South Korea is a rapidly growing pharmaceutical market. Previously considered a developing economy, this country was reclassified
as a developed economy in 2010, though it is still considered an emerging market. In recent years, South Korea's high growth
rate has continued amid worldwide economic downturns and is expected to continue in years to come. It is estimated to be the
fastest growing developed market in the world. Other characteristics, such as recent free-trade agreements strengthening intellectual
property rights and an aging population, make the market attractive for multinational companies. There are, however, considerable
challenges. While South Korea's overall economy has outpaced other countries in the years since the worldwide economic downturn,
rapidly rising healthcare costs caused the government to cut drug prices in 2011. Because the government is the single payer,
this rise in costs has had a profound impact. South Korea's new president, Park Geun-Hye, has made building a safe and happy
population a centerpiece of her platform. As a result, the Ministry of Food and Drug Safety (MFDS) has highlighted their own
goal of becoming an international model for drug safety.
The bio-pharmaceutical business outlook in South Korea remains positive. (JASON TEALE PHOTOGRAPHY WWW.JASONTEALE.COM/GETTY
South Korea health and pharmaceutical market overview
The International Monetary Fund (IMF) considers South Korea to be a "graduated" developing economy, with the 15th highest gross domestic product (GDP) per capita worldwide and the 12th highest purchasing power parity (PPP). It is now the fourth largest healthcare market in the Asia-Pacific region, following
Japan, China, and Australia (1). According to the Korean Pharmaceutical Traders Association, Japan and China are also the
largest buyers of exported drugs from South Korea (2).
Over the past four decades, South Korea's population has consistently migrated from the countryside to cities, especially
the capitol, Seoul. With 9.8 million inhabitants at the last census in 2005 and more than 24.5 million people in the surrounding
areas, Seoul is the most densely populated city in the OECD. The population is one of the most ethnically homogeneous, but
low birth rates and a rapidly aging population have resulted in increasing immigration since 2000, largely from other Asian
countries, with government projections that the immigrant population could be as high as 6% in 2030 (3). The government has
also created incentives for fertility and adoption in recent years to balance the rapidly aging population.
Population demographics have two particular implications for pharmaceutical companies looking to expand in the region: first
the labor participation rates of the Korean population will decrease, and second, the aging population will face greater health
Healthcare is paid for by National Health Insurance (NHI) with financing help from employee/employer contributions and is
compulsory. Eligibility extends to all residents of South Korea, regardless of their nationality. This program does require
copayments for pharmaceutical products, set at 35–40%. Because the copay is a percentage, some individuals also purchase private plans to offset additional costs in the case
of expensive diseases such as cancer.