Big research budgets aid Korean bio medical sector growth

The South Korean government has rolled out several measures to develop the nation as a global biotech and medical industry hub

Pharmaceutical companies spent about $2.4b on research and development in 2019

SOUTH KOREA

South Korea’s biomedical research and development sector will continue to flourish, owing to growing investments by the government, according to a report from Fitch Solutions. The country’s highly effective regulatory environment and advanced medical infrastructure are also fermenting the sector’s continued growth..

The report noted that the country’s government remains committed to the strengthening of the domestic pharmaceutical and healthcare system, with a view to bringing more novel drugs to the market to meet the needs of the country’s ageing population.

To this end, the South Korean government has rolled out several measures to develop the nation as a global biotech and medical industry hub. The ongoing business transformation amongst South Korean companies towards drug discovery will also see the introduction of more innovative treatments, the report stated.

“Moreover, South Korean firms have made significant investments in R&D as they seek to shift away from their traditional focus on generic drugs. Spurred on by government incentives such as subsidies and tax breaks, the ratio of R&D spending to sales has increased among South Korean drug manufacturers.”

At the same time, prospects for South Korea’s pharmaceutical industry are expected to remain bright. In December 2020, South Korean drug and biopharmaceutical companies recorded stellar performances amidst the pandemic.

Back in December 2017, the government and pharmaceutical firms first announced their plans of investing 3.5t won or USD3.2bn into R&D in the pharmaceutical sector by 2022 as compared to 1.7t won (USD1.5bn) invested the year before.

The surge was attributed to large investments in developing new drugs and expanding production facilities. The 113 listed pharmaceutical companies’ spending on R&D rose 7.6% YoY to $2.4b (KRW2.6t) in 2019.

In 2019, the government declared bio-health as a national vision, aiming to capture 6% of the global pharma and medical device market. It has since ramped up related exports to $50b, and is working to foster its bio-health sector as one of the nation’s mainstay export industries by the year 2030.

CHARTIST: TAIWAN’S AGEING AND SHRINKING POPULATION TO IMPACT HEALTHCARE SPENDING

Taiwan continues to age but fertility rates are starting to decline as well and that may lead to higher costs of care and an increase in healthcare utilisation.

Fitch predicts the rise of healthcare spending in Taiwan, with universal health insurance as the main driving force. However, as working age people able to pay the NHI premiums decrease, the government may be forced to drive up the cost even further.

“At the start of 2021, the government raised premiums from 4.69% to 5.17% and supplemental premiums from 1.91% to 2.11%. Even with the increase, the NHI administration projects the reserve fund will be exhausted by 2023,” Fitch Solutions advised in its report.

Taiwan’s healthcare spending

Sources: Fitch Solutions

Taiwan’s pharma sales

Source: Fitch Solutions