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Regulator approves antibiotic for sale in U.S.

A locally developed antibiotic for treating MRSA infections received a permit yesterday from the U.S. Food and Drug Administration (FDA), making it only the second Korean medicine approved by the agency.

In the United States, Dong-A ST, which developed the drug, Sivextro, expects to make annual sales of about 300 billion won ($293 million) from license royalties and technology support from Cubist Pharmaceuticals, its U.S. producer and distributor.

Sivextro, whose chemical name is tedizolid, is used to treat infections of the super bacteria Methicillin-resistant Staphylococcus aureus, or MRSA, which enters the body through open wounds and can penetrate deep beneath the skin.

Sivextro is expected to be granted a permit by 2015 from the European Medicines Agency (EMA). Once granted sales permission, Cubist will expand distribution of Sivextro to Canada and Europe.

The overseas success of a locally developed drug is rare in the pharmaceuticals industry, which is hindered by its tendency to rely solely on the domestic market.

The industry is worth about 15 trillion won, but is made up of small companies, with none recording annual sales of more than 1 trillion won.

The nation’s top 20 pharmaceutical companies’ operating profit recorded an average of 8.6 percent in 2012, compared to the United States’ 26.1 percent, Europe’s 21.9 percent and China at 21.2 percent.

The Korea Health Industry Development Institute wrote in a report that “pharmaceutical companies in the U.S. and Europe maintain an operating profit of higher than 20 percent largely because they produce products based on their own patented source technologies.”

Although LG’s Factive, the first Korean drug to receive a patent from the FDA, is sold in more than 30 countries, with about 90 percent of total sales made overseas, the Korean pharmaceutical industry’s overseas market is largely limited to Asia. According to data compiled by Korea Pharmaceutical Traders Association, Japan was the industry’s biggest customer in 2011, purchasing drugs worth $375 million, followed by Vietnam at $162 million, China at $137 million and Turkey at $86 million.

Experts say that low sales are a reflection of the limited investment that Korean pharmaceutical companies put into research and development (R&D). In 2011, Korean companies spent $2 billion on R&D, one-tenth of what was spent by Japanese companies. On average, companies in other countries spend a few hundred billion dollars on research per year.

“Developing new drugs is a task that Korean companies must carry out in order to continue growing in the global pharmaceutical market, which is worth a few hundred trillion dollars,” said Lee Kyeong-ho, president of the Korea Pharmaceutical Manufacturers Association. “Like pharmaceutical leaders such as the U.S. and European countries, the Korean industry also needs a lot of support from the government.”

BY PARK SU-RYON, KIM JI-YOON [jiyoon.kim@joongang.co.kr]