Industrial and Regulatory Perspectives on Pharmaceuticals in Korea

Jeong-Seok Lee, Ph.DDirector GeneralBiopharmaceuticals Policy DivisionBureau of Biopharmaceuticals and Herbal MedicineKorea Food and Drug Administration

November, 2011

Worldwide Pharmaceutical Market

Worldwide market size is USD 856 billion (KRW 916 trillion) in ‟10,

and continues to grow

- Strong growth of “Pharmerging Market” such as China and India, etc.

- Expected to reach USD 1,100 billion around 2014 (IMS Health, 2010)

Source : IMS Health Market Prognosis, Mar. 2010

515562

605650

694

742782

837 856

9.1% 9.1% 7.7%7.3%

6.8% 6.8% 5.5%

7.0%

2.3%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

0

100

200

300

400

500

600

700

800

900

1000

2002 2003 2004 2005 2006 2007 2008 2009 2010

Drastic change in world markets

- After traditional pharmaceuticals were released in the 1980s, biopharmaceuticals

have been significantly developed thanks to technological advancement.

Changes in Pharmaceutical Market- Growth of Biopharmaceutical Market

Pharmaceut

icals 76.7%

Therapeutic

proteins12%

Therapeutic

antibody 7.0%

Vaccine

4.0%

<World Pharmaceutical Market Volume in 2009>

Pharmaceuticals

Therapeutic proteins

Therapeutic proteins

Vaccines

Pharmaceuticals

69.9%

Therapeutic

proteins12%

Therapeutic

antibody11.2%

Vaccine

5.4%

<Estimated World's Pharmaceutical Market Volume in 2015>

Pharmaceuticals

Therapeutic proteins

Therapeutic proteins

Vaccine

※ Source: Datamonitor, Monoclonal antibodies 2010 (‟10.10)

Changes in Pharmaceutical Market- Growth of Biopharmaceutical Market

Potential Markets for Cell Therapy

- Total Value of the cell-based markets was approx. $35 billion in 2009

and is expected to rise to $62 billion in 2014, and $106 billion in 2019.

- A number of cell types are used but stem cell may constitute slightly more than half of this market in the future.

15.5

8

2.7 3.1

1.7 1.3 0.61

0.7 0.4

24

14.6

5.8 6.3

3.32 1.9 2 1.5 0.6

37

25

12.511.5

6.53.5 3 4

2.8 1.2

0

5

10

15

20

25

30

35

40

2009

2014

2019

Billio

n$

<According to cell therapy and related technologies>

3.6 2.74

2.2

3.7

1.7

5.7

0

5.5

7.56.6

3.9

5.9

2

7.9

0.6

8.6

10.5

12.3

5.9

9.1

3

17.5

2.3

0

2

4

6

8

10

12

14

16

18

20

2009

2014

2019

Billio

n $

<According to Therapeutic Area>

※ Source: A Jain PharmaBiotech Report(‟10.10)

Changes in Pharmaceutical Market- Growth of Biopharmaceutical Market

Rapid Growth Witnessed in Global Stem Cell Therapy Market

- (Overseas) Stem cell market expected to grow from USD 6.9 billion in 2005to USD 32.3 billion in 2012 (annual average growth: 24.6%)

※ Market volume in 2012 estimated : adult stem cells (USD 18 billion),

umbilical cord blood stem cells (USD 9.2 billion), embryonic stem cells (USD 5 billion)

- (Domestic) Market volume in 2012 estimated to be at app. USD 500 million and stem cell therapy product clinical trials on the rise yearly (No. of approval cases ranked 2nd in the world after U.S.)

<Global Market Estimates> <Domestic Market Estimates> (2005~2012, USD Hundred Million) (2005~2012, USD Hundred Million)

Current Korean Pharmaceutical Market

Korean market size in ‟10 is USD 17.8 billion (KRW 19.1 trillion),

5.1% growth compared with the previous year.

- Recent 5-year average annual growth rate is 9.7%, maintaining relatively

higher growth than worldwide market.* Growth rate slowed down due to weak domestic demand caused by global economic crisis in ‟09.

