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Energy Boardroom

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– Lee Kyeong-Ho, Chairman and CEO – South Korea

Lee Kyeong-Ho, Chairman and CEO, KPMA (2)The Korea Pharmaceutical Manufacturers Association (KPMA) is Korea’s oldest association for pharmaceutical companies, with a history dating back to 1945. Lee Kyeong-Ho, chairman and CEO of KPMA, describes the need for Korean pharma companies to invest in innovation through collaborative efforts with the support of government initiatives.


Could you describe your background and KPMA’s main priorities?

My background consists primarily of government work. After 28 years working in the Ministry of Health and Welfare, I moved to the government-affiliated Korea Health Industry Development Institute for three years. I then spent four years working at the University of Inje, near Busan. In 2010, I became the chairman of KPMA.

KPMA’s first priority is to create a Korean comparative product. This means a new, innovative drug that is developed entirely in Korea. In order for this to happen, we need greater investments in R&D. Secondly, as the domestic market is not so large, the production capability for the Korean domestic industry is already beyond its capacity for this market. Therefore, we need to develop our foreign market. We are also finalizing changes to our business ethics. Changing the environment to become more transparent and ethical is a big issue. Finally, my personal objective is to make at least five Korean pharmaceutical companies to join the ranks of global multinationals.

What are the most important steps to facilitate the process of creating such a company, as well as creating an innovative drug?

It depends on the leadership and ownership of each company. All of our priorities depend on that. I continuously talk to our member companies about what we must do to develop and maintain the sustainability of our industry. More active support is also important in terms of governmental policy. Over the last few years, we have had a very hard time. Strict pricing policies have had a big impact on the pharmaceutical industry in Korea. KPMA is in constant discussion as to what we must do to overcome this unfortunate situation. Essentially, by investing more in R&D, increasing foreign business, and changing our business environment to complying with global business ethics and standards, pharmaceutical companies in Korea can overcome this situation. KPMA continuously provides symposia, forums, and seminars regarding new drug development and how to perform successfully in foreign markets. We need the information to provide to our members about what is going on in the world in terms of the global market, regulatory schemes or changing environment.

In terms of business ethics, KPMA revised its official guidelines for its member companies this year for the first time in 20 years. This revamp accounts for new trends regarding business ethics. For example, the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) has leading guidelines in terms of business ethics, and the Mexico City Principles as outlined by  the Asia-Pacific Economic Cooperation (APEC) provides new guidelines for codes of conduct in the pharmaceutical business. KPMA has adopted these concepts, philosophies and new principles, and thus revised its business ethics guidelines in July 2014.

What has been the effect of investment by Korean manufacturers to upgrade their existing facilities to cGMP levels?

Of course this is not an easy situation, but exports are increasing and the upgrading of Korean facilities certainly helps. Korean companies are making the effort to comply with cGMP guidelines, and the basic purpose of updating manufacturers’ capacity to cGMP is essentially for customers. The Korean Ministry of Food and Drug Safety has also ensured that its regulation is up to global standards now. KPMA members must do the same, and many Korean companies have invested a great deal for the upgrading their production facilities. Now, companies behind cGMP levels have no choice but to request other qualified facilities to produce theirs. Therefore, I can say that these days all the Korean products are made in manufacturing sites that comply with cGMP guidelines.

The US Free Trade Agreement (FTA) has certainly helped to remove some barriers as well, but the number of US imports to Korea has increased. What strategies have local companies taken to counterbalance this increase?

