South Korea has one of the largest OTC and Pharma markets in the Asia-Pacific region and ranks 13th among the world’s pharmaceutical markets. South Korea’s Pharma market was valued at US $20 billion in 2012, having grown from US $14.5 billion in 2006 at a CAGR of 5.5%. It is expected to grow at a CAGR of 7.6% to reach US $31.04 billion by 2018. Increases in insurance coverage, South Korea’s ageing population and favourable government initiatives are expected to continue driving the country’s growth.
The country’s industry is highly fragmented, with almost all domestic pharmaceutical companies having a strong portfolio of generic products rather than expensive, branded drugs. The South Korean market is tough to enter, but clearly regulated IP rights, changing demographics and government support have contributed to making the South Korean pharmaceutical industry attractive to multi-national companies. South Korea has been described as a ‘transitional pharmaceutical market’, with high single-digit CAGRs expected in the combined sales of OTC and Rx medicines over the next five years.
OTC medicines have been a growing sector in South Korea due to a tendency for self-prescription among patients. There are around 21,000 pharmacies in South Korea, with Boots and Watsons among them. The South Korean government has signed free trade agreements with the US, Europe and India that are aimed at improving the IPR framework in the country and making the pharmaceutical industry more attractive to foreign investment.
In general, the EU-Korea Free Trade Agreement aims to strengthen transparency in drug pricing decisions, government policies and enforcement.