Pharmaceuticals Korea report 2009

KoreaPharma reportMay 2009

MAY2009 FOCUS REPORTS S2

‘Where is my dream - Nonhyeon dong’, Lee Yuwoon, Korean Traditional Ink on Paper, 2009

KOREA: Igniting the New Growth Engine

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T hough it may traditionally be known in the West as ‘The Land of the Morning Calm’ or ‘The Hermit Kingdom’, anyone even slightly familiar with contemporary Korea would make a very different choice of adjectives to

describe it. One that invariably comes to mind and is cited by both locals and foreigners alike is ‘dynamic’. Edged between Japan and China, Asia’s economic powerhouses of today and tomorrow, Korea has had to struggle for centuries to not only assert its uniqueness but to simply exist. Moreover, a victim of 20th century ideological and geopolitical confrontation, Koreans underwent a brutal civil war over 50 years ago that still maintains the nation divided in communist North and capitalist South.

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This backdrop makes it all the more remark-able to witness what South Korea (Korea for the rest of the article) has managed to achieve to date. In just a few decades, it went from being a poor and war-torn country to one of the most prosperous and stable places in Asia. Despite its relatively small size, population, and lack of natural resources, Koreans under-took a rapid industrialization of the country that made it part of the ‘Asian tigers’ and one of the 15 largest economies in the world by the 1990s. Based on a big focus on education and strong government support, Korea developed expertise in export-driven industries such as shipbuilding, automotive and IT (information technology). Korean companies became not only globally competitive, but often leaders in their respective fields.

“It is striking how globalization is quickly shaping local habits in a country that only 15 years ago was still closed to foreign culture influences”, says Juergen Koenig, President of Merck Korea. “Indeed, I think that if there is one distinctive feature of the Korean people it is their incredible ability to adapt to changes; this helps explain their ability to achieve fast, strong and consistent growth in the past de-cades”, he adds.

Ironically, this success and the country’s ac-celerated integration with the rest of the world have made it particularly vulnerable to the current global economic downturn. Demand for Korea’s key exports such as vessels, automobiles and elec-tronics are highly sensitive to the economic cycles. In this con-text, President Myung-Bak Lee – locally nicknamed the ‘CEO President’ due to his career in the private sector and business-friendly policies – is actively looking to support the develop-ment of other knowledge-based industries. One of the strategic sectors mentioned by the government is the health industry, encompassing pharmaceutical, BT (biotechnology) and medical tourism.

“The pharmaceutical and BT industry create added value for an economy, particularly when combined with IT and NT

(nanotechnology)”, states Jae Hee Jeon, Min-ister of Health, Welfare and Family Affairs. “Therefore, there is active support at a na-tional level in Korea for the growth of this industry which is seen as one of the country’s future growth engines”, she adds. Indeed, many in Korea see the potential of the IT- BT-NT convergence in the health industry as one of its strongest competitive advantages, as it will build on the country’s different areas of expertise in order to develop more preventive and personalized medicine.

Healthier, but at a priceThe importance given to the pharma and bio-tech sectors also stems from the challenges posed by Koreans’ evolving lifestyles and fast-ageing process. OECD studies show that Korea saw the greatest gain in life expectancy among member countries in the past 46 years, exceeding the OECD average for the first time in 2006. According to the Korea Health Indus-try Development Institute (KHIDI), the coun-try’s population over the age of 65 is expected to go from 8% in 2004 to 20% in 2020. This is naturally leading to a higher occurrence of chronic diseases and Bup-Wan Kim, President of the KHIDI, expects that “the demand for

advanced medical care and e-health will increase dramatically”.At the same time, the ageing population is putting the national

health insurance system under mounting pressure as the amount of patients and the severity of the illnesses grow. As a result, the Korean government introduced the Drug Expense Rational-ization Program (DERP) in 2006 with aims to stabilize public healthcare spending. Though it seems to have succeeded in this regard to some extent, the changing regulations and deep price cuts have – not surprisingly – raised many voices about the neg-ative impact on the pharmaceutical industry, both among the domestic and foreign players on the Korean market.

