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South Korea Pharmaceuticals and Healthcare Report Q1 2010
Business Monitor International, Nov 2009, Pages: 96
Business Monitor International's South Korea Pharmaceuticals and Healthcare Report provides industry professionals and strategists, corporate analysts, pharmaceutical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on South Korea's pharmaceuticals and healthcare industry.
BMI calculates that South Korea’s pharmaceutical market, which was worth around KRW10,698bn (US$9.93bn) in 2008, will increase at a compound annual growth rate (CAGR) of 7.70% in local currency terms through to 2014. By the end of 2009, the market value is projected to increase to KRW11,929bn (US$9.36bn) due to the recovering economic situation and also as South Koreans continue their frequent visits to physicians and hospitals. Over a 10-year period, the publisher's updated and extended drug expenditure forecast model predicts the market should grow at a slower CAGR of 6.56% in local currency terms, topping KRW22,523bn (US$22.52bn) in 2019. The government’s attempts at cost-containment should counterbalance the rising demand for pharmaceuticals driven by ageing population.
In the meantime, South Korea’s pharmaceutical landscape will remain a dynamic one, especially in the field of research and development (R&D). Swiss firm Novartis recently announced a US$100mn investment in local bioscience start-ups, swiftly following Japan’s Otsuka Pharmaceutical’s US$85mn investment in a similar deal. Anglo-Swedish multinational AstraZeneca and US-based Pfizer are also funding South Korean biomedical research, a field strongly supported by the South Korean Ministry for Health, Welfare and Family Affairs. In fact, in September 2009, the ministry decided it would provide more funds for research activities on contagious diseases, primarily for zoonoses, in 2010.
In the light of the steady market growth projections, rising demand for chronic and long-term disease treatments and an improvement in operating environment that should be stimulated by the US-South Korea free trade agreement (FTA), the publisher ranks South Korea third in the publisher's Q110 Business Environment Ratings for the 15 major Asian markets. According to Channel News Asia, after a revision to legislation, the number of medical tourists in South Korea has increased by 40% year-on-year (y-o-y) to the end of June 2009, which will clearly support the development of the country’s pharmaceutical values. Additionally, after much lobbying on behalf of the drug industry, the authorities are considering the reform of the much-criticised pricing system for prescription pharmaceuticals, with the final decision expected by the end of November 2009.
However, while the country’s prospects are considerable, price cuts, market access barriers to innovative pharmaceuticals and generic substitution will conspire to decelerate the rate of growth over the coming years. This is especially relevant as cost-containment pressures on the National Health Insurance Corporation (NHIC)’s finances continue to result in more measures to control pharmaceutical expenditure, following the introduction of cost-effectiveness reviews for new pharmaceuticals and similar requirements over the past few years. In fact, the NHIC has recently sued over 100 pharmaceutical companies that it suspected of selling almost 300 unlicensed products, in a move illustrative of the tightening financial situation.
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