Korea’s Fair Trade Commission is set to impose what could be heavy penalties on a number of pharmaceutical companies for violations of the country’s Fair Trade Law which relate to rebates and donations and their financial support for medical meetings, research and post-marketing surveillance.

The firms have been given until September 12 to explain their actions, and observers believe that the Commission will take these into account. However, industry leaders insist that companies should not be penalised because of the serious setbacks which they have suffered recently, especially as a result of the US/Korea Free Trade Agreement (KORUS FTA), and the Korea Pharmaceutical Manufacturers Association has asked the Commission to simply issue the firms with warning letters.

However, earlier this week a senior government official dismissed claims that domestic drugmakers would suffer under the KORUS. While Lee Young-ho, director general at the Office of Health Industry Promotion within the Ministry of Health and Welfare, acknowledged that they were expected to “face a blow, with major drug companies from the US taking a stronger hold of the local market,” he added: “I think it will be short-term losses and, in the end, the agreement will help enhance the competitive power of local drugmakers and inspire them to develop more exclusive pharmaceuticals in the future.”

The government “will help local firms to stay strong,” with policies to promote R&D and exports, and plans to inject 1 trillion won over the next 10 years to transform some local firms into global companies, said the official, adding: “I believe that the industry, in the long run, will develop into a growth engine for Korea.”

Korean agency wins court battle against Lilly

Meantime, the Korea Trade Commission has announced victory in a lawsuit brought by Eli Lilly in which the US drug major claimed that the Commission had failed to protect its intellectual property rights.

In what could be a ground-breaking decision, the Administrative Court in Seoul has upheld the Commission’s finding that there was no conclusive evidence that Lilly’s IP rights were being violated by Indian drugmaker Dr Reddy’s manufacture of the cancer drug gemcitabine (Lilly’s Gemzar). The US firm had said that the Commission should have taken action against local companies Korean United Pharmaceutical, Kwangdong Pharmaceutical, Shinpoong Pharmaceutical and Yuhan for using the Indian version. By Lynne Taylor