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Top: Jae Hee Jeon, Minister of Health, Welfare and Family Affairs; Below: Bup-Wan Kim, President of the Korea Health Industry Development Institute

Already one of the top 15 phar-maceutical markets in the world with a value of about $10.5 bil-

lion (at 2008 consumer prices), South Korea’s continuous growth has made it one of the most prominent emerging countries for the industry, with some even considering that its mix of greater disposable income, an ageing population and lifestyle changes make it a ‘dream

market’. Indeed, although multinational companies (MNCs) currently account for less than 40% of the pharmaceutical sales in Korea, they have mostly enjoyed high double-digit growth in recent years. Even in the midst of the economic slow-down, Business Monitor International (BMI) forecasts the Korean pharmaceu-tical market to grow at an annual rate of 8.56% through to 2012, well above

global levels. However, the sentiment among big

pharma companies in Korea is notably less bullish these days. Many have seen their growth rates significantly decelerate since 2007. For most, the blame is not on the economic troubles but on the implementation of the government’s cost containment policies. According to Kyu-Hwang Lee, President of the Korean

The Korean market: dream or reality?




Research-based Pharmaceutical In-dustry Association (KRPIA), “There are specific aspects such as lack of clarity and of transparency stem-ming from the DERP, which give the impression of arbitrary deci-sions by the government in terms of reimbursement and pricing policies. The criteria for these key decisions are expressed too broadly and with a lack of scientific definitions”, he says.

Fabrice Baschiera, General Man-ager of Sanofi-Aventis Korea, has seen the French pharmaceutical company take the top spot in terms of market share among MNCs, but also shares the concerns over the recent policy developments. In his view, Korea is facing similar issues regarding healthcare spending as Euro-pean countries with universal coverage and is trying to learn from those experiences. “The problem is that Korea is trying to accomplish in only a few years a process that took 10-15 in other countries. This is making it very difficult for the in-dustry to change and adapt adequately”, he affirms, adding that by taking more into consideration the views of physi-

cians and the industry, the negative effects of the DERP could be minimized.

Other leading figures in Korea’s MNC landscape, such as Urs Flueckiger, General Manager of Roche Korea, also point out the dangers of the increased uncertainty. “Products are getting stuck in the approval process due to pricing and reimburse-ment issues”, states Flueckiger. “Unfortunately, for patients this means a delayed access to innovative drugs”, he adds. Indeed, this has a direct impact on companies in Korea. Roche’s AVAS-TIN, which is #2 in its field globally, is not being reimbursed in Korea and HERCEPTIN – a breakthrough in early breast can-cer treatment – has been in reimbursement discussions for over two years.

For Flueckiger, the government’s request for prices far below international standards – in a country that has achieved GDP levels of developed economies and with high costs of doing business – is unrealistic. Notwithstanding these disagreements, Flueckiger points out that like for most MNCs Korea is one of Roche’s strategic emerging markets and is still growing at a pace above average. Moreover, the Swiss company is signifi-cantly stepping up its clinical trials activity in Korea (currently 60, up from just 5 a few years ago) and looking closely at the country’s technological offerings, particularly in drug delivery.

As for Korea’s fairly well-developed domestic pharmaceutical industry, comprising around 250 manufacturers, their tradition-al focus on locally high-priced generics has thus far spared them much of the pain inflicted on the sector by the implemen-tation of the DERP. Indeed, many Korean pharmaceutical com-panies have continued posting double-digit growth, largely driven by their ability to quickly launch major medicines coming off patent on the local market. Of the top-tier players in Korea, with nearly 20% growth in 2008, Yuhan Corpora-tion seems to be best capitalizing this momentum. The company’s robust sales of ATORVA, a generic of Pfizer’s LIPITOR, con-tributed significantly to this performance. According to Yuhan’s CEO, Joong Keun Cha, this success is thanks to “an aggressive pre-marketing campaign that lasted a year, and to Yuhan’s most invaluable asset: a staff of 600 highly skilled and moti-vated salespeople”.

