FOREIGN DRUG FIRMS CALL FOR SOUTH KOREAN R&D SUPPORT

Industry sources are calling on South Korea's government to take a more "global" view of innovation to encourage foreign investment in local drug firms. Only two major foreign pharmaceutical companies still manufacture in South Korea.

Part of the problem is that the drug-pricing system in the country can be arbitrary, discouraging R&D, as innovative companies cannot be sure their products will receive fair treatment. Patent protection in the country also fails to meet international standards. Counterfeiting is a problem and the government is notoriously slow to implement sanctions against companies violating patent laws.

A further deterrent to innovation is the high local cost of generic drugs, which often offer discounts of just 20% on the price of original innovator drugs. This means many local drugmakers will often simply copy Western drugs rather than develop new products. Generics account for roughly 30% of South Korea's drug market in value terms, and 50% by volume. However, the government is currently trying to attract foreign capital — especially in biotechnology — and foreign firms are stepping up collaborations with local academic research institutions.