I. SOUTH KOREA’S ECONOMIC RECOVERY
South Korea is rebounding from the Asian crisis quite well. Unlike its performance in 1997 – 98, when GDP fell more then 5%, the South Korean economy will recover from recession over the next few years. Indeed, due to the success of recent economic reforms, the South Korean government increased its 1999 – 2000 GDP growth estimates from 2% to 5 – 6%. In June 1999, exports hit an all-time monthly record of $13 billion, up almost 13% from a year ago. A 6.3% increase in domestic consumption year-on-year in early 1999 has also driven import growth – which in June was up 32% from a year before to total $10.2 billion. Unemployment for late 1999 is also expected to fall to 5%, from the government’s earlier forecast of 7.5%.
The country’s recovery is due in large part to the sweeping economic reforms initiated last year by the government. These include 1) chaebol or industry restructuring, 2) deregulation, and 3) promoting foreign investment.
While reluctant to give up any of their family-dominated business empires, most of the chaebol or large business groups have trimmed down to several core businesses through asset sales, business divestitures, mergers and spin-offs. Under pressure from the government, chaebol are also abandoning the so-called “fleet management” system of launching innumerable subsidiaries that led to excessive expansion. As a result, South Korea’s five major conglomerates have realized 23 trillion won (about US $19 billion) through these self-rescue efforts. They now plan to garner an additional $17 billion through stock increases and $26 billion by attracting foreign capital.
Indeed, the number of foreign-South Korean business ties has expanded rapidly since the crisis. Many South Korean companies have attempted to lure foreign capital in their corporate restructuring process, while foreign enterprises have been looking to use existing facilities as bridgeheads to penetrate South Korea as well as other Asian markets. Official figures show that 34.3% of the 102 investment projects in South Korea worth more than $10 million are in the form of mergers and acquisitions (M&A) between South Korean and foreign companies.
DEREGULATION AND LIBERALIZATION
The centerpiece of the government’s liberalization drive, however, is the 1998 Foreign Investment Promotion Act, which emphasizes promotion and assistance of foreign investment rather than control and regulation. Under the Act, the South Korean government will induce $15 billion in foreign investment in 1999, and increase the ratio of foreign investment to GDP from 2.6% in 1996 to 13% by 2003 (the world’s average presently stands at 10.6%). The Act also features an expanded range of tax incentives, specific assistance for investment projects, provides for the setting up of regional investment promotion centers, the immediate addressing of complaints, the designation of foreign investment zones and the establishment of a new foreign investment committee.
Under the new Act, existing regulations were simplified and tax advantages for foreign businesses were enhanced. As a result, almost all areas of economic activity have been liberalized, including capital and foreign currency transactions, as well as the corporate and real estate markets. A tripartite committee composed of representatives of labor, management and government also recently achieved a consensus of laws allowing layoffs and other flexible labor policies.
Given the success of South Korea’s recent economic and business reforms, foreign medical companies should remain confident about their future endeavors in the country. As always, however, success in the South Korean medical device and pharmaceutical markets is contingent on an in-depth knowledge of the regulations surrounding these areas – particularly since the recent industry upheaval in South Korea has affected many of the country’s medical device and pharmaceutical regulations over the past year. This report will examine many of the recent changes in South Korea’s medical regulations as a guide for medical device and pharmaceutical companies operating in the country.
II. UPDATE ON SOUTH KOREA’ S MEDICAL DEVICE REGULATIONS
As mentioned in our earlier report (Regulatory Changes in the South Korean Medical Market: Medical Devices and Pharmaceuticals, July 1998), South Korea’s medical device market was growing rapidly at an annual rate of about 14 – 15%. In fact, the market was approaching US$1 billion before the financial crisis struck in 1997 and caused the market to lose about $300 million:
While the market suffered huge losses between 1997 and 1998, this was due more to the decline in sales of expensive medical equipment (MRIs, CT scanners, etc.) The rate of purchases of expendable/nonessential supplies, on the other hand, has remained at a stable level. Furthermore, the medical device industry’s performance in 1997 – 98 was clearly a result of the country’s economic performance, and thus with South Korea’s economic recovery its medical device market will also pick up very quickly. The underlying forces driving the growth of the South Korean medical device market will remain strong throughout the next several years:
• A strong focus in high-tech industry. The electronics field in South Korea, including semiconductors, industrial electronic and electronic parts, is about on par with Western countries in terms of development. The country also harbors many technical experts who are products of Korean universities’ strong electronics and medical engineering focus.