Exact figures on changes in terms of imports and exports are difficult to calculate. But in general, the pharmaceutical area has not been affected too much by changes in custom tax. In fact, there is almost no change. New drugs come into Korea targeted for the country’s healthcare system regardless of what the US FTA has changed. However, once the system of separating prescription and dispensing was implemented in 2000, the portion of imported originator drugs certainly increased. Before that, domestic companies had around 70 percent market share whereas today it is closer to 60 percent. Patented drugs have been slowly increasing over time, starting before this agreement, and not just from the US but from Europe as well. The implementation of the patent approval linkage as outlined by the Hatch-Waxman Act of the US was a big issue. The Korean industry was against it, but regardless it will be in place as of next year. I believe, however, that this impact can also be an opportunity to stimulate Korean pharma companies to increase their efforts in investing in the development of New Drug and Patented Drug of their own through aggressive R&D.

How important is the generics industry for the Korean pharmaceutical industry today?

Korean generics are still a major supplier of the whole expenditure for the national insurance scheme covering about 40 percent of the total market. But these companies are changing their strategy. Of course they are still very much focused on generics, but simultaneously they try to implement innovation into their portfolio, allocating a great deal of their budget for this activity with relatively successful results, albeit only within the domestic market.

Nevertheless, it is impressive to see companies that have always focused on generics can invest in R&D and still succeed.

Indeed, Korean companies have already put 21 new drugs on the market. This is considered to be a successful experience in a short period of time. Having only really started in the innovative area since the late 1980s, the Korean pharmaceutical industry has already received two approvals for antibiotics and one IMD approval for anti-ulcer agentfrom the US FDA, manufactured by LG Life Sciences in 2003, Dong-A Pharmaceuticals in 2014 and Hanmi Pharmaceuticals in 2013 respectively. Boryung has also enjoyed a number of successes in various overseas markets such as Mexico, South America, Russia and China with its new drug “Kanarb”.

Kang-Choo Lee of KRDA said he wanted all 55 of his member companies to develop a new drug in five years. Do you believe this goal is achievable?

We all sincerely hope that this can happen. I can see that through more confidence, as well as a change in ownership and leadership mindsets, this goal can be achieved. I believe that this is an important factor for success. All 55 members of KDRA are also members of KPMA too.

Korea is in a unique position in terms of new drug development. Korean companies have an interesting experience to develop innovation, but not game-changing innovative new drugs because it requires significant money and manpower that we do not have enough yet. Nevertheless, we do have successful experience in creating incremental innovation, and this has been an excellent experience for Korean companies. In some cases, multinational companies are interested in such products, which are usually successful in the Korean market. For example, Hanmi Pharmaceuticals has had several success stories in which they have modified innovation in the area of hypertension. They were then approached by MSD to co-market these products. With these kinds of collaborations, pharmaceutical companies in Korea have enjoyed great success. I think that Korean companies have very high-quality manpower compared to other developed countries like the US or EU in terms of cost and even attitude, and for a small country we have excellent resources for new drug development. To make this happen however, we need to pull all those resources together to focus on a specific new drug development. The private and public sector must convene and allocate capital and resources together for developing new drugs. We should implement a strategy similar to the National Health Institute in the US, which recently announced new drug targets by which they gathered industries and academia together to provide a primary fund from the government. I understand that rationale, and we need those kinds of systems in Korea too. Right now the Korean government does support an R&D fund here, but the operation is split across three different ministries. I have proposed to the government for the creation of one “control tower” that oversees all resources for implementing new drug development.

What are the objectives for KPMA by 2020?

The government has its own initiatives planned for 2020, through their “Pharma Vision”. KPMA is also doing its best to help achieving this goal of “One of the Top 7 Pharmaceutical Powerhouses with 10 Global New Drugs”. But from our side, for the next five years we would like to see at least three or four new Korean-made drugs obtain US FDA approval. There are some very promising candidates currently undergoing clinical trials in the US, and we anticipate approval from the US FDA in the coming years. Once this approval is granted, we can sell these medicines across the world. This means we can get potential marketing power to go for the worldwide market, and it also stimulates other Korean companies in terms of competition. We would also like to focus on expanding our market access in pharmerging markets including China, Brazil, Mexico, Russia.


To read more articles and interviews from South Korea, and to download the latest free report on the country, click here.



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