Korea has emerged as a leading pharmaceutical market and global hub in Asia over the last two decades. With a population of 50 million, Korea is the third largest pharmaceutical market in the Asia-Pacific region.
Market Size and Growth
In 2016, Korea’s pharmaceutical market was worth over $16 billion and is estimated to reach $20 billion in 2020. Sales by multinational drug companies make up a third of the Korean pharmaceutical market. In 2016, exports from the United States alone were valued at more than $930 million, approximately one-fifth of the total pharmaceutical exports to Korea.
The Korean Ministry of Health and Welfare provides mandatory universal healthcare to its residents under the single-payer National Health Insurance System. Despite only spending 7.4% of its GDP on healthcare in 2016 (World Bank), Korea has an efficient healthcare system and offers high-quality and affordable treatment to its population.
Korea’s pharmaceutical industry has traditionally been dominated by generics, but in recent years, the government has pushed drug development, particularly in biopharmaceuticals, as well as clinical trials.
Formerly known as the Korea Food & Drug Administration (KFDA), the Ministry of Food and Drug Safety (MFDS) is the main regulatory body for pharmaceutical products in Korea. The Pharmaceutical Safety Bureau operates under the MFDS and is responsible for issues such as pharmaceutical management, quality, drug approvals, patenting, and clinical trials. The MFDS is also responsible for setting the reimbursement price of pharmaceutical products.
The Korean government’s goal is to become a Top-7 global pharmaceutical powerhouse by 2020. To do this, they have implemented a number of regulatory reforms to increase the presence of international expertise and align with global standards. In July 2016, the MFDS proposed a series of pricing reforms in order to attract more multinational firms into Korea’s biopharmaceutical sector.
First, the MFDS has proposed to increase the set price of biosimilars from 70% to 80% of the original product price. A multinational firm producing a biosimilar must also fulfil a number of conditions, such as joint development with a Korean company and then conducting the clinical trials in Korea. Second, the Ministry has also raised the target price range of Incrementally Modified Drugs, medicines with similar compounds as originals but with higher effectiveness. Finally, the reform raises the price for pharmaceuticals on the reimbursement list if the strength of the product has increased.
In July 2014, the MFDS joined the PIC/S (Pharmaceutical Inspection Convention and Pharmaceutical Inspection Co-operation Scheme). This agreement guarantees that Korea’s Good Manufacturing Practices (GMP) are aligned with international standards and has greatly strengthened the pharmaceutical manufacturing and clinical trial industries in the country.
Foreign Companies in Korea
Multinational corporations are heavily engaged with the export and development of pharmaceutical products in Korea. Major multinational pharmaceutical exporters include Boehringer Ingelheim, Bayer, Johnson & Johnson, Sanofi-Pasteur, Roche, GlaxoSmithKline, Pfizer, and Bayer.
In October 2016, Merck (Kenilworth, NJ) opened a new 20,000 square feet bioprocessing collaboration center in Songdo District, Incheon, replacing a smaller site in Seoul. Named the M Lab, Merck’s new facility is part of a global network of nine laboratories and allows bio-manufacturing corporations to access cutting edge technologies and skills. In September 2016, GE Healthcare (Chicago, IL) also opened a 23,700 square feet Fast Trak Bioprocessing Technology and Training Center in Songdo.
In June 2017, Sanofi Pasteur (Lyon, France) gained approval from the MFDS to include its quadrivalent flu vaccine, VaxigripTetra, to Korea’s National Immunization Program (NIP). GlaxoSmithKline’s (London, UK) influenza vaccine Fluarix Tetra has also been approved by the NIP and was the top-selling flu vaccine in Korea in 2016.
Domestic Pharmaceutical Companies
Korea’s domestic pharmaceutical firms have also undergone remarkable growth. Firms such as Yuhan, Green Cross, and Hanmi have begun conducting their operations internationally, while others such as Celltrion and Samsung Bioepis are heavily engaged in biopharmaceutical research and development. As Korean pharmaceutical firms develop into larger corporations themselves, the number of collaborations with other foreign companies should increase.
Korea has emerged as a leader of clinical trials over the last decade as a result of extensive government funding and international investment. Korea currently ranks seventh globally in the number of clinical trials conducted per year. Korea’s government hopes to become the fifth-largest country for clinical trials by 2020. The fast start-up time, world-class expertise and competitive costs, particularly in face of rising costs in other Asia-Pacific countries, continue to make Korea a growing destination for multinational pharmaceutical corporations to conduct clinical trials.
Notable multinational firms engaging in clinical trials in Korea include GlaxoSmithKline, Pfizer, Boehringer Ingelheim, Sanofi-Aventis, Amgen and Centus. As of April 2017, there are 25 biosimilar clinical trials on-going in Korea, 12 of which are conducted by multinational pharmaceutical companies. As of 2016, GlaxoSmithKline alone has conducted over 70 global clinical trial programs in Korea. In June 2017, GlaxoSmithKline began a stage 3A clinical trial for its Rotavirus Vaccine, “Rotarix”.
With an average life expectancy of 82, Korea has the eleventh highest life expectancy in the world (World Health Organization, 2016). However, the continued consumption of alcohol and tobacco, as well as the higher prevalence of sedentary lifestyles, is increasing the incidence of non-communicable diseases (NCDs).
Around one-seventh of Korea’s population over 30 has diabetes, a figure that increases to almost one-third for those over 65. Multinational corporations such as Eli Lilly (Indianapolis, IN) have worked extensively in Korea, which launched its “Trulicity” insulin drug in June 2016.
Korea is also one of the quickest aging countries in Asia. Currently, nearly 14% of Korea’s population is over the age of 65 and by 2030, 25% of the population will be over the age of 65. Korea is expected to have the second eldest population in the world by 2050, behind only Japan. As a result, government spending on healthcare is expected to increase, while the demand for multinational pharmaceuticals targeting chronic diseases such as diabetes, arthritis, cardiovascular problems and blood pressure will grow too.