Unfortunately, external enthusiasm for the South Korean market was severely dented by the 1997 financial crisis, which led to many foreign investors selling their assets. Since then, the country has introduced major policy changes that have made it stronger and more focused than other Asian competitors; for example, South Korea's foreign-exchange reserves have been described as the second highest after Japan among the 30 international member countries that make up the Organization for Economic Co-operation and Development. This makes the likelihood of another financial crisis reminiscent of 1997 unlikely.
As the country's economy has rebounded, so too has foreign interest. This was highlighted by the decision to hold the 2006 International Conference on Pharmaceutical Medicine (ICPM) in Seoul, South Korea's capital?— the first ICPM meeting to have been held in the Asian region.2Driving foreign interest
The new system has created considerable opportunities for foreign companies as there is strong demand from the population for new medicines. At present, pharmaceuticals account for approximately 30% of healthcare expenditure in South Korea.1 Estimates of the value of the country's pharmaceutical market vary, but Business Monitor International has predicted that it will reach $21.6 billion (€13.7 billion) by 2011.4
A major attraction for pharmaceutical companies is the separation of medical prescribing and dispensing, which was a key reform of the South Korean healthcare system in July 2000. This process marked a shift from dispensing doctors to a retail pharmacy market and was strongly resisted by physicians, who had traditionally derived a large proportion of their income from pharmaceuticals.
These measures appear to have benefited multinational pharmaceutical companies, which are dominating the market,1 and South Korean consumers are now more aware of branded medications. As foreign companies tend to introduce the latest breakthrough medicines, they have had the most success. In contrast, many local companies have become so reliant on income streams from the government for generic drugs that they have little desire to innovate.