[Desk’s View] Respect Korea's generic drug industry

its specificity built the foundation for self-sufficiency of finished drugs in Korea

 The Korean pharmaceutical industry is characterized by generic competition upon the original drug’s patent expiry.

 

When a new drug's patent expires, companies develop products that contain the ingredients for marketing.

 

Combination drugs, reformulated drugs, and generic drugs containing patent-expired drug ingredients are the weapons of domestic pharmaceutical companies.

 

With more than 200 finished drug pharmaceutical companies focusing on the market for patent-expired drugs, it is indeed an inefficient industry.

 

If 10 of these pharmaceutical companies devoted to new drug development, the industry would have been bigger with be less excessive competition.

 

However, in the 100-year history of Korea’s pharmaceutical industry, the industry’s focus has always been on the development of generic drugs, not new drugs.

 

With global pharmaceutical companies such as Pfizer, Novartis, and Roche dominating the new drug market, it is unlikely that the Korean pharmaceutical industry will be reorganized into a new drug-oriented industry in the near or even distant future.

 

However, it is a self-evident fact that the generic drug industry is increasing Korea’s self-sufficiency in finished drugs.

 

According to the Korea Food and Drug Statistical Yearbook, as of 2022, the self-sufficiency rate of finished drugs in Korea was 68.7%, and the self-sufficiency rate of API was 11.9%.

 

Although we are highly dependent on foreign countries for APIs, a high proportion of the finished drugs are made in Korean factories and supplied to domestic patients.

 

The self-sufficiency of finished drugs is also high because of Korea’s generics industry foundation.

 

This is a factor that gives us a sense of stability in terms of market supply and demand.

 

If Korea’s generic industry had been dominated by foreign companies, the Korean drug market would have been unstable, being fully dependent on imports.

 

However, the excessive competition in the generic industry needs to be addressed as it leads to inefficient market conditions.

 

Illegal rebates and substandard quality are among the issues that hinder the competitiveness of the Korean pharmaceutical industry.

 

Furthermore, the inability of competition to drive down prices in the state-controlled insurance market also plays a role in the inability of this bad practice to be corrected In this regard, the key to the proper growth of the Korean generics industry depends on the creation of a normal competition system that does not break the current high degree of self-sufficiency.

 

However, it is unclear whether the state’s recent drug price reduction policies reflect this situation, especially as the government's recent external reference pricing reevaluation disregards Korea’s situation.

 

The very idea of comparing generic drug prices in 8 developed countries that have different pharmaceutical industry structures seems to be a misunderstanding or complete disregard of the Korean generic industry.

 

A unilateral drug price reduction policy will kill the domestic generic industry.

 

This is a problem that could lead to the retreat of the Korean pharmaceutical industry, which is built on generics.

 

There is no guarantee that killing the generics industry will lead to the growth of the new drug industry.

 

The recent 'Study on Improving the Drug Price System for Generic Drugs' that the government conducted to implement the generic drug price reduction policy also suggests that it is necessary to strengthen policies to encourage the use of low-priced products in the early stages.

 

If the government doesn't intend to kill the generic industry, it should prepare measures to encourage the use of low-priced generics before unconditionally lowering drug prices.

 

Korea's generic drug industry may look less sophisticated than those of developed countries that develop new drugs, but is not something to disregard.