JEJU-DO < invest Korea

Japan's pharmaceutical market is the third-largest in the world after the US and China, worth approximately USD 86 billion, which is 10 times larger than that of Korea. Ohsong Pharm Co., Ltd. is the "first" Korean pharmaceutical company to have applied its one and only business model in this huge Japanese market. Today we are introducing Ohsong Pharm, the Korean pharmaceutical company that turned its eyes to the emerging blue ocean market, away from the Korean market that is about to be saturated and has been plain sailing ever since.

"Ohsong Pharm mainly deals with penicillin injections. The Korean market for this product is unlikely to grow further, which means that we will be maintaining the status quo unless unexpected changes occur. In order to reform this profit structure, we decided to focus on the Japanese pharmaceutical market that is ten times the Korean market."
Hyunna Yoo, Director of the Management Division, explained why Ohsong Pharm chose to advance to Japan.

The main business of Ohsong Pharm is contract manufacturing of pharmaceutical products and quality maintenance as a CMO (Contract Manufacturing Organization) of Japanese companies. The company has successfully settled down by steadily building trust in Japan for 10 years, a market widely known for its tricky requirements.

After establishing a subsidiary named Brio Pharma Co., Ltd. in Japan in 2017, the company has obtained a manufacturing license and is expanding its foothold in Japan. "Even Japanese companies face struggles in complying with the regulations of Japan. But we can work with Japanese companies, as Brio Pharma obtains the required licenses in Japan on our behalf . Furthermore, for Korean companies that plan to advance into the Japanese market, Brio Pharma provides consulting services regarding profit structures and difficulties in exports," said Director Yoo.

Ohsong Pharm, which is a coordinator between Korea and Japan, gave rise to a business model not seen before in Korea. This business model is reflected in the footsteps of Brio Pharma. Brio Pharma is the first Korean company to have filed an application for four products with the Pharmaceuticals and Medical Devices Agency of Japan (currently pending approval), something that no Korean pharmaceutical company has ever accomplished.

Osong Pharm was initially not located in Jeju Island. When discussing the relocation of the headquarters in 2011, the most likely candidate was Cheonan, Chungcheongnam-do, where the affiliated factory was located, and Jeju was not an option. "However, because the Representative Director had a particularly good impression of Jeju, we decided to relocate our headquarters to the island," said Director Yoo. The company was relocated to Jeju Island in January 2013, and in October of the same year, it built an office building in its current location and settled down.

Although there were numerous advantages of moving to Jeju, such as the natural environment and a better work environment, the difficulty of hiring talented people remained unsolved. As Ohsong Pharm is a pharmaceutical company, the required job skills are very specific: English proficiency, basic knowledge in pharmaceuticals, proficiency in Japanese, and basic knowledge in licensing regulations to handle affairs in Japan.

Director Yoo was aware that there are not many talented people nationwide who are equipped with all the skills required. That is why Ohsong Pharm continues to provide on-the-job training to its employees after they are hired. "But after employees receive training and become talented enough to work at Ohsong Pharm, they soon moved to another company," she added. Thus, a talent suitable for Osong Pharm is also a talent attractive to other companies.

"We hope to solve such problems with the help of Jeju. In fact, we are about to sign an MOU with the College of Pharmacy of Jeju National University. The collaboration will lead to a virtuous cycle where students of Jeju National University learn the business know-how of Ohsong Pharm, while Ohsong Pharm can tap into a pool of talented students," Director Yoo explained. Thus, just by preventing the outflow of highly educated manpower from Jeju, the city will be able to secure a sound growth engine.

Ohsong Pharm stood out in Jeju as well. It was designated as a small-giant local company of Jeju and has received R&D subsidies for the past three years. It was also selected as a global small giant company in 2020. However, the path to making such achievements has not always been easy. Although Ohsong Pharm satisfied all the requirements, the fact that it was registered as a "wholesale" business caught up with the company. According to the industrial standards of Korea, Ohsong Pharm only fell under the "wholesale business" category even though it engaged in a series of high-added value business, from making sales in Japan, manufacturing in Korea, and then exporting products back to Japan. Thus, relevant authorities were reluctant to provide R&D subsidies to Ohsong Pharm that is registered as a wholesale company.

"Nonetheless, we did not sit idly by. We went to meet relevant authorities to explain and provide presentations on the business structure of Ohsong Pharm, but we were not selected for the first few times," explained Director Yoo. Then how did the company win the title as the small giant local company of Jeju? One possible reason is that a growing number of people – though not everyone – appreciated the company's new business model.

As Ohsong Pharm is a coordinator, it does not have its own laboratory or factory. From an administrative perspective, the company is unlikely to receive any R&D or development subsidies. Since a business model such as that of Ohsong Pharm is unprecedented, the authorities would have found it difficult to understand its significance. However, the value of Ohsong Pharm was ultimately recognized by Jeju, as it was selected as a global small giant company. The company plans to strengthen its current business activities and expand its reach to regenerative medicine and medical devices. Ohsong Pharm looks forward to the day that Jeju Island further flourishes with the company's unique business model.