Toward competitive pharmaceuticalsLately, the pharmaceutical industry has been highlighted as a next-generation growth engine. The pharmaceutical industry is attractive. The global market size is 1.2 quadrillion won ($1 trillion), two to three times that of the automobile and semiconductor markets. With an aging population, demand for the treatment of various illnesses increases, and the added value of the industry grows. As competition is intense and products require long development periods, we need to approach the industry with long-term perspectives.
Korea’s pharmaceutical industry is 14th in the world. However, it lacks global competitiveness, as we have focused on quantitative growth with generic products rather than qualitative growth with innovative new drugs. In order to become a pharmaceutical power, innovative new drugs should be developed and succeed in the global market. We are at the starting line. What matters now is which direction we run toward.
First, the competency of pharmaceutical companies is important. The key is the ability to develop innovative new drugs. However, it requires major investment over years, so there are limits to a company promoting the entire development process.
Therefore, global pharmaceutical companies engage in open innovation. Rather than each company developing drugs from beginning to end, a number of companies open their calibers to pursue joint projects.
Korean pharmaceutical companies with relatively smaller funding can experience success at a different level by utilizing the open innovation of exporting technologies and research outcomes to global companies. Hanmi has made a series of successful technology exports in this context.
Second, it is necessary to prepare an environment that encourages open innovation. In developed countries, the need for a new drug development community was recognized early on, and companies, government agencies and academia created pharmaceutical clusters.
Companies, universities, hospitals, clinical institutions, venture companies and investors are linked together to speed up research, evaluation and clinical trials. Now, Korea desperately needs systems and assistance to encourage active participation in bio clusters.
Lastly, the government needs to have a will to create a good cycle of collaboration and execute the plans. Government policy has tremendous impact on the pharmaceutical industry. Incentives can be offered to allow pharmaceutical companies to develop innovative new drugs, and restrictive regulations should be relaxed or removed.
It is inspiring that the government is eager to help the development of the pharmaceutical and bio industries. However, government programs like preferred medicine charges may not be realistic for global companies. Of course, it is hopeful that the government is working in cooperation for open innovation and enhancement of global competitiveness. Let’s hope for more specific measures such as research and development incentives, fair drug pricing systems and boosting plans that meet global standards for exports.
Chairman of the Korean Research-based Pharma Industry Association and CEO of Janssen Korea