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Drugmakers cut entertainment expense due to anticorruption law
  • By Park Gi-taek
  • Published 2017.08.25 16:27
  • Updated 2017.08.25 16:38
  • comments 0

Almost a year after the Act on Prohibiting Illegal Solicitation, or “Kim Young-ran Law,” went into effect, statistics show the domestic drugmakers reduced their entertainment spending.

As a result of analyzing the semiannual reports of 10 pharmaceutical companies that recorded first-half year sales of 100 billion won ($88.5 million) or more and have the entertainment expense category, the wining and dining costs sharply fell at eight corporations in the six-month period.

The entertainment costs of the 10 companies -- Yuhan Corp.유한양행, Kwang Dong Pharmaceutical광동제약, Daewoong Pharmaceutical대웅제약, Hanmi Pharm한미약품, Dong-A ST동아ST, JW Pharmaceutical JW중외제약, Dongkook Pharm동국제약, Il-Yang Pharm일양약품, Daewon Pharm대원제약 and Samjin Pharm삼진제약 – totaled 5.2 billion won in the first-half year, down 19 percent from 6.4 billion won in the same period of last year.

Yuhan Corp. recorded the steepest decline in the percentage of entertainment expenses. Yuhan spent 600 million won on entertainment in the first half of last year but slashed it by 70 percent to 180 million won this year. Following Yuhan was Daewoong, which cut reception expenses 65 percent, from 770 million won to 270 million won, and Dong-A ST, down 62 percent from 240 million won to 90 million won.

The entertainment expenses of JW Pharmaceutical and Dongkook fell from 11 million and 210 million won to 6 million won and 20 million won, respectively.

The expense of Samjin Pharm decreased 39 percent to 240 million won, while those of Daewon and Il-Yang spent dropped 32 percent and 29 percent, respectively, to 80 million won and 210 million won.

Among the big-10 companies, the entertainment expenses of Hanmi and Kwang Dong in the first half of this year increased 4 percent and 30 percent, respectively, in the first half of this year, spending 3.5 billion won and 490 million won.

Some watchers of the pharmaceutical industry think the drop in entertainment expenses could be the sign of declining sales and marketing activities.

“Over the past two to three years, the drastically strengthened adoption of the compliance program has sharply reduced face-to-face sales with doctors and the support of academic conferences, and the implementation of the Kim Young-ran Act김영란 aggravated the situation further,” an industry executive said. “Drugmakers have been seeking new ways, such as online marketing, but there will be confusion until the new systems take root in the pharmaceutical industry.”


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