The Korean pharmaceutical industry is facing limits to its domestic growth and is rapidly transitioning to an export-driven model. With ongoing price reductions and market stagnation making it difficult to expand domestic sales, the performance of companies is increasingly reliant on global drug sales and royalties.
According to industry reports, the first quarter of this year saw mixed results for pharmaceutical companies, with those heavily reliant on exports showing significant improvements, while companies focused on domestic markets struggled to grow.
However, the domestic market has structurally limited growth potential. The government's ongoing price reduction policies and intensified competition in generics are making it increasingly difficult to secure profitability. There is a growing recognition in the industry that the existing domestic and wholesale-centered structure cannot sustain long-term growth.
In this context, success in the global market and royalty income have become the core pillars of performance. Yuhan Corporation has seen significant profitability improvements from overseas sales and royalties of its non-small cell lung cancer treatment, Lurbinectedin. GC Pharma is accelerating its expansion in North America with its immunoglobulin product, Aliglo. SK Biopharm is transforming its performance structure with the U.S. sales growth of its epilepsy drug, Cenobamate, while HK inno.N continues its stable growth thanks to the overseas expansion of its gastroesophageal reflux disease treatment, K-Cab.
Yuhan Corporation expects to surpass 100 billion won in annual operating profit as milestone payments and royalties from Lurbinectedin's technology transfer begin to materialize. GC Pharma anticipates approximately $300 million in sales by 2028 based on the growth of Aliglo in the U.S. SK Biopharm's Cenobamate generates annual sales of $400 million to $600 million in the U.S., with first-quarter sales this year reaching 197.7 billion won, a 48.4% increase from the same period last year. HK inno.N recorded 58.5 billion won in prescriptions for K-Cab in the first quarter, raising expectations for overseas expansion.
The high exchange rate environment is particularly favorable for export-oriented companies. While the cost burden increases due to the import structure of raw pharmaceuticals, dollar-based sales offset this, leading to overall profitability improvements. Consequently, companies with a higher proportion of sales in advanced markets like the U.S. and Europe are benefiting relatively more.
Ultimately, the competitive landscape of the domestic pharmaceutical industry is rapidly shifting from a domestic focus to an export-driven model. The business focus is moving beyond simple finished drug sales to include global drug commercialization, technology transfers, contract development and manufacturing (CDMO), and biosimilars.
An industry insider stated, "The domestic prescription market is primarily serving as a basic revenue base, while actual growth and profitability are now determined overseas. The restructuring will accelerate around companies that secure new drugs and business models that can succeed in the global market."
However, there are also concerns about the limitations of the current export-focused growth strategy. According to a report by the Korea Health Industry Development Institute, there have been over ten instances of technology transfers exceeding 1 trillion won from 2012 to 2024. While achievements are increasing, the industry is still criticized for not breaking free from a revenue structure dependent on global pharmaceutical companies.
As a result, there is a growing call for stronger collaboration models between large domestic pharmaceutical companies and bio ventures. Bio ventures possess innovative technologies and early research capabilities, while large pharmaceutical companies have strengths in clinical development, approval, production, and distribution, allowing for mutually beneficial synergies.
An industry representative remarked, "The industry will accelerate its restructuring around companies that not only transfer technology but also possess their own commercialization capabilities and global pipelines. A well-defined strategy is also required to build a collaborative ecosystem between large pharmaceutical companies and bio ventures."
* This article has been translated by AI.
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