- Percentage of Korean pharmaceutical market in the global market is estimated to

be 1.9%.* North America 42.3%, Europe 29.2%, Japan 10.8%, South America 5.3%.

114,530

126,220

140,707152,635

171,854

182,199191,437

9.1 10.2

11.5

8.5

12.7

6.0 5.1

0.0

5.0

10.0

15.0

20.0

25.0

30.0

50,000

70,000

90,000

110,000

130,000

150,000

170,000

190,000

2004 2005 2006 2007 2008 2009 2010

Worldwide market

1.9%

USD 856 billion

KOREA

Source : KFDA (Jun „10)

Characteristics of Korea Pharmaceutical Market

1. Centered on ethical drug : Percentage of ethical drug in total pharmaceutical

production is 82.0%

* Percentage of ethical drug production : (2005) 72.4% → (2009) 80.8% → (2010) 82.0%

2. Market ranking : Antibiotics – antipyretics - analgesics/anti-inflammatory

agents – antihypertensives – agents for peptic ulcer

3. No. 1 production figure in Korea : Quinvaxem Inj. by BernaBiotech Korea

(USD 0.24 billion)

4. Trade : Export figure USD 1.4 billion & import figure USD 4.09 billion,

resulting in trade deficit of USD 2.69 billion

* Trade balance : (2007)USD -2.87 billion → (2009)USD -2.69 billion → (2010) USD -2.97 billion

5. 15 new drug (NME) KFDA approved, Factive® Tab. of LG Life Sciences

US FDA approved.

Characteristics of Korea Pharmaceutical Market(cont‟d)

6. Share of multinational pharmaceutical companies in Korea – sales increased but share at a standstill

- Sales of multinational companies in Korean market continue to grow

- Share of 35%, not “revolutionarily” increasing

Weight of multinational vs. Korean pharmaceutical companies in Korean market

10.000

Unit: 0.1 billion KRW

20.000

30.000

40.000

50.000

60.000

70.000

‟03 „04 „05 „06 „07 „08

10%

20%

30%

40%

50%

60%

70%

34% 33% 34% 35% 35% 35%

Sales figure of Korean companiesSales figure of multinational companies

Share of multinational companies

Source : IMS Health Market Prognosis, Mar 2009

Challenges in Pharmaceutical Safety Management

Steady increase in pharmaceutical demand according to rapid, low

birth rate/aging and pursuit of better quality of life

- Increase in chronic diseases; universal spread of senile diseases

- Need for systematic response to new demand on public healthcare(ex. H1N1)

Borderlessness of pharmaceutical safety management following the

globalization and diversification of import sources

- Domestic distribution of counterfeit drugs, e.g., illegally imported impotence

treatment drugs, becomes frequent

- Increase in need for mutual cooperation between various main agents of action

including FDA, EMA, multinational pharmaceutical companies, etc.

Challenges in Pharmaceutical Safety Management (cont‟d)

Appearance of specialized domain of safety management, e.g.,

advance in bioscience & technology, converged & integrated product

- Urgent need for safety management/evaluation system including science-based

license review

Rise of importance of Risk Communication

- Transition to patient-centered medical system including personalized medicine

- Growing importance of provision of information to help consumers & patients

safely use pharmaceuticals

Challenges in Pharmaceutical Safety Management (cont‟d)

Insufficient infrastructure and support system for new drug development

- Continuously widened technology gap between advanced countries

in generating the new drug target and candidate substance

- Stagnant R&D investment percentage of domestic pharmaceutical companies

(6.2% of sales figure of listed pharmaceutical companies in 2008)

Enhanced competitiveness in the global pharmaceutical market

- 73.6% of domestic companies producing finished drug products

: production scale < KRW 50 billion

- Need to improve reputation on Korea‟s advanced c-GMP facilities, etc.

- Steady growth of pharmaceutical product export with recent upswing in vaccine

export (Quinvaxem Inj.®, etc.) (average annual growth rate 16.9%)

spring summer

fall winter