• Continued demand for foreign medical technology. South Korea’s economic progress over the past twenty years led to improved healthcare and a large number of medical facilities and personnel (there are currently more than 32,000 hospitals in South Korea and about 60,000 doctors). Furthermore, due to rising per capita income, many doctors and facilities developed a strong preference for sophisticated medical technology. About 70 – 80% of medical devices in Korea are currently imported, and due to the lack of local production this share should remain stable over the next few years.
MEDICAL DEVICE REGULATIONS
As mentioned in the earlier report, the Ministry of Health and welfare (MOHW) implemented a new regulatory approval system for medical devices in September 1997. Devices that were not imported into Korea prior to the implementation date (i.e. those devices first imported into Korea after September 1, 1997) must comply with the new regulations. However, medical devices imported into Korea before September 1, 1997 can continue to be imported under the old procedures during a two-year transitional period lasting from September 1, 1997 to September 1, 1999, after which all medical devices qualifying for the transitional period must comply with the new regulations.
In addition, with the introduction of the new system, the MOHW, which previously had jurisdiction over all medical device approvals, has delegated approval authority to the 1996-established Korean Food and Drug Administration (KFDA). Although KFDA regulations are primarily modeled after U.S. FDA regulations, KFDA has little experience and expertise in the area, resulting in approvals that could be delayed significantly. The following is an overview of some changes in the new regulatory environment under the KFDA.
A. TESTING REQUIREMENTS
As mentioned in the previous report, Korean regulations allow imported medical devices to be exempt from local type tests when equivalent foreign test data is submitted. Local type tests are considered to be very expensive, since “substantially equivalent” products with even minimal variations (size, model, etc.) from those already proven to be safe and effective must undergo separate tests. To date, however, no U.S. firm has been exempted from local type tests, mainly because of the difficulties associated with obtaining exemptions and the lack of clearly defined exemption guidelines among testing agencies.
For example, the requirement for submitting original foreign test data in order to qualify for an exemption is nearly impossible for most companies to follow. According to the regulations, companies must submit original test data that is issued by test labs, certified by the responsible foreign government agencies, and notarized in the country of origin. However, many test labs in the U.S. only issue one test data original to device manufacturers, and the U.S. FDA typically does not certify test documents.
KFDA testing agencies can also grant testing exemptions if the foreign company produces a certificate of Good Laboratory Practices (GLP) and a GLP inspection report. However, for animal testing the U.S. FDA issues no such certificate of GLP that attests to the validity of the test laboratories themselves.
Also, there are inconsistencies in the requirements for submitting testing standards. To qualify for an exemption, the government requires foreign companies to continually submit their new ISO or Good Manufacturing Practice (GMP; now Quality System Regulations or QSR in the U.S.) documentation to the MOHW. The previous report indicated that since South Korea’s medical markets were moving towards international testing standards like ISO 9000, foreign medical companies would find it easier to maintain their testing exemption by continually submitting their new ISO documentation to the MOHW.
However, many foreign manufacturers have self-imposed standards and testing methods (STMs) that are often equal to or even stricter than international requirements – and since STMs are not listed as international standards, KFDA and its testing agencies have not accepted them to date. KFDA is currently looking for ways to obtain third party recognition to verify that manufacturers’ STMs can attest to the safety and effectiveness of the device. However, KFDA still cannot accept that a U.S. manufacturer’s own STMs are already validated through a quality system subject to U.S. FDA investigation.
Furthermore, KFDA has consistently required U.S. manufacturers to produce a certificate of compliance by the U.S. FDA to indicate that a company’s products are in compliance with U.S. QSR. Again, however, the U.S. FDA does not issue such a QSR “certificate of compliance.” While QSR compliance could be recognized through the issuance of an FDA Certificate to Foreign Government (CFG) as a substitute to the KFDA mandated certificate of compliance, KFDA is not receptive to the idea of accepting a CFG.