Left: Fabrice Baschiera, General Manager of Sanofi-Aventis Korea, Center: Urs Flueckiger, General Manager of Roche Korea, Right: Joong Keun Cha, CEO of Yuhan Corporation

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While the current situation may appear to have local companies regaining the upper hand over the MNCs in the quest for dominance of the Korean market, the

mid and long term perspectives paint a more complex picture. For decades, the domestic pharmaceutical industry was able to thrive through a focus on production of generic products and in-licensing of new drugs, but the negotiations of Free Trade Agreements (FTA) with the United States – pending ratification – and the European Union – under discussion – are set to change the rules of the game.

The innovation challengeAmong the Korean pharmaceutical companies the growing consensus is that in order to survive and succeed in the era of truly global competition that is upon them, the key will be to make greater investments to enhance their R&D and manufac-turing capabilities. The local industry only began full-scale R&D activities following the introduction of the product pat-ent system in 1987, and since then 14 new drugs have attained KFDA (Korean Food and Drug Administration) approval. Global new drug status has only been reached on one occasion by a Korean company, when in 2003 the US FDA approved LG

Life Science’s FACTIVE (Gemifloxacin), a novel quinolone antibacterial agent. But as the company’s CEO In-Chull Kim acknowledges, it is not enough to reach US FDA (US Federal Drug Agency) or EMEA (European Medicines Agency) approv-al but this “needs to be followed up with a successful marketing and sales strategy”.

Yuhan’s Cha also recognizes that the success in the Korean generics market alone is not enough to propel the company to-wards the future. Besides diversifying through toll-manufacturing and other health-related products, Yuhan is prioritizing R&D and focusing on four strategic therapeutic areas: CNS, oncology, circulatory and gastrointestinal system. Yuhan’s in-house diges-tant REVANEX is on the Korean market and will also be distrib-uted in places such as China, Southeast Asia and Latin America. Daewoong, another top 5 player in Korea, already gets a majority of its revenues from proprietary drugs, and is also focusing on expanding its existing business in China and Southeast Asia.

The other pillar of the Korean pharmaceutical industry’s trans-formation is the government-fostered upgrading of manufacturing facilities. Keen to support the development of a globally competi-tive domestic industry but aware of the challenges set to arise from the FTAs, the Ministry of Health and the KFDA established

Free trade triggers shift in paradigms



a roadmap aiming to bring the entire Korean pharmaceutical in-dustry up to cGMP (current Good Manufacturing Practices) by 2012. According to Jeung-Soo Kim, former Minister of Health and President of the Korea Pharmaceutical Manufacturers Asso-ciation (KPMA), “over $1.9 billion have already been invested by companies to upgrade their facilities in the country, illustrating their firm commitment to making Korea one of the leading phar-maceutical industries in the world”.

Navigating uncharted waters aheadHowever, not everyone in the Korean pharmaceutical industry is convinced of the need for such a massive push for cGMP. While medium-sized companies complain about the heavy financial burden this is imposing on them, others wonder about the long-term business sense of such a generalized move. Young-Jin Kim, CEO of Handok Pharmaceuticals points out that, now, “many Korean companies, regardless of their size, are pouring most of the money they have made over the last several years into new factories. The problem is that we are not sure that Korea needs so much new pharmaceutical manufacturing capacity, so if this strategy proves wrong many will suffer”.

The utility of these large investments will ultimately depend on the extent to which local companies are able to take advantage of the FTAs in order to penetrate overseas markets. Although Korea is a large and dynamic market, the leading local players will find it difficult to sustain high levels of growth if they limit

themselves to it, particularly as international companies gain eas-ier access. And the reality is that to date most Korean companies generate a very small part of their revenues from international sales, with some exceptions such as LG Life Sciences which has 40% of its business overseas, or Shin-poong Pharm which has special-ized in producing medicines required by developing countries. Most analysts agree that in order to see a truly global Korean pharmaceutical company emerge, market leaders such as Dong-A, Hanmi, Choongwae and Green Cross will have to overcome the limits of their ownership model and finally allow for a long over-due wave of consolidation.

