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The pharmaceutical industry
Korea’s pharmaceuticalmarketstood at KRW19.291 trillion (USD 17.3 billion)* in 2013, up 0.3% YoY,and posted a five-year CAGR of 2.3% from 2008 to 2013. Given that the marketrecorded a higher growth rate than the global market until 2010, its growth pace has slowed. However, Korea’s pharmaceutical market continues on a steady growth path despite the global economic crisis.
In particular, it is notable that Korea’s pharmaceutical production increased by 4.1% YoY, to KRW16.2 trillion, in 2013, departing from a stagnant growth trend since 2010. Korea’s pharmaceutical exports posted a 2008-2013 CAGR of 13% driven by Korean pharmaceutical companies with a growing presence in theglobal market.
In contrast, Korea’s pharmaceutical imports dropped 10% YoY, to KRW5.2 trillion in 2013, contributing to a sharp decline in trade deficits.
Korea’s pharmaceutical industry employed 78,259 individuals in 2013, up 5.1% YoY, or 3,782 individuals. This marks an upturn in pharmaceutical employment, breaking from a downward trend since 2010, and indicates that business activities have recently gained momentum in Korea’s pharmaceutical industry.
Pharmaceutical researchers numbered5,437, accounting for 6.9% of the total workforce in Korea’s pharmaceutical industry.As much as 70.2% of researchers have master’s or doctoral degreesand the research workforce structurewas based mostly on higher-skilled talent. In a nut shell, Korea’s pharmaceutical industry records modest growth across the board. As Korean pharmaceutical companies have steadily sharpened their competitiveness,the Korean industry has increased exports and production volumes and fast reduced trade deficits.
Recent developments in Korea’s pharmaceuticalindustry (KRW million)
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | %YoY | 5-year CAGR | |
|---|---|---|---|---|---|---|---|---|
| Production | 13,893,810 | 14,788,387 | 15,569,588 | 15,440,251 | 15,560,663 | 16,191,845 | 4.1% | 3.1% |
| Export | 1,255,891 | 1,772,242 | 1,770,059 | 1,943,493 | 2,309,534 | 2,318,522 | 0.4% | 13.0% |
| Import | 4,319,756 | 4,953,881 | 5,108,911 | 5,447,053 | 5,728,874 | 5,155,829 | -10.0% | 3.6% |
| Trade balance | -3,063,865 | -3,181,639 | -3,338,852 | -3,503,560 | -3,419,340 | -2,837,308 | -17.0% | -1.5% |
| Market Size | 16,957,675 | 17,970,026 | 18,908,439 | 18,943,812 | 18,980,003 | 19,029,152 | 0.3% | 2.3% |
Biotech industry
Korea’s biotech industry stood at KRW 7.52 trillion in 2013, up 5.3% YoY,in terms of domestic sales and exports, and posted a high CAGR of 8.9% from 2009 to 2013.
In terms of production value, the bioengineered food segment is the largest contributor, with annual production of KRW 3.21 trillion in 2013, accounting for 40% of the biotech industry. The second-largest contributor is biopharmaceuticals, with annual production of KRW 2.78 trillion. Biochemicals and other biotech segments are small in terms of absolute production value but expand at a fast pace, raising expectations that they will represent an increasing share of the biotech industry’s production.
Korean biotech industry production (domestic sales + exports) (KRW million)
| Year | Production | Total | Biopharmaceuticals | Biochemiclas | Bioengineered food | Other |
|---|---|---|---|---|---|---|
| 2011 | Domestic sales | 3,646,896 | 1,506,329 | 355,684 | 1,065,8343 | 719,049 |
| Export | 2,749,356 | 954,412 | 74,783 | 1,531,965 | 188,195 | |
| 2012 | Domestic sales | 4,068,644 | 1,577,572 | 408,226 | 1,261,325 | 821,521 |
| Export | 3,060,585 | 1,139,980 | 97,173 | 1,610,631 | 212,802 | |
| 2013 | Domestic sales | 4,357,396 | 1,636,942 | 451,091 | 1,338,933 | 930,430 |
| Export | 3,166,435 | 1,138,462 | 111,110 | 1,682,131 | 234,731 | |
| %YoY | Domestic sales | 7.10% | 3.76% | 10.50% | 6.15% | 13.26% |
| Export | 3.46% | -0.13% | 14.34% | 4.44% | 10.30% | |
| 2009-2013(CAGR) | Domestic sales | 10.64% | 1.14% | 14.73% | 47.36% | 11.51% |
| Export | 3.79% | -1.50% | 12.28% | 23.53% | -10.84% |
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.