Thus, unless testing exemption regulations are adjusted to meet the realities of the industry, foreign medical device companies will have to continue subjecting their products to expensive local type tests. Indeed, under the new regulations, new substantially equivalent products that were not already registered under the new system (i.e. products not approved post September 1, 1997) are required to be accompanied by more comprehensive data or backup documents than products which were already approved (before September 1, 1997). However, KFDA recently hinted at the possibility of approving substantially equivalent products (for new sizes and model variations) without requiring additional dossiers, if the original approvals were issued by KFDA after the new medical device regulations were introduced. And while it did indicate that new devices substantially equivalent to products previously approved by other agencies before September 1, 1997 would have to undergo a new application, KFDA has agreed to review individual cases upon special request to determine whether additional dossiers or backup documents for approval are needed. This case-by-case analysis would be especially helpful for devices where public guidance on requiring additional documents is not available. KFDA is also currently working to set clear criteria for local type test waivers, in order to make them more transparent and consistent.
Nevertheless, foreign device companies should not put full faith in the KFDA’s ability to decide whether additional documentation is necessary for their products, nor can they gauge how much time will be needed to reach agreement with the KFDA. As a result, foreign companies would be better off having prior discussions at the local level between their authorized Korean representatives and the responsible KFDA official(s) before making an official approval application.
B. BIO-COMPATIBILITY (SAFETY) DATA REQUIREMENT
KFDA often requires comprehensive data to prove that the materials used for and in medical devices are safe. Data requirements tend to be more comprehensive when devices are implanted in the body (Class III devices in the previous report, for example). Many medical device companies, however, have had problems in submitting safety or biocompatibility data. This is especially true for materials that have been widely used for the past several decades, and have been deemed so safe that data is no longer being generated not are available from the medical device manufacturer or other sources.
Foreign medical device manufacturers are hoping that KFDA will waive such biocompatibility/safety data requirements for materials whose safety has been proven through use elsewhere. The KFDA has in recent years announced that it would exempt biological safety data of some metallic materials for orthopedic products; as such products’ material safety has been proven safe through wide use over an extended period of time. The exemption of data for metallic materials for other devices or for plastic materials for orthopedic implants is still being considered, and the agency has said that it would explore the same exemption for other materials and applications whenever possible. KFDA also stated that it would consider waiving test data and would look into other alternatives if applicants seeking registration are able to justify the reasons why data is not available or submits alternative information, i.e. clinical trial data. However, KFDA, as a new agency, is still not fully convinced of the industry’s request primarily due to the lack of expertise and of accumulated experience.
C. PRODUCT LICENSE TRANSFER RIGHTS
Currently, KFDA regulations will not allow a product license to be transferred to another importer. When a Korean importer for a medical device changes, Korean regulations require that a new approval from KFDA be obtained, even though the product has already been proven safe and effective and has already passed all of the regulatory hurdles under the previous importer. This regulation incurs time and costs for obtaining a new approval, which, in turn, delays the supply of the products to market as well as increases the price.
Under the current policy, U.S. firms have to put together all of the documentation necessary for approval but find that the document requirements are often different to those already submitted for approval by the previous importer. In fact, with the absence of Korean regulations in this area, many foreign companies have found that regulations can even change from one official to another.
This issue has been particularly detrimental for the many multinational device manufacturers that have undergone a merger or acquisition, which then has changed the legal status of importers in Korea. Various U.S. government agencies have been working with KFDA to change its policy, so that import licenses can be transferred by agreement between two distributors, old and new. However, KFDA has not yet shown any flexibility, saying that, from a regulator’s perspective, import product licenses belong to a specific company and are not detachable or transferable because there would be no accountability.
D. FOREIGN DEVICES PENDING APPROVAL THAT ARE ALREADY APPROVED AND/OR MANUFACTURED IN OTHER MARKETS
Korean regulations require a foreign device to have been approved by the government of the country of origin before the Korean government approves its import into Korea. Furthermore, Korean regulations require separate device approvals for products that are manufactured in different manufacturing facilities and/or in different countries, even though a product may be an identical medical device (approval documents in the new country or a new Free Sale Certificate must be presented). This has clearly presented problems for foreign medical companies, since these rules not only force them to go through the entire approval process when moving manufacturing facilities from one site to another, but also hinder their marketing capacity since many encounter slow approval processes in their home country and thus begin marketing their products abroad before home approval is received.
Despite KFDA’s position, U.S. industry is hoping that it could import into Korea those devices which are pending final approval in the U.S. and for which a Certificate of Exportibility (COE) has been issued by the U.S. FDA. The U.S. FDA, before it issues a COE under Section 802, requires that medical devices meet the following conditions: 1) the agency has reviewed the safety of the device; 2) the manufacturer has complied with the U.S. Quality System; and 3) the device has been approved for import by FDA-designated “Tier I” countries such as the EU and Japan. And for products manufactured in other markets, since devices that fall in this issue category have already been imported into Korea, submitting a certificate of quality system approval of international standards for the new plant(s), where appropriate, would address the Korean government’s concerns about quality consistency between old and new plants.
