The Korea Herald


[Herald Interview] ‘Time is ripe for Korean pharmas to go global’

Securing Korea’s own drug supply chain needs state-driven impetus: KPBMA chairman

By Lim Jeong-yeo

Published : June 11, 2020 - 15:39

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KPBMA Chairman Won Hee-mok speaks with The Korea Herald. (KPBMA) KPBMA Chairman Won Hee-mok speaks with The Korea Herald. (KPBMA)
“We must strike the iron when it’s hot,” said Korea Pharmaceutical and Bio-Pharma Manufacturers Association Chairman Won Hee-mok, referring to the overseas expansion of Korean pharmaceutical firms.

“In more ways now than ever, people are sharply aware of the importance of health care due to the coronavirus pandemic,” Won said in an interview with The Korea Herald.

This year will be remembered as a fork in road where the blueprints for future growth took a turn to one accentuated by a need for better medicine.

“Korean pharmas have greatly advanced through their 100-year history. Now they must stake out their place in the global market,” said Won.

The road to a bigger market is an ambition that resonates in all companies, and thus, it has become one of the core projects of KPBMA.

In order to aid its members’ foray into the US market, KPBMA has aligned visions with Cambridge Innovation Center, a real estate service for entrepreneurs in Massachusetts, and with Massachusetts Institute of Technology’s Industrial Liaison Program.

KPBMA has rounded up 10 members to help their safe and sure docking, to join the likes of Yuhan USA, GC Pharma, LG Chem and Samyang Biopharm who have already nestled in the hub.

Open innovation

For Korean pharmas to successfully stretch their roots abroad, Won stresses that they must adopt “open innovation.”

Open innovation refers to the sharing of insights and resources to expedite the otherwise lengthy and extremely costly endeavor to create new medicines.

Homegrown names such as Hanmi Pharmaceutical and Yuhan are actively endorsing open innovation in broadening their research scope to biologic drugs. Unlike chemical drugs, biologic drugs are “alive” as they’re made using therapeutic mechanisms of live proteins.

Biologic drugs are difficult to develop. From discovering a potent drug to animal and human clinical trials and passing the safety screening -- only 10 percent of all biologic drug research and development pursuits cross the finish line of commercialization. Not to mention, the full voyage takes an average timeline of a decade and some trillions of won investment.

The realistic strategy to reduce risks is open innovation, or a relay of license-outs, Won said. For example, a biotech can research the drug candidate, after which a midsized firm can license-in the pipeline to carry out early stages of clinical trials and then a bigger pharma can complete the advanced, more expensive stages of trials.

“We must be wary of research done for the sake of doing research,” said Won, “There has to be selective focus on drug materials that will actually serve unmet medical needs. This can be expedited through open innovation of ideas, manpower and infrastructure.”

According to data from Pharmaceutical Management Division at the Ministry of Food and Drug Safety here, exports of domestic pharmaceutical products surpassed 5.1 trillion won ($4.2 billion) in 2018, a sixfold increase from 2006’s 871 billion won.

In the first quarter of 2020, when the overall export revenue of Korea declined 1.4 percent on-year, exports of pharmaceutical products, medical devices and cosmetics rose 22.5 percent on-year. In the pharmaceutical products category, the export volume amounted to $1.7 billion, up 45 percent on-year.

Self-sufficient raw materials

There still remain critical tasks back at home, however, the most immediate being securing raw materials for drugs.

Self-sufficient supply of essential drugs is an indispensable cogwheel in maintaining a healthy community, albeit not as ostensible as the rule of law, equal rights and the employment rate. And the importance of a country having a hold on its own medical raw materials is being given a second look in the wake of the global pandemic that tightened borders and trade routes.

China, which accounts for 34 percent of active pharmaceutical ingredients shipped to Korea, closed down several manufacturing facilities due to the prolonged COVID-19; while India, which supplies 10 percent of APIs in Korea, has limited the exports of 26 types of raw ingredients.

While Korean pharmas have stocked enough raw materials to last them a while, the KPBMA estimates if the API prices rise by 25 percent, the Korean pharmaceuticals and biopharmaceuticals industry will eventually meet a headwind worth 1.07 trillion won.

Currently, Korea has 75.6 percent self-sufficiency for finished pharmaceutical products, but merely 26.4 percent for APIs and 46 percent for vaccines.

“This is because the APIs and vaccines lack cost-effectiveness for companies. It is difficult to anticipate a reliable return from investing in independent facilities for APIs and vaccines for unforeseen infectious diseases. There needs a policy-driven support to help the pharmas retain at least their production cost,” Won said.

COVID-19 factor

Pharma companies are in a conundrum that they exist to cure illnesses, and if there are no illnesses to cure, their raison d’etre disappears. 

Won pointed out that the sudden emergence of a global pandemic bolstered popular attention to personal hygiene, dramatically reducing the number of common illnesses. The prevalence of hand sanitizers and masks not only helped decelerate the spread of COVID-19, but also warded off the outbreak of seasonal flu.

Market researchers predicted that the decreased occurrences of trivial sicknesses, doubled with maximum 46 percent drop in the number of patients visiting hospitals during the pandemic, will incur at least 10 percent revenue loss for pharmaceutical firms. This concern was however offset in the first quarter by a corresponding decrease in the pharmas’ operating costs and an increase in long-term prescription of bulk drug orders for patients in self-quarantine.

Still, the long-term economic impact of COVID-19 on pharmaceutical industry has to be watched closely, because less number of in-hospital patients means fewer people eligible for ongoing clinical trials of novel drug development pursuits, Won said.

To provide support to the industry and prepare it for future outbreaks of pandemic, KPBMA as of mid-May has set up a Korea Innovative Medicine Consortium (tentative name) that backs joint research and development of vaccines and treatments for infectious diseases. The companies of 13 board chairmen of the association are required to give 200 million won each to the consortium, while the 34 other firms are recommended to give 100 million won each. The remaining sum of the total 7 billion won budget will be filled in by KPBMA.

The 13 board chairmen’s companies include Hanmi Pharmaceutical, GC Pharma, Daewoong Pharmaceutical, Daewon Pharmaceutical, Dongkook Pharmaceutical, Boryung Pharmaceutical, Yuhan, Ildong Pharmaceutical, Jeil Pharmaceutical, JW Holdings, Chong Kun Dang, Huons Global and Dongkoo Bio&Pharma.

The association has also called on the government to be more alert of the need to increase autonomy in API supply.

Won is the 21st president of the KPBMA. He has a bachelor’s degree in pharmacology from Seoul National University and a doctor of pharmacology degree from Kangwon National University. He served as the 34th chairperson of the Korean Pharmaceutical Association in 2006 and was a member of the 18th National Assembly in 2008 in the then-conservative ruling party, Grand National Party.

By Lim Jeong-yeo (