The hybrid modelIn the case of Handok, one of Korea’s top 10 and fastest growing companies, the ownership structure has been its main distin-guishing and competitive factor. A long-standing joint-venture with German company Hoechst, Handok underwent numerous shareholder transformations throughout Big Pharma’s M&A frenzy since the year 2000. Although it is still owned 50% by Sanofi-Aventis today, the companies formally separated their management in 2006 and Handok operates its business inde-pendently since. Despite the successive changes, Handok experi-enced high levels of growth in the 1990s and into the 2000s, outperforming the overall market.

“I believe that the main reason for this success was Handok’s ability to be ahead of the other local companies, and even mul-tinationals in Korea, regarding scientific marketing practices”, states Kim. “Indeed, in 1986 we started to implement the first medical department in a Korean pharmaceutical company, eventually developing the biggest and best in the country”, he adds. This new approach contributed greatly to Handok’s most remarkable commercial success, AMARYL, an anti-diabetic de-veloped in-house. Handok’s track record with foreign players


Above: Yuhan Corporation’s Manu-facturing Facilities; Right: In-Chull

Kim, CEO of LG Life Sciences



and its MNC-style management have also made it a partner of choice in Korea for licensing col-laborations with companies like Nycomed, Solvay and Actellion, as well as for co-promotion with Novartis.

Something to look forward toWhen the FTAs do eventually pass ratification and come into ef-fect, Big Pharma will have plenty to cheer about besides the lower-ing of import tariffs. Although the country is already well seen in terms of its IP regulations, the US FTA will further raise the level of protection by creating a new linkage system that will make it no longer possible for a generic of a patented product to receive KFDA approval. In addition, although not explicitly addressed, the research-based companies also hope that freer trade will lead to a drop in the prices of generic drugs, which in the view of Merck’s Koenig, “are considerably higher than in most other countries, generating an imbalance between the incentive to de-velop research-intensive products or to simply do generics”.

Voices across the KRPIA also expect the FTAs to improve the situation in terms of compliance with ethical business practices. In fact, the Ministry of Health has recently declared it a priority to eradicate unethical business prac-tices in the industry, and the Korean Fair Trade Commission (KFTC) has already carried out investigations that resulted in fines, involving primarily locals but also some multinational com-panies. In this regard, Koenig, who is also the current Chairman of the EUCCK (European Union Chamber of Commerce in Korea)

Pharmaceutical Committee is organizing a seminar in May 2009 aiming to improve the skills of product managers from European, American, Asian and especially local companies.

Looking at the bigger picture, Tom Keith-Roach, CEO of AstraZeneca Korea also highlights the FTA’s positive effects on patients, “who will enjoy huge benefits from more choice, better value, and from greater transparency and fairness in competi-tive practices”, he says.


Left: Young-Jin Kim, CEO of Handok Pharmaceuticals; Right: Jeung-Soo Kim, President of the Korea Pharmaceutical Manufacturers Association

Legal advice with a side of ‘kimchi’In a dynamic country like Korea, where changes tend

to happen at a dizzying pace, the best way for a foreign company to avoid being “in deep kimchi,” which literally means “in a Korean pickle” in reference to the popular traditional spicy dish, is to seek legal advice from a firm with a long track record in dealing with both big pharma and the local courts.

Lee & Ko, one of Korea’s largest legal companies, was amongst the first in the country to have a team dedicated to the pharmaceutical, healthcare and medical sectors. Its patent specialists and attorneys with degrees in areas such as chemical engineering, pharmacy and bio-tech make it one of the preferred legal partners for the pharmaceutical sector in Korea. And with KFTC investi-gations and prosecutions on the rise, Lee & Ko is lending its litigation experience to companies in very sensitive cases in connection to ethical business practices.

“As the pharmaceutical and biotech sectors continue to grow, Lee & Ko is fully prepared and awaits to provide legal services in these sectors” says senior partner Byoung Jai Kim. Lee & Ko was recently chosen by Chambers Asia 2009 (an international legal magazine) as one of the best law firms in South Korea based on an evaluation of 11 legal practice areas. Also, 13 of its lawyers were selected in the Asia Law magazine’s ‘Lead-ing Lawyer 2008’ list.



