning, product registration, compliance activities and the evaluation of government support programs available in South Korea.
Conclusion
South Korea offers multiple funding, tax, and certification programs for pharmaceutical and medical device companies. Understanding which programs apply usually requires reviewing business activities and long-term expansion plans.
To learn which schemes may apply to your business, reach out to us at info@artixio.com. Artixio helps pharmaceutical and medical device companies by evaluating available schemes and assisting with regulatory and market entry requirements.
FAQs
Is there a complete list of government schemes for pharma and medical devices in Korea?
No single document covers everything. MOHW, MFDS, MOTIE and KHIDI each publish their own programs separately and that’s exactly why tracking what applies to a specific company usually takes outside help.
What government schemes exist for pharma companies in South Korea?
Innovative Pharmaceutical Company certification, running since 2012 under MOHW, recognizes companies at the corporate level. The National New Drug Development Project works on project-level funding tied to a specific drug candidate, not a company-wide status.
Is there a medical equipment subsidy scheme in Korea?
Not under that name. What exists instead is the SME Policy Fund, a general facility-and-equipment loan open to manufacturers broadly and a tax-reserve provision letting nonprofit medical institutions buy equipment tax-free. Neither was built specifically for healthcare, so terms should get confirmed directly with the administering agency.
What healthcare investment incentives apply to foreign pharma companies?
The Cash Grant program is the major one. Its coverage reached up to 75% for R&D centers tied to national high-tech strategic industries, and up to 60% for other qualifying R&D investments. Other qualifying investment projects generally receive lower support rates, negotiated case by case based on investment size and technology level.
General corporate and income tax exemptions for foreign-invested companies were phased out for new applicants after 2019, though targeted reductions remain available under specific programs like Opportunity Development Zones. Customs exemptions on imported capital goods remain available for up to seven years. All of it runs through Invest Korea.
Corporate and income tax reductions come next, plus customs exemptions on imported capital goods for up to seven years. All of it runs through Invest Korea.
What is the eligibility for Innovative Pharmaceutical Company certification?
There isn’t a single eligibility requirement, but R&D investment is an important one. As of the 2026 reforms, companies with annual pharmaceutical sales over 100 billion KRW need to spend at least 7% of revenue on R&D. For smaller companies, the benchmark is 9%. Companies holding US FDA or EU GMP certification qualify for a reduced 5% threshold.
Since these rules were revised recently, checking the current MOHW requirements before filing is a good idea.
