The Strategy of Cooperation and Competition Based on Comparative Analyses of Pharmaceutical Industries of Korea and India
6 Pages Posted: 29 Oct 2013
Date Written: October 25, 2013
The Korean pharmaceutical industry has recently experienced difficulties because of the rebate issue and the Korean government's continued policy to lower drug prices. In addition, the adoption of the drug approval-patent linkage system, following the implementation of the Korea-US and Korea-EU FTAs, could lead to the deterioration of the profitability in Korean pharmaceutical companies.
Of the many risks that Korea’s pharmaceutical industry is facing, this study began out of the concerns over the possibility of the entrance into the Korean market by the Indian pharmaceutical firms. With the Korea-India CEPA, which became effective as of 2010, the possibility of the influx of cheap Indian pharmaceutical products into Korea is a potential risk factor to Korea’s pharmaceutical industry with a high level of dependence on the domestic market and generic drugs.
India’s pharmaceutical industry is a 16 billion-dollar industry (with 1.5% of the world's market share) and as of 2011, it is the world's 12th largest in terms of sales. In particular, it has been showing a remarkable double-digit growth rate since the start of the new millennium. Such growth rate far surpasses India’s overall economic growth rate and it has been demonstrating sustainable growth despite the recent economic downturn.
When compared to Korea’s pharmaceutical industry (ranked 13th in 2011, with 1.4% of the world's market share), the Indian market was smaller than Korea in terms of size. However, as of 2009, India’s pharmaceutical industry has surpassed that of Korea, and the gap continues to grow.
Notably, in terms of production quantity of generic drugs, India has about a 20% share of the world’s market. India has the most number of FDA-approved production facilities outside of the U.S., and its pharmaceutical industry has a substantially superior competitive edge as compared to its other industries.
Four of the country’s pharmaceutical companies are ranked among the top 100 in the world. When this is considered in light of the fact that none of Korea’s pharmaceutical companies are among the world's top 100, one can gauge the level of competitiveness of India's pharmaceutical industry.
Keywords: India, pharmaceutical industry, Korea-India CEPA
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