If in terms of chemical based drugs it remains to be seen if Korea will succeed in the shift

from generics to innovative medi-cines, the country’s biotech sector appears much closer to closing the gap with the most advanced coun-tries. Over the past decade, invest-ment in biotech R&D has jumped 80% and the market has been growing at an average yearly rate of 18%. Korea has the second highest growth rate in bio-thera-peutic patent applications world-wide and its researchers’ articles are among the most featured in top scientific publications. The country is equipped with all the ingredients necessary for excellence in biotechnology: top-notch infrastructure, a high level of education, well trained and moti-vated scientists, experience with complex manufacturing, gener-ous government support and ambitious entrepreneurs.

The Korean biotech industry began to coalesce in the early 1990s with a handful of trailblazers, but it has been over the

past decade that the country has seen an explosion in both the number and specialization of startups. Leaders have begun to emerge in areas ranging from cloning and stem cell research, to novel anti-cancer therapies and bio-manufacturing. This has been possible in large part thanks to Korea’s strength in scientific research. Whereas previously the brightest minds would choose careers focused on engineering or IT, today the bio-medical field gets the best of the crop. The country has a number of top-

notch research institutions and countless startups have spun out of pioneering work done at places like Seoul National Univer-sity (SNU) and the Korean Research Institute of Bioscience and Biotechnology (KRIBB).

These bio-ventures have yet another advantage – the country’s ties to two top biotech players. Korea’s proximity to Japan and close relations with the US has facilitated investment, technol-ogy transfer and partnerships with these biotech powerhouses. Korea’s biotech has also been on the global M&A map, as illustrates the recent merger between local stem cell company Histostem and US-based AmStem, creating the largest accred-ited cord blood bank in the world. Established in 2000 by Hoon Han, a professor at the Catholic University in Seoul, Histostem specialized in umbilical cord blood stem cell re-search and by 2002 had already opened the Seoul Cord Blood Bank, allowing the company to coordinate stem cell collection, research and treatment.

A major milestone came in 2007 when the KFDA approved the use of Histostem’s stem cell treatments as a ‘surgical tech-nique’, which enabled the company to treat and collect data for numerous medical conditions through clinical studies, “to my knowledge, the only approval of its kind in the world”, affirms Han, adding that they are, “proud to be one of the few compa-nies in the world that are profiting from its own stem cells”. Through the merger with AmStem, Histostem is taking its stem cells and treatments to the United States, where they are cur-rently seeking FDA approval for further research, but is also intent on expanding across strategic locations like China and Southeast Asia. Convinced that stem cells are the ‘magic bullet’ of the 21st Century – and with AmStem now at the helm – Han believes that they will become “the world leader in supplying the biological needs of stem cell research within 2 years”.

Another local biotech success story, Medy-Tox, shows that Korean entrepreneurs are not afraid to take on established players on the world arena. Professor Hyun-Ho Jung founded Medy-Tox in 2000, as a means of extending his research relat-ed to botulinum toxin to the industrial and commercial fields. Since launching their flagship botulinum-based product –


Korean biotech ready for take-off

Left: Juergen Koenig, President of Merck Korea; Right: Tom Keith-Roach, CEO of AstraZeneca Korea

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known as MEDYTOXIN in Korea and NEURONOX internationally – on the Korean market in 2006, the company has experienced stellar growth and even managed a successful IPO in the midst of the financial crisis in early 2009.

So far, Medy-Tox has entered Japan and Southeast Asia, and is currently ex-panding in Latin America to countries such as Colombia and Brazil. “In total, we have already penetrated more than 35 markets and our main goal is to ulti-mately enter Europe and North America”, affirms Jung. He is nonetheless aware of Allergan’s domi-nant position on the global market and acknowledges that it will take time to make doctors and patients around the world under-stand that Medy-Tox is offering a high-quality and competitive alterna-tive. According to Jung, their efforts are focused on “working to build this trust gradually and look-ing forward to developing products that could not only equal BOTOX but actually also improve in certain of its weak points”.

