Life science and healthcare to Korea

Trends and opportunities

The market

Pharmaceuticals

The Republic of Korea’s (ROK, also known as South Korea) pharmaceutical market is one of the most significant in Asia and continues to steady grow. Sales are forecast to increase from US$15billion in 2015 to US$21 billion in 2025, which represents a compound annual growth rate of 3.6 per cent.

There are a total of 894 pharmaceutical companies in South Korea, of which one-third manufacture finished pharmaceutical products and account for more than 75 per cent of the sectors US$16 billion output (Source: 2016 Korea Pharmaceutical Industry Directory, Korea Pharmaceutical Traders Association).

Biotechnology

South Korea’s biotechnology industry boasts approximately 600 companies grouped into four regional clusters (Osong, Daejeon, Jeonlla and Kangwon) and 25 centres. More than 70 per cent of the country’s biotechnology companies specialise in the biomedicine sector, with the remainder focused on bioprocessing and equipment (Source: Business Monitor International, South Korea Pharmaceuticals and Healthcare Report, Q4 2016).

Local domestic production was valued at A$8.7 billion in 2014. In terms of domestic sales, biopharmaceuticals accounted for A$3.3 billion (49.1per cent) of the total domestic market, followed by biofood at A$1.6 billion (25.2 per cent) and bioenergy and resources at A$706 million (11.0 per cent) (Source: Korea Biotechnology Industry Organisation, Local Biotechnology Industry Overview 2014, March 2016).

Regenerative medicine

The South Korean Government is aiming to position the country as a world leader in biotechnology and has highlighted regenerative medicine research and development as one of the key areas of growth. In 2016 the government invested around A$107 million into regenerative medicine research and development.

Owing to favourable stem cell policies that allow both human and therapeutic cloning, South Korea has a high percentage of industry players investing in derivation, isolation and storage of human neural stem cells (hESCs).

With over 700 companies, South Korea is the fifth-largest regenerative medicine market globally, behind the United States (US), United Kingdom (UK), Germany and Japan. The country has a track-record of commercialisation to stem cell therapy products, setting the industry on a healthy growth trajectory. South Korea also has one of the highest levels of stem cell banking in the world at 25-30 per cent (Source: Frost & Sullivan Global Stem Cell Market 2014, ‘The New Age of Regenerative Medicine’; September 2015).

Medical devices

In 2014 South Korea’s medical device market size was valued at approximately US$4.4 billion, a 7.4 per cent increase over 2013.

The country is highly dependent on imported medical devices, with approximately 66 per cent of all devices coming from offshore and accounting for US$2.9 billion of the segment in 2014. The most common imports are MRI systems, X-ray CT, stents, knee implants, kidney dialysis devices and soft contact lenses.

The top five importing countries are the US, Germany, Japan, China and Switzerland with Australia in the 13th place (Source: Medical Device Industry Analysis Report 2015, Korea Health Industry Development Institute).

Research and development (R&D)

South Korea is one of the leaders in R&D in the Asia Pacific region given the commitment to innovation from both the public and the private sector. According to the Korea Institute for Advancement of Technology, the total government budget for R&D in 2016 was US$15.9 billion. The life science was given the largest portion accounting for 14.6 per cent, followed by information electronics (13.1 per cent), aerospace and ocean (10.7 per cent), energy resources (8.7 per cent), and machinery, manufacturing and processing (8.7 per cent) (Source: Korea Institute for Advancement of Technology).

Bio-product export and import 2014

Export by category

• biofood: 49 per cent
• biopharmaceutical: 40 per cent
• biochemical: four per cent
• bioelectronics: three per cent
• bioprocess and equipment: two per cent.

Import by category

• biopharmaceutical: 87 per cent
• biochemical: six per cent
• bioprocess and equipment: four per cent
• biofood: two per cent.

(Source: Local Biotechnology Industry Overview 2014, Korea Biotechnology Industry Organisation, March 2016).

Opportunities

Australia exported A$624 million worth of pharmaceutical products (including vitamins) to South Korea in 2014, our largest export market for the sector (Source: Department of Foreign Affairs and Trade, Fact sheet: trade in goods, December 2016). The Korea Australia Free Trade Agreement (KAFTA) has strengthened and expanded our bilateral relationship by building on existing and developing new relationships in the biotechnology sector. All tariffs on Australia’s pharmaceutical exports to South Korea (including vitamins) have now been eliminated. Almost 90 per cent were eliminated on entry into force, with the remainder phased out in January 2016. South Korea’s tariffs on Australian pharmaceutical products were up to eight per cent.

Significant areas of opportunity for Australian pharmaceutical companies include:

• biopharmaceuticals, owing to the Korean Government’s strong support for generics (e.g. protein therapeutics).
• cardiovascular and metabolic disease, especially with the increasing prevalence of diabetes.
• oncology, stemming from increases in early diagnosis and detection of cancer and targeted treatment of the top three types of cancer: lung, gastric and liver cancer.
• medical devices for the treatment of chronic diseases that are becoming more prevalent as the number of older South Koreans continues to grow.

Regulatory

A safety and efficacy test report is required for registration of pharmaceutical products.

A test standards and methodology report is also required for registration of pharmaceutical products.

Certificates of manufacture and free sale are required for registration of pharmaceutical products.

(Source: Approval process for pharmaceuticals, MFDS,  Traders Association, Regulations on safety of pharmaceuticals, Korea Pharmaceutical).

Links and industry contacts

Industry associations

Korea Biotechnology Industry Organization
Korea Drug Research Association
Korea Pharmaceutical Traders Association

Government

Korea Drug Development Fund
Korea National Enterprise for Clinical Trials
Ministry of Food and Drug Safety
Ministry of Health and Welfare
Ministry of Trade, Industry, and Energy

Research institutes

Korea Institute for the Advancement of Technology
Korea Research Institute of Bioscience and Biotechnology
Osong Medical Innovation Foundation

Contact details

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Working in partnership with Australian state and territory governments, Austrade provides information and advice that can help Australian companies reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.