III. UPDATE ON SOUTH KOREA’S PHARMACEUTICAL REGULATIONS
The Korean pharmaceutical market, currently the 10th largest in the world, was approaching US$9 billion before the country’s financial crisis hit full force in November 1997. Although the market volume has decreased about 30% since then – drug imports, which were growing at about 13% annually before the crisis, were slashed by 15% in 1998 – this area is still considered one of the least-affected by the crisis. In particular, the Korean government’s special efforts to maintain a constant supply of medicines, as well as its willingness to increase reimbursement prices depending on the change of exchange rates even on a select product-by-product basis, have contributed to expectations that this industry will continue to grow rapidly as the economy recovers. Also, the domestic industry’s lack of competitiveness in technological development and marketing will continue to keep domestic pharmaceutical firms in the background (producing mostly generics) in most sectors of the industry.
Although several disadvantages such as import approval requirements, unequal treatment, and the lack of coverage by the Korean national medical insurance system still face pharmaceutical importers, the rate of growth of imported pharmaceuticals has still exceeded that of the overall import market in Korea for the past few years. Imported pharmaceuticals are also expected to increase their market share in July 1999 when the Korean government, as committed, includes them in the reimbursement list under the national healthcare insurance plan (see Regulations, Part B).
As mentioned in the previous report, the Korean government did make a commitment to deregulation and structural reform in 1997 in response the country’s financial crisis. In January 1999, for example, the government finally removed its ban on large pharmaceutical corporations from entering the industry (a ban implemented to protect medium and smaller-sized drug companies).
Thus far, however, there has been little progress in the government’s follow-through on its promised reforms. The government’s pharmaceutical regulatory and pricing systems are still quite prohibitive, and many discriminatory policies and barriers to market access remain for imported pharmaceuticals. Foreign companies recently lodged formal protest against the MOHW in March 1999, claiming among other things that clinical trial requirements for new drugs were too strict, and that there was no price transparency in the distribution of drugs (many Korean firms have been selling drugs to hospitals at prices lower than those listed on the National Reimbursement List (NRL)). The KFDA has been responding slowly to these protests, and it remains to be seen whether the country’s pharmaceutical industry will be easier for foreign companies to penetrate in the near future.
A. REORGANIZATION OF THE MOHW
With the establishment of the new KFDA, some responsibilities and personnel of the Pharmaceutical Affairs Bureau were restructured by closing two divisions: the Pharmaceutical Distribution Division and the Pharmaceutical Safety Division. As a result, four divisions remain: 1) Pharmaceutical Policy Division; 2) Pharmaceutical Development Division; 3) Pharmaceutical Industry Division; and 4) Narcotic Control Division.
B. IMPORT REGULATIONS
The previous report detailed the complex import regulations for foreign pharmaceutical firms to introduce their products into the market. During the IMF bailout of South Korea in 1997 – 98, IMF called on Korea to improve the transparency of its import certification procedures. The government has been reviewing the 54 laws covering import regulations to identify necessary improvements in transparency. In the meantime, South Korea will continue its efforts to consolidate the individual laws into one book as the Consolidated Export and Import Notice system. The government will also send guidance or orders to the agencies that conduct quality tests of imported goods to educate working level officials on how (at least in theory) to protect business proprietary information of imported pharmaceutical and cosmetic products.
C. IMPROVING COMPETITIVENESS IN THE MARKET
Although imports currently dominate the market, foreign drug firms should pay close attention to the government’s efforts to improve the competitiveness of domestic pharmaceutical firms. For example, the MOHW set up a task force in February 1999 with the Korea Pharmaceutical Manufacturers Association to encourage domestic drug firms to form strategic alliances (bilateral/multilateral) among themselves, as well as another task force, comprised of officials from internal and external watchdog organizations, to push for increased competitiveness within the sector. Changes in the distribution system are also expected (see Part C below), and the MOHW plans to continue its new drug R&D assistance project for domestic firms that will invest a total of 317 billion won (about $270 million) through 2001. The latter includes the establishment of such R&D assistance organizations as Disease Model Research Center, Clinical Trail Center, Medical and Pharmaceutical Literature and Information Center, as well as actively support new drug development.