By segment, the biochemicals segment posted the fastest growth, at 8.5% YoY. Of other biotech segments, the bioelectronics and bio-environment segments recorded a high growth rate of 53.8% YoY and 9.6% YoY, respectively, although their respective domestic sales were relatively low, at KRW 37.3 billion and KRW 30.3 billion.
In terms of domestic sales, biopharmaceuticals are the largest segment, accounting for 50% of the biotech market. However, biopharmaceuticals recorda slower growth rate than other segments, while bioengineered food and biochemicalsmarked higher growth rates. The biotech market is expected to grow beyond biopharmaceuticals to include diverse segments such as biochemical, bioengineered foodand other biotech segments.
The number of companies in Korea’s biotech industry increased by 13, from 958 in 2011 to 971 in 2012, marking an upward trend. By segment, the number of biotech companiesincreased in the biopharmaceuticals, biochemicals and other segments but slightly declined in the bioengineered food segment.
In 2013, the number of people employed by biotech companies stood at 38,197, marking an increase of 627 individuals from 2012. In other words, the average number of employees per biotech firm stood at 39.3.
The number of researchers amounted to 11,605 individuals, or 30.4% of the employees in Korea’s biotech industry. 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.
Industry Outlook
The global pharmaceutical and biotech markets have steadily expanded thanks toan aging population and growing awareness of healthy lifestyles worldwide.
The global pharmaceutical industry expanded 2.4% YoY, to USD959 billion in 2012, and posted a high CAGR of 5.3% from 2007 to 2012. The growth rates are relatively low compared to the pre-crisis growth rate of about 8%. However, the global pharmaceutical industry has continued on a steady growth path despite a global economic slowdown, as national healthcare spending and demand for healthcare have increased amid aging populations in Asia.
The global biotech market amounted to USD1.18 trillion in 2012. This global industry is one of the most promising and expected to reach USD1.57 trillion in 2015, with a 2010-2015 CAGR of 9.7%.
The future development of the pharmaceutical and biotech industries is expected to be led by technology convergence-driven newindustries, such as BIT.
Size and growth outlook of the global biotech market
| Year | Value (USD billion) |
Growth rate (%) | |
|---|---|---|---|
| %YoY | CAGR | ||
| 2010 | 987.2 | 9.1% | 9.7% |
| 2011 | 1,079.0 | 9.3% | 9.7% |
| 2012 | 1,181.5 | 9.5% | 9.7% |
| 2013 | 1,298.4 | 9.9% | 9.7% |
| 2014 | 1,434.7 | 10.5% | 9.7% |
| 2015 | 1,572.4 | 9.6% | 9.7% |
The “ubiquitous” healthcare industry has emergedthanks to IT-related innovative technologies, creating new medical device markets such as portable diagnostic devices for remote health monitoring, remote consultation and remote treatment. The personalized healthcare market is estimated to reach USD63.9 billion in 2015, from USD33.7 billion in 2010.
Thanks to dramatic technological developments in DNA analysis, key product categories will include chips and diagnosis kits based on DNA sequencing and protein analysis.
The preventive medicine segment, such as the introduction of biosensors and biomarkers, is expected to develop thanks to growing demand for products that enable fast diagnosis and early detection,for disease prevention. The development of personalized target therapy and companion biomarkers (companion diagnostics) are expected to emerge as a new business model for the pharmaceutical industry.
The industry shift from one-size-fits-all products to personalized treatment products should be accelerated.
Medicinal treatment and management will take into consideration personal genetic information and physical traits, departing from the practice of applying the same treatment to all patients. In this regard, development of the single-nucleotide mutation search, precision diagnosis and monitoring segments will enable drug response prediction and help establish a system to fend off trial and error and side effects in advance.
By Moon, Hey-seon
Research Fellow/KIET Leading Industry Research Division
hsmoon@kiet.re.kr
The above article does not necessarily reflect the views or position of KOTRA.