Big Pharma is taking notice of the op-portunities lying in Korea’s biotech sec-tor, and many MNCs are establishing agreements at different levels with both academia and start-ups. Through its Global Venture Fund, Novartis has cho-sen Korea as the first country to have its own focused fund in 2008. According to Peter Jager, CEO of Novartis Korea, the fund “consists of a $20 million budget to be used to participate and explore the local venture businesses over a period of 5 years”.

Regional initiatives breeding successIn the past, the Korean government has had tremendous success with export pro-motion policies in areas like electronics and heavy industries. But now, as these sectors reach maturity and profitability declines, the focus is shifting to next gen-eration technologies. Current economic challenges seem to have only increased the bio-industry’s profile, as it is men-tioned as one of the strategic sectors that

will benefit from the Korean economic stimulus plans.

Some of the major investment incen-tives for biotech in Korea come at the regional level, from the numerous special zones and bio-clusters throughout the country. One of the most focused on bio-medicine is the GyeongGi Bio-Center, in the province just outside of Seoul. Located here is perhaps one of Korea’s most promising R&D based bio-ventures to-day, Neurotech. Attracted in 1998 by

special incentives aiming to get professors involved in the biotech business, Byoung-Joon Gwag and three other Korean col-leagues left their research jobs in the US to return to their home country, where they eventually secured government funds and created Neurotech. Thanks to the early discovery of a lead compound for stroke, based on Aspirin’s properties, the company has already completed

Phase I clinical trials of their Neu2000 medicine in the US and is preparing to carry out Phase II in Asia.

Korea’s strong fundamentals and sig-nificant government support to the bio-tech sector give Gwag confidence about the future, but he considers that the coun-try’s bio-ventures still need to find the suc-cessful model to follow. “Now all we need is to develop one global drug to show that it is possible and to lead the way for other Korean companies”, he says. Although still at an early stage, Gwag firmly believes that Neurotech can play such a role and become one of the leaders for the Korean biotech sector in the future. “We are working on unmet medical needs such as stroke and Alzheimer’s by taking basic science to the industry, communicating better at all phases of development in order to avoid translational errors”, Gwag affirms.

In terms of broader regional develop-ment projects, the new gold standard in Korea is the Incheon Free Economic Zone (IFEZ). The complex, still under construc-tion, already boasts a Biotechnology Com-mercialization Center, campuses for Korean and foreign universities, and R&D and

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Hyun-Ho Jung, CEO of Medy-Tox




The global pharmaceutical industry’s gradual shift of at-tention towards the East has brought with it a boom in clinical trial activity in Asia-Pacific. Though its regula-

tory framework kept it at the margin of this trend for some time and has it playing catch-up with countries like Singapore and Australia, Korea now looks poised to become a clinical trials hub in the region. Indeed, after realizing the importance of participating in global clinical trials for the development of an innovative pharmaceutical industry in the country, the Korean government harmonized with international guidelines in 2000 and adopted the IND (Investigational New Drug) system. This resulted in Korea’s participation in its first multinational studies that year and an exponential growth ever since.

With its focus on the health industry as a future growth engine, the government has stepped up its support of clinical trials ac-tivity through further regulatory streamlining and the creation of the Korea National Enterprise for Clinical Trials (KoNECT) in 2007. This publicly-funded entity was charged with the mission of supporting the development of the clinical trial centers in the country and to promote Korea as a hub for multinational studies. As such, KoNECT has been collaborating with Pfizer, which signed a Memorandum of Understanding (MOU) with the Korean government in 2007 expressing the drugmaker’s intention of investing $300 million over the following 5 years in R&D in the country.

