South Korea stays attractive to pharma sector despite drug approval lag

High spending and an innovative R&D environment are expected to ensure attractiveness.

South Korea’s market attractiveness for the pharmaceutical sector is expected to remain strong even despite persisting concerns surrounding the lag in drug approvals in the country, according to a report from Fitch Solutions.

High per-capita pharmaceutical expenditure, as well as the country's highly innovative research and development (R&D) environment, will ensure the attractiveness of the pharmaceutical market, the report said.

“The government's support for the pharmaceutical industry, as reflected by the recent announcement of new legislations to improve medicine accessibility will bode well for South Korea's long-term potential as a proposition for pharmaceutical firms,” Fitch said.

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Fitch expects pharmaceutical sales to grow to $32.1b (KRW35.3t) by 2027 from $21.9b (KRW28.5t) in 2022, expanding at a five-year compound annual growth rate (CAGR) of 4.3% in local currency terms.

The delay in the medicine approval review timeline is expected to continue growing in South Korea, the report stated.

In a 2022 study on the evaluation period for 235 drugs approved in South Korea between 2011 and 2020, the Korea Research-based Pharma Industry Association (KRPIA) said the evaluation period by South Korea’s Ministry of Food and Drug Safety (MFDS) grew to 353 days in 2020 from 276 days in 2011.

In comparison, the US Food and Drug Administration, European Medicines Agency, and Japan’s Pharmaceuticals and Medical Devices Agency reduced the evaluation period for new drug approval and review by 10, five and three days respectively between 2011 and 2020.

“As such, patients in South Korea remain at a disadvantage compared to other countries with respect to the number of innovative medicines available, though moderate improvements will continue to reduce the gap,” Fitch said.

Despite this, South Korea is expected to continue enforcing relevant laws to increase medicine accessibility and ensure that innovative products are appropriately valued.

In late November 2022, South Korea's MFDS announced a new program titled the Global Innovative Products on Fast Track (GIFT) which is similar to the US FDA’s breakthrough therapy designation system.

Under the Korean Fast Track system over the last two years, over 20 drugs have received fast-track approvals including orphan, cancer, and COVID-19 drugs, Fitch noted.