South Korea’s pharmaceutical market was worth around $9.9 billion last year and will grow around 3.5% annually to 2013, reaching a value of $15.1 billion by the end of that year, says a new report.

Combined sales of prescription and over-the-counter (OTC) medicines in South Korea – the fourth largest pharmaceutical market in the Asia Pacific region, behind India and ahead of Australia – rose 5.4% last year, or 9.6% in local currency terms, says the study, from Business Monitor International (BMI). By the end of 2018, the market should be worth $19.4 billion, driven by factors including the country’s aging population, high pharmaceutical expenditure ($204 per capita per annum) and relatively stable regulatory structure, plus the Free Trade Agreement (FTA) which it concluded with the USA on April 1, 2007,

However, several significant legal clouds hang over South Korea's pharmaceutical industry, it adds. Firstly, allegations of companies paying bribes to doctors to prescribe their medicines have implicated many local companies. For example, the Korea Times has reported that Auh June-sun, the president of the Korea Pharmaceutical Manufacturers Association and chairman of Ahngook Pharma, is among the accused.

Secondly, the National Health Insurance Corporation (NHIC) has announced the launch of legal action against over 100 pharmaceutical companies that it suspects of selling almost 300 unlicensed products, claiming that it has had to pay for drugs that lacked data demonstrating effectiveness. Leading local drugmakers are among those from which it will seek damages worth a total $99 million.

Moreover, it was reported in April that South Korea’s drug companies spend over 40% of turnover on promotional, advertising and marketing activities. The country’s antitrust watchdog has issued several warnings that it will punish “extreme” marketing exercises, or the offer of excessive rebates to hospitals. According to the Korea Health Industry Development Institute’s 2008 Medicine Industry Report, a total of $3.14 billion was spent by local drugmakers over twelve months on activities to boost product sales, while just 5-10% of sales were re-invested in R&D.

Over-prescribing of antibacterials is also a major problem, with a survey conducted by the Health Insurance Review and Assessment Service in the first quarter of this year finding that 57.3% doctors were prescribing antibacterials for the treatment of colds, up from 56.5% who were doing so in 2007.

A total of 4,565,473 disability-adjusted life years (DALYs) were lost to non-communicable diseases in South Korea during 2008, according to BMI’s Burden of Disease Database (BoDD). This figure is set to rise to 5,018,724 by 2030, mainly due to the increased prevalence of lifestyle-related diseases such as diabetes and cardiovascular conditions. Over the same period the number of DALYs lost to communicable diseases will decrease by over 60%.

The domestic pharmaceutical industry continues to mainly focus on generics. However, the country also has a growing reputation as a location for both pharmaceutical research and clinical trials. In June, the government announced that France’s Sanofi-Aventis was hoping to find a local R&D partner by the end of the year, notes BMI.

Free swine flu vaccines

Meantime, the government Grand National Party (GNP) has announced that swine flu vaccines will be provided free to around 9.1 million people across the country, including least one million medical staff, 7.5 million school children and 660,000 soldiers, plus senior citizens, pregnant women and children aged under five. For those who are not eligible to receive it free, the charge will be $8.03 per vaccination, said a government spokesman.