“This is, to my best knowledge, the largest investment by any foreign company in Korea”, boasts Ahmet Goksun, President of Pfizer Korea. Pfizer’s investments in the country have been growing considerably in quantitative terms in recent years, but

Goksun prefers to highlight the quality of its activities which in-clude Phase II trials, “some of the most trailblazing work in areas like oncology is being done in Korea, with a heavy involvement of local opinion leaders”. He adds that “Koreans have an in-credible level of energy, can-do spirit, sense of responsibility, and pay extremely high attention to education and science”.

The steep rise in clinical trial activity in Korea has also made it a very attractive market for CROs (Clinical Research Orga-nizations), where global names such as Quintiles and Icon are bumping elbows with numerous local players that have

emerged. One of the first for-eign CROs to enter Korea in 2000 was Taiwan-based APEX , now part of PAREXEL. Albert Liou, founder of APEX and currently Corporate Vice Presi-dent and General Manager Asia-Pacific of PAREXEL, re-members the dramatic effects the regulatory changes had on global trials, but also points out Korea’s many other strong points. “Korea has many great medical centers, highly trained staff and a reasonably large pa-tient pool”, he says, adding that, “companies are coming here

Above: Asan Medical Center in Seoul, one of Korea’s leading hospitals; Right: Peter Jager,

President of Novartis Korea

manufacturing facilities for startups and multinationals alike. IFEZ is home to the contract manufacturing organization (CMO) Celltrion which is today one of Korea’s flagship biotechnology companies. Founded in 2002 by California-based

VaxGen and a group of Korean partners, Celltrion’s facilities include an R&D center and a highly automated cGMP manufac-turing plant. The company manufactures biopharmaceuticals for multinationals including Bristol-Myers Squibb and has

established a co-development agreement with MediGene. Not content to remain a CMO forever, Celltrion is reinvesting its revenues in R&D, looking to become a major player in the highly prospective bi-osimilars sector.

Clinical trials galore



basically due to patient recruit-ment and compliance, as well as the high quality research”.

As a pioneer in Korea’s bur-geoning CRO market, Liou focused on getting hands-on experience in local clinical operations and regulatory know-how, as well as aggressively establishing local networks with hospitals and in-vestigators. The beginning was difficult for Liou and the boom didn’t start until several years later, but his strategy was always preparing for the long-term spike in growth. “Our efforts have

greatly paid off and have been reflected in our clients’ recogni-tion. Currently we have about 60 clinical research experts in Korea, and I believe we’re one of the largest CROs in the coun-try in terms of size, quality, and services offered”, he says.

Now as an integral part of PAREXEL, the company benefits from a truly global reach and, compared to other international CROs, counts with more experience in the Korean market thanks to its early arrival. Liou adds that, in consequence, “we know the industry leaders and we can find the right hospital

with the right type of patients for a given study. It really does make a big difference to be able to give clients predictable time-lines, have relationships with doctors, know the culture, and understand the local business customs. Thus, operations-wise, experience-wise, and manpower-wise, we have advantages over other global CROs here in Korea”.

Korean CROs: the plot thickensADM Korea, a local CRO, has decided to look to neighboring Japan in order to boost its visibility and capabilities for multi-national trials. Founded in 2003 by Seokmin Yoon, ADM later joined forces in 2006 with Japanese CRO EPS, which now owns a 35% stake in the company. This special relationship is helping position ADM Korea to participate in global or pan-Asian trials originating from Japan, particularly since that country started allowing the use of foreign data for Phase II and Phase III trials in 2007. Specialized in Phase III clinical studies, ADM aspires to increase the part of its business related to global trials from 40% to 50% in the near future.

However, Yoon also recognizes the importance of its business from local Korean and bio-venture companies. “Having local


Ahmet Goksun, President of Pfizer Korea

When thinking big pays offBeing South Korea’s only land-locked province and

sparsely populated, one might hastily write-off Chun-gcheongbuk-do (Chungbuk) as a region destined for agri-culture and simple living. This may have been its fate if it were not for policies seeking to spread the wealth out of the Seoul area, coupled with visionary local leader-ship. Indeed, Chungbuk was one of the first provinces to actively seek to attract investments specifically from the pharma and biotech industry since the 1990s, a move that currently has it punching well above its weight.

