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BIOPHARMACEUTICAL

KoreaWhere Success Knows No Limits

Index

1. Industry Overview 3

2. Competitive Standing and Outlook 9

3. Government Policies 14

4. Status of Foreign Direct Investment 15

Market size & production trends Korea’s pharmaceutical market stood at KRW 19.291 trillion (USD 17.3 billion)* in 2013, up

0.3% YoY, and posted a five-year CAGR of 2.3% from 2008 to 2013

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* Currency conversion based on March 10, 2015 rate.

Recent developments in Korea’s pharmaceutical industry Unit : KRW mn.

2008 2009 2010 2011 2012 2013

13,893,810

14,788,387

15,569,588 15,440,25115,560,663

16,191,845

16,957,675

17,970,026

18,908,439 18,943,812 18,980,00319,029,15

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Production

Market size

Industry Overview - Pharmaceutical industry

Industry Overview - Pharmaceutical industry

Export & import trends Korea’s pharmaceutical exports posted a 2008-2013 CAGR of 13% driven by Korean phar-

maceutical companies with a growing presence in the global market

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Export & import trends in Korea’s pharmaceutical industry

2008 2009 2010 2011 2012 2013

1,255,891

1,772,242 1,770,0591,943,493

2,309,5342,318,52

2

4,319,756

4,953,8815,108,911

5,447,0535,728,874

5,155,829

Export

Import

Source: Korea Health Industry Development Institute (2014), Analysis of Korea’s Pharmaceutical Industry (2013)

Unit : KRW mn.

Industry Overview - Pharmaceutical industry

Human resource trends As much as 70.2% of researchers have master’s or doctoral degrees and the research

workforce structure was based mostly on higher-skilled talent.

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Number of people employed in Korea’s pharmaceutical industry

Korea Health Industry Development Institute (2014), Analysis of Korea’s Pharmaceutical Industry (2013)

2008 2009 2010 2011 2012

75,406

81,204

77,314

74,477

78,259

Unit : People

Industry Overview - Biotech industry

Market size & production trends The domestic biotech market stood at KRW 5.87 trillion in 2013, up 6.1% YoY, posting a

CAGR of 8.5% from 2009 to 2013.

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Market size and production trends of the biotech industry

Source: IMS Health (2012)

2009 2010 2011 2012 2013

2773474

5,787,826

6,396,252

7,129,229

7,523,831

4,236,695

4,751,946

5,208,078

5,643,437

5,866,853

Production

Market Size

Unit : KRW mn.

Industry Overview - Biotech industry

Number of biotech companies The number of companies in Korea’s biotech industry increased by 13, from 958 in 2011 to

971 in 2012, marking an upward trend.

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Changes in number of biotech companies

Source: Biotech Industry Study (2014)

Total Biopharmaceuticals Biochemicals Bioengineered food Others

918

276 188 202 247

958

305204 199

250

971

317

203 199252

2011 2012 2013

Unit : Companies

Other

Industry Overview - Biotech industry

Human resource trends About 60% of researchers have master’s or doctoral degrees. The workforce is highly

skilled in the biotech industry, as seen in the pharmaceutical industry.

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Workforce structure of the biotech industry Unit : People

Source: Biotech Industry Study (2014)

Biopharmaceuticals biopharmaceuticals Bioengineered food Others

1,030 362 345 359

3,519

1,355 1,298 1,239

6877

1,9373,527 3,079

7,043

1,282

2,9002,045

Doctoral degree

Master’s degree

Bachelor’s degree

Other

OtherBiochemicals

Competitive Standing and Outlook

The global pharmaceutical and biotech markets have steadily expanded thanks to an aging population and growing awareness of healthy lifestyles worldwide.

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Size and growth outlook of the global biotech market

Source: IMS Health (2012)

2010 2011 2012 2013 2014 2015

987.20

1,079.00

1,181.50

1,298.4

1,434.70

1,572.40

CAGR: 9.7%

Outlook of the global biotech market

Unit : USD bn.