The government’s action plan to improve domestic competitiveness will also deal with the domestic industry’s backward distribution system. The industry currently has a dual distribution system – indirect sales via wholesale outlets to pharmacies and hospitals and direct sales to pharmacies and hospitals with no wholesalers involved. The portion of sales via wholesalers accounts for 47% against the 80 – 100% in advanced countries. Furthermore, the huge number of pharmaceutical transactions that slip wholesalers leads to extreme competition, a complicated price system, and invariably an increase in sales costs.
The improvement of transparency in pharmaceutical distribution will help set the stage for the implementation of the disputed separation of dispensary from medical practice. In February 1999, the government decided to postpone for a year a measure to establish a strict division between pharmacists and doctors, which was slated to begin in July I, 1999. The proposed system, which has faced fierce opposition from lobbying groups of both pharmacists and doctors, would make doctors hold exclusive rights to prescribe medicines and pharmacists to fill prescriptions (currently, pharmacists can prescribe and fill prescriptions).
When implemented, the measure would accelerate realignment of the pharmaceutical industry’s landscape based on high-tier firms. With the system, close checks of the effects of medicines by doctors and pharmacists will cause large firms to mass-produce quality products at reasonable prices, resulting in the improvement of large firms’ competitiveness.
Korea’s National Health System is currently closed to private healthcare insurance providers. As such, reimbursement rates to healthcare providers are set by the MOHW with the National Federation of Medical Insurance (NFMI) making disbursement payments. The monopolistic nature of the government as the healthcare provider and its desire to contain healthcare costs have generally resulted in artificially low reimbursement rates and a reimbursement system for which there is a lack of systematized uniformity and transparency.
Under the current system, NFMI only lists improved, enhanced, or upgraded medical devices on the National Reimbursement List (NRL) when their prices are not higher than those of the existing products already listed. Thus, the R&D expenses incurred by foreign companies to develop a new or improved device are essentially lost under the current regulations. Furthermore, the reimbursement system does not maintain transparent, uniform and publicly accessible guidelines for seeking listing on the NRL (NFMI currently authorizes different prices according to product functions, but there is no published information on the definitions of different functions). Nor is there any government facility or official liaison contact point to seek clarification on whether a device can be reimbursed. Finally, there is no comprehensive and up-to-date published list of average prices, creating confusion when companies that did not know whether their products were priced above the average price are suddenly told to lower their prices.
Past appeals by foreign companies to NFMI to change this system have not produced any change in this system to date.
Reimbursement problems with pharmaceuticals are similar to those for medical devices. Foreign pharmaceutical companies see much need for improvement in the following areas: 1) Transparency between hospital and manufacturer through fixed ex-manufacturer price and wholesale margin; 2) Ability of manufacturers to sell directly to hospitals; 3) Market-based pricing for patented products; and 4) Separation for prescribing and dispensing.
The government did introduce a new Ordinance (No. 98-67) in 1997 to provide for imported products’ reimbursement on an equal basis with local products through the medical insurance scheme.
This Ordinance was scheduled to go into effect July 1999, and it remains to be seen to what extent it will actually be put into effect. Furthermore, some reimbursement-related problems remain that the Ordinance does not address. These include: 1) discounting to hospitals, 2) profit margins, 3) administrative procedures, and 4) calculation of pharmaceutical reimbursement prices. Furthermore, even when the Ordinance is implemented, the industry will still be faced with the question of how to determine the reimbursement price for imported products. This is because of the 24.17% unofficial hospital margin that has been built into the pricing system for locally manufactured products, and thus current proposals for imported drug pricing effectively sets the reimbursement price at a level that is 30% below the average of G7 member prices.
Members of the U.S.-based Pharmaceutical Research and Manufacturers of America (PhRMA) are requesting the support of the U.S. government to ensure that the new pricing system for imported products ensures that the actual supply price in Korea is equivalent to the ex-manufacture price in G-7 countries, particularly for innovative and all patented products. PhRMA is also recommending that the reimbursement price should also include a mechanism to address foreign exchange fluctuations to counter the negative effects of major currency devaluations.
