In our latest Pharmaceutical and Healthcare Business Environment Ratings (BERs), South Korea can be found in pole position of the 16 markets surveyed in the Asia Pacific region, ahead of Japan and Australia. The upgrade is due to a re-evaluation of the size and growth of the country’s medicine market based on new data from the Korea Pharmaceutical Manufacturers Association (KPMA) and the improved economic outlook. Through to 2014, we expect the total market value, measured at consumer prices, to reach KRW17,985bn (US$17.98bn) in 2009, up from KRW13,330bn (US$11.0bn) in 2009. The five-year compound annual growth rate (CAGR), calculated at 6.17% in local currency terms (10.35% in US dollars), will slow down to 4.98% and 7.02%, respectively, over the longer, 2009-2019 period – mainly as a result of higher uptake of generic medicines, downward pressures on prices and patent expirations.
In the meantime, concerns over market barriers remain, with the US trade association Pharmaceutical Research and Manufacturers of America (PhRMA) again recommending that South Korea be placed on the ‘Priority Watch List’ of its Special 301 Submission for 2010, mirroring its status in 2009. While South Korea had agreed to improve patent, trademark and copyright protection and to strengthen intellectual property (IP) enforcement, its stance towards the reimbursement of innovative drugs, the lack of transparency in pharmacoeconomic (PE) assessments and signs that compulsory licensing is an attractive option for some stakeholders have emerged as some of PhRMA’s key concern. Companies are increasingly devising new methods for the penetration of the South Korean market, with Pfizer stating in late April 2010 that it may launch generics there, as it patents expire.
Nevertheless, the South Korean pharmaceutical market remains a dynamic one. In April 2010, it was reported that sales of over-the-counter (OTC) drugs – including Novartis’s cold medicine Theraflu, Reckitt Benckiser’s Gaviscon and Wyeth’s Centrum Silver – increased in South Korea as a result of aggressive advertising campaigns. The authorities are, however, planning to reduce maximum drug prices by 15-25%, intending to punish pharmaceutical companies that offer kickbacks to doctors, hospitals and pharmacies. From October 2010, the Ministry for Health, Welfare and Family Affairs (MIHWAF) will compensate medical institutions and drug stores if they buy pharmaceuticals below the government-set maximum prices. In order to appease pharmaceutical firms, the MIHWAF will offer incentives to those that invest in research and development (R&D).
The government is also aiming to capture a slice of the fast-developing medical tourism market. In March 2010, having already allowed hospitals to actively look for patients abroad, the Seoul government launched an enhanced medical tourism plan to boost revenue through its advanced medical services. Under the plan the city government will focus on improving five medical areas – regular check-ups, skincare, plastic surgery, herbal medicines and dental service – and establish partnerships with local medical offices to provide comprehensive services to patients.

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