“Nowadays, all provinces in Korea recognize biotech as a powerful growth engine, but thanks to Chungbuk’s pioneering in terms of attracting investments and in constructing the adequate infrastructure, we are clearly ahead of the rest”, states Chungbuk’s current Governor, Woo-Taik Chung. And this is not just political talk; the facts are there to prove the province’s strength. Most notably, Chungbuk completed construction of the Osong Bio Technopolis in 2007, becoming arguably Northeast Asia’s largest biotechnology location. Lured by numerous incentives, dozens of pharma and biotech companies have already committed to investing in Osong, where they will find themselves next to agencies such as the KFDA and the KHIDI.

Chungbuk is also looking to take its expertise in the field of oriental medicine to the rest of the world by hosting an international conference in 2010. According to Chung, “there is an increasing demand for oriental medicine in Western countries. The purpose of this con-ference is to help foreigners understand the particular benefits and opportunities of oriental medicine”.

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business can sustain us through contractions in the global economy, which makes us more sta-ble”, he says. In his view, some global CROs that enter Korea on a project basis often struggle to adapt when projects are cancelled or become scarce. For Yoon, ADM Korea’s, “balance in local and global studies is a very big strength for the company”.

Of the numerous local CROs appearing on the Korean market since 2000, Dream CIS has managed to take the top spot in terms of reve-nues. It grew at a moderate but healthy rate of 15% in 2008, while new orders climbed 25%. The company’s biggest clients are major MNCs, but an important part of its business is with Korean companies. “Currently we are also tar-geting local generics manufacturers and bio-venture firms, as we are looking to diversify the client base”, explains Won Jung Choi, Founder and President of Dream CIS.

Choi considers that the key to this success was the focus on quality and adhering to international standards and regula-tions. “Secondly, I realized that employee skill levels are directly correlated with the quality of our final product. There-fore, I have continually reinvested in employee training and improving the quality of our human resources. Thirdly, I focused on establishing top-notch infrastructure and IT systems. A final important point is that we have price points and customization options care-fully crafted for the Korean market”, he affirms.

Despite its recent progress, Korea still lags far behind countries like Australia and Taiwan in terms of the density of clinical trials. In Choi’s view, there are several elements still holding back the country. “From the patient perspective, the general public still sees clinical trials as unnecessary or undesirable… this weak patient demand creates an upper limit to the expansion of the industry”, he says. In terms of the companies, he finds that the local players find investigation fees too burdensome, and regarding multination-als, “there really is not enough promotion of Korea as a destination for clinical trials in the global context”.

Young Jack Lee, President of LSK Global Pharma Services, also sees challenges in areas such as human resources and some outdated regulations but overall is opti-mistic about Korea’s future in clinical trials. “Besides its own market, the coun-try is a potential gateway to the nearby giants China and Japan. In this sense, Korea can develop a very beneficial relationship with its neighbors similar to what Canada has with the United States”, says Lee.

LSK Global PS is still a small player in the Korean CRO landscape, but Lee considers that thanks to his long track record in clinical trials in the US and the team he has assembled, the company has an edge in terms of experience and manpower. Aiming to prove to multina-tional companies that LSK Global PS is ready for the job, the company is working to enhance its image and has increased its size. In Lee’s words, “we are growing and building a reputa-tion for ourselves”.

If Korea manages to maintain its attractive-ness for clinical trials and the pharmaceutical industry continues on its road to innovation, there are reasons to believe that LSK Global and other players of all sizes have bright days

ahead of them. Koreans have surprised the world more than once with their scientific and industrial prowess, and the bets are on to whether they will also become a force to be reck-oned with in the global pharma and biotech industry in the years to come.

On page S15 of our Australia report published in the November 2008 edition of Pharmaceutical Executive, Novotech does not have offices in Shanghai but in South Korea and India.

Albert Liou, Corporate Vice President and

General Manager Asia- Pacific of PAREXEL

email: [email protected]

Pharmaceuticals Korea report 2009

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Transcript of Pharmaceuticals Korea report 2009