V. CONFIDENTIALITY AND INTELLECTUAL PROPERTY PROTECTION
To date, South Korea’s regulations on intellectual property rights (IPR) and company confidentiality have been weak. As mentioned in the previous report, however, the government is trying to improve IPR and confidentiality rights in the country. The country acceded to the Berne Convention in 1996, reduced end-user software piracy, and increased budget allocations for IPR enforcement through the Korean Prosecutors Office. For the past three years, the country has also been on the International Intellectual Property Alliance’s (IIPA) Special 301 “watch list,” a significant downgrade from its previous position on IIPA’s more serious “priority watch list” between 1992 – 96.
Nevertheless, there is much room for improvement, and while the government has made many promises over the past two years to improve protection for foreign companies, it has yet to act on them.
For medical device approvals, KFDA would like to receive the same information submitted to agencies like the U.S. FDA – including company confidential information for approval. However, many foreign device firms are still reluctant to submit the required information, due to doubts whether the government has an appropriate system for the protection of company confidential information, especially from domestic competitors. In fact, there have been a number of cases in Korea in which technical data from the originator’s regulatory dossier have apparently been made available to competitors of the file sponsor. And since the injured company has to rely on KFDA officials for the issuance of other product licenses, it is in a weak position to pursue any legal action. This has caused basic distrust among many local Korean importers, foreign suppliers, and KFDA officials, thereby delaying the approval process.
Progress on this issue is not expected in the near future. Foreign device companies have asked that KFDA should develop a transparent system that would not only require relevant officials to protect confidential information submitted for approval, but also provide enforceable penalty consequences for divulging such information. The Korean government, however, has explained that, given the existing general regulations to require government officials to protect privileged information, legislating additional regulations is not necessary.
At the time the previous report was written, the Korean government was also making many promises about improving IPR protection for pharmaceuticals. As a member of the World Trade Organization (WTO), South Korea promised to implement various parts of the Trade-Related Aspects of Intellectual Property (TRIPs) Agreement, as well as consider implementing patent term extensions for pharmaceuticals (which would allow foreign drug firms to operate in Korea for long periods of time without having their products duplicated domestically).
However, not much has changed in South Korea’s IPR protection for pharmaceuticals over the past year. In fact, the environment may have worsened somewhat – the MOHW recently cancelled its provision for “Drug Re-Examination” protection, which was introduced in 1994 to require that the licenses of new pharmaceutical products be subject to “re-examination” for up to six years in order to confirm the safety of the related drugs in general circulation. In return for the effort involved in the collection of the required safety data by the sponsors, MOHW provided limited administrative protection (for up to six years) for products which were registered after January 1, 1995. By cancelling this measure, the MOHW is essentially defaulting on its WTO obligations regarding data protection. In fact, it even licensed some generic products recently that were related to patented medicines from U.S. companies, raising even more concern that Korea may be reneging on its obligations related to intellectual property.
Recently, despite the IIPA’s downgrading of Korea to Special 301 “watch list” status, the Office of the United States Trade Representative (USTR) intensified examination of South Korea’s discriminatory trade practices and market access barriers for U.S. pharmaceutical exports under the Super 301 provisions of the Omnibus Trade and Competitiveness Act of 1988. Under the Super 301 process, USTR will address the Korean Government’s restrictive barriers affecting the pharmaceutical industry. These include recognition of the value of innovation and the importance of deregulation through equal and fair treatment of imported products, harmonization of regulatory requirements, including acceptance of foreign clinical data, and protection under TRIPs – including data protection and enforcement and transparency in and access to the policy setting process.
South Korea’s pharmaceutical and medical device markets, while suffering a temporary slowdown due to the crisis, are rebounding with the country’s impressive economic recovery. Demand for imported products in both markets is high, and while the government is trying to boost local competitiveness, the domestic markets in both areas are still far behind foreign companies in terms of technology and overall marketing strategy.
However, there remains a downside to South Korea’s medical markets – namely, the Korean government’s sluggishness in deregulating both markets. The government has made considerable progress on restructuring chaebol and encouraging foreign capital. However, these policies have not been fully implemented in the country’s medical markets. Despite the government’s many promises over the past year, approval requirements are still unclear, reimbursement is difficult, and IPR protection is lax. The KFDA’s relative inexperience is one reason for these recurring problems, and perhaps the maturing of the agency over the next few years will yield a more coherent and transparent approach to foreign medical companies. Overall, foreign device and pharmaceutical firms still face considerable challenges in penetrating South Korea’s medical industry, and in order to guarantee future success they must pay close attention to the rapid changes occurring in Korea’s medical market trends and regulatory environment.