Competitive Standing and Outlook

Outlook of the domestic biotech market

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The in vitro diagnostic segment has strong growth potential thanks to new technology de-velopment and a rapidly aging population. The market is estimated to reach KRW 420 bil-lion in 2014.

Korea’s in vitro diagnostic medical device (IVD) market

Source: Ministry of Trade, Industry & Energy, Five-year Plan for Technology Innovation (2013)

2009 2010 2011 2012 2013 2014

Bioelectronics 369 489 553 624 724 840

Bioinformatics & biological

assay1,406 1,355 1,531 1,730 1,955 2,209

Bio diagnostics

(20% of the diagnostic

test market)

600 690 780 881 996 1,125

Total 2,375 2,534 2,864 3,235 3,675 4,174

Unit : KRW mn.

Competitive Standing and Outlook

Most promising sector

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If the domestic development of new therapeutic antibodies speeds up, Korea’s therapeu-tic antibodies segment will reach KRW 300 billion in 2015.

Outlook for the Korean therapeutic antibodies market

Source: Ministry of Trade, Industry & Energy, Five-year Plan for Technology Innovation (2013)

Unit : KRW mn

2006 2010 2015

300

830

3000

Competitive Standing and Outlook

Increased R&D investments

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R&D investments in the pharmaceutical industry recorded KRW 967.2 billion in 2012, positing a CAGR of 13.7% for the past 5 years.

Korea’s biotech R&D investments reached KRW 1.165 trillion in 2013, continuing on a growth path.

Unit : KRW million

R&D investments by Korean pharmaceutical companies

Source: Korea Health Industry Statistics System (KHISS)

2008 2009 2010 2011 2012

578,268648,362

684,207

813,755

967,239

Korea’s biotech R&D investments

Source: Biotech Industry Study (2014)

Unit : KRW million

2011 2012 2013

9,30210,079

11,651

Competitive Standing and Outlook

Increased R&D concentration

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The R&D concentration rate of Korea’s pharmaceutical companies rapidly increased, from 6.24 in 2008 to 7.67 in 2012.

Unit : %

R&D concentration among Korean pharmaceutical companies

2008 2009 2010 2011 2012

6.24

6.5 6.44

7.41

7.67

Government Policies

2013 the Five-year Comprehensive PlaFor the support and development of the pharmaceutical industry: To be among the top 10 in the global phar-maceutical industry

- By recording pharmaceutical exports worth KRW 11 trillion- Creating four world-class new drugs by 2017 through five core tasks

Govt. efforts in the pharmaceutical industry

2013 - Five-year Comprehensive Plan

Streamlined procedures for new drug registration

• Provides Korean companies with consulting and advisory services through recruiting leading ex-perts from overseas as short-term consultants.

The PB 300 Project

• The Korean government introduced a pilot system that combines drug approval and price evaluation into a single procedure to streamline current procedures.

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Government Policies

15 Source: Biotech Industry Study (2014)

The government has designated the healthcare industry as one of the pillars of and core tasks for Korea’s transition toward a “creative economy.”

Unit: KRW 100 mn

2009 2010 2011 CAGR

Government R&D 123,437 137,014 148,902 9.8%

Biotech R&D 20,112 23,252 25,808 13.3%

Biotech R&D as % of government R&D 16.3% 17.0% 17.3% -

Government efforts in the biotech industry

Government R&D investments by segment

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KRW 350 billion in investments from Temasek, since 2010Celltrion

• Strategic partnership with Japan’s Nichi-Iko Pharmaceutical (2010)• Exclusive sales right worth KRW 30 billion (2014)Aprogen

Established the Network Equipment Education Center in SeoulSamsung

BioLogics

Strategic partnership with GSK Dong-A Pharm

Ajinomoto Genexine, a joint venture with AjinomotoGenexine

Success CasesStatus of Foreign Direct Investment

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