International pharmaceutical companies continue to rank Korea as one of the larger “pharmerging” markets in Asia. Innovative preparations continue to dominate the market with foreign imports or local manufacture of foreign products taking a large share of the pharmaceuticals budget. Industry sources project double digit growth as health care spending continues to increase. Given Korea’s aging population, per capita health care expenditures will continue to rise, even as the Government of Korea seeks to manage costs.
Not withstanding the Korean government’s cost containment measures, the U.S. government will continue to work closely with and advocate on behalf of U.S. exporters’ market access concerns. This includes continuing to encourage the Korean Government to make the market more transparent, to reimburse innovative drugs at appropriate levels, and to ensure Korean patients have access to innovative pharmaceuticals. Industry sources speculate that the Korean government’s need to reduce costs will be balanced by satisfying consumer demands for advanced health care over the next few years. We advise U.S. exporters of research-based, innovative drugs to evaluate the impact of the new reimbursement system on their potential sales before entering this lucrative and growing, but challenging market.
With the Korean government’s encouragement, the Korean biotech pharmaceutical industry is striving to invest more in R&D (currently only 4-5 percent based on sales revenue) and diversify from the production of generics and antibiotics. This trend presents excellent opportunities for U.S. biotech firms to participate in Korea’s strategic biotech sector. Korea’s pharmaceutical industry is competitive in terms of chemical synthesizing technologies, and it is strengthening its competition in the areas of drug screening, safety evaluation and clinical trials. Korean companies are pursuing strategic alliances with multinational firms to finance R&D for new products or for cross licensing of existing technologies. Industry experts predict that the U.S. market share will increase as more U.S. biotechnology-based products become commercially available over the next few years.
The Osong Bio-Technopolis, a program within the Korean Ministry of Health, Welfare and Family Matters, is seeking foreign investment for biotechnology industry development in the high-tech science park at Osong. The 4,633,000 square meter science park will have two major focuses: pharmaceuticals and cosmetics (59.7 percent) and medical devices (25.8 percent). Since the Korean biotech industry is still developing, opportunities exist for U.S. companies interested in the future potential of this industry in Korea.