Domestic pharmaceutical companies are accelerating their moves to enter the so-called pharmerging markets, meaning developing nations such as Brazil and Mongolia where the pharmaceutical demand is surging.
An early entry into rapidly growing pharmerging countries will be an opportunity for Korean drugmakers to secure the markets first and raise their brand awareness, analysts said.
Samil Pharmaceutical and Il-yang Pharmaceutical have made the foray into Mongolia.
The Mongolian pharmaceutical market was worth 160 billion tugriks ($66.3 million) in 2015, according to the Ulaanbaatar Office of the Korea Trade-Investment Promotion Agency (KOTRA). About 80 percent of the nation’s total medicine demand relies on imports from 57 countries. Korean drugs are quite popular among Mongolians, as Korea ranks eighth among the 57 drug exporters concerning the export volume.
Il-yang Pharm exports peptic ulcer treatment Noltec, and Dongwha Pharm, digestive drink Whal Myung Su, to Mongolia. Samil Pharm established a joint venture with a Mongolian firm, and Dong-A Pharmaceutical set up a factory, in the landlocked country.
Brazil is another pharmerging market.
Brazil’s healthcare spending ratio to the gross domestic product (GDP) went up from 8.69 percent in 2011 to 9.48 percent in 2018, according to estimates by the Korea Pharmaceutical and Bio-Pharma Manufacturers Association (KPBMA). The Brazilian government’s spending on healthcare out of the total expense also rose from 47.3 percent in 2011 to 50.6 percent in 2018.
Multinational companies account for 70 percent of all the 550 registered pharmaceutical firms in Brazil. As Brazil is highly dependent on imports, Korean drugmakers pick the nation as an attractive market.
Foreign pharmaceutical companies must register with the Agencia Nacional de Vigilancia Sanitaria (ANVISA) to sell drugs in the country.
They can also indirectly export their medicines by selling the products to ANVISA-registered importers.
Rather than establishing a local subsidiary and pursuing ANVISA registration that takes at least one or two years, Korean firms are seeking a partnership with a certified domestic drugmaker to enter Brazil.
JW Holdings exports three-chamber nutritional IV solutions to Brazil, and Daewoong Pharmaceutical, botulinum toxin Nabota.
GC has recently signed a deal with the Brazilian government to supply immunoglobulins.
Indonesia is also one of the attractive markets for pharmaceutical firms.
According to Heo Yu-jin, an official at the Jakarta Office of the KOTRA, pharmaceutical demand in the country is rising on the back of the government’s policy to improve medical infrastructure.
The better health insurance system has made lower-income earners receive hospital care without financial burdens, and the Indonesian government boosted the healthcare budget significantly.
As the government allocated 106.1 trillion rupiahs ($7.9 billion) in the healthcare sector in 2016, a whopping 43 percent year-on-year increase, Indonesia has become a representative pharmerging market.
Korean drugmakers such as Chong Kun Dang, Dong-A ST, and Daewoong Pharm have established business entities in Indonesia.
Chong Kun Dang set up CKD-OTTO Pharmaceutical, a joint venture with local firm OTTO. Dong-A ST signed a memorandum of understanding with mid-sized Indonesian drugmaker Combiphar. Daewoong established a biotech research lab in the country.
“Korean products targeting infants and young children are popular in pharmerging markets because they are competitive both in quality and price,” said an official in charge of global businesses at a drugmaker. “Pharmerging markets will be a Blue Ocean for Korean drug firms for growth.”