Updated on 28 May 2012
South Korea has the highest healthcare expenditure in Asia Pacific, with an estimated 55 percent funded by the public sector
South Korea has high growth potential in the life sciences industry with its strong governmental support, highly educated personnel, growing infrastructure, and burgeoning innovation from the academic and private sectors.
The country is a significant market for over-the-counter as well as prescription drugs, making it highly attractive to multinational drug manufacturers as well as to local and foreign healthcare companies. South Korea has been successful in making global companies outsource biopharmaceutical production to its local companies. For instance, in 2011, Bristol-Myers Squibb (BMS) signed an agreement with Celltrion for manufacturing biopharmaceutical products, including its abatacept and belatacept products.
The country continues to be lucrative for foreign companies to enter into research and development (R&D) collaborations and licensing agreements with the local pharma and biotech companies. This is because South Korea has an enviable track record in pharmaceutical R&D. Since 1999, 15 new molecular entities (NMEs) discovered by local firms have been approved by the Korea Food and Drug Administration (KFDA). The key drivers for the market growth are sector liberalization, the people's preference for branded drugs, annual production growth rate of 10 percent, and a high per capita consumption rate.
South Korea has the highest healthcare expenditure in the region, with an estimated 55 percent funded by the public sector. In the recent years, the government has been forced to implement cost-cutting measures, owing to a large deficit faced by the healthcare system. Healthcare costs continue to rise, with the country's rapidly aging population adding upward pressure to the total spending.
South Korea's continuous price cuts will negatively impact the domestic pharmaceutical sector, despite the government's intention to spend more on R&D, as companies are unable to generate significant revenues due to price cuts.