Korean pharmaceutical companies are moving beyond simply expanding overseas sales to securing control over sales in foreign markets. They are not only exporting products but also establishing local distribution networks and sales organizations. This shift is seen as an attempt to change their revenue structure, as growth potential is limited in the domestic market, which is characterized by price reductions and intense generic competition.
According to a report from the Korea Institute for International Economic Policy, the global pharmaceutical market is expected to grow from $1.67 trillion in 2024 to over $3 trillion by 2034. In contrast, South Korea accounts for only 1.7% of the global pharmaceutical market revenue. The United States holds 47.8%, the five major European countries account for 14.4%, and China and Japan represent 6.8% and 3.7%, respectively, highlighting a significant disparity.
Expanding into international markets has become a common goal for domestic pharmaceutical companies. However, recent trends indicate that the ability to secure sales leadership in foreign markets is becoming a key competitive factor, rather than just the volume of exports. As distribution layers increase, companies face constraints on pricing strategies and market responsiveness.
More companies are entering markets directly to secure leadership. GC Green Cross invested 138 billion won in 2024 to acquire full ownership of ABO Holdings, a local blood bank operator in the United States, to expand its local business from raw plasma procurement to finished product sales.
The blood product 'Aliglo,' which entered the U.S. market, recorded sales of 34.9 billion won in the first quarter of this year, marking a nearly fourfold increase compared to the same period last year. Annual sales are projected to rise from 48.6 billion won in 2024 to 151.1 billion won last year. The company aims to achieve $1 billion in sales in the U.S. market by 2035, with Aliglo being a core growth driver.
Celltrion established direct sales systems in Europe in 2020 and in the United States in 2023, expanding its sales network centered on local subsidiaries. In the U.S., the company has integrated production, supply, and direct sales distribution networks, enhancing its pricing competitiveness and negotiation power with pharmacy benefit managers (PBMs). With the direct sales system firmly in place, key products like Uplizna, Vegzelma, and Truxima have achieved the top prescription status in both European and U.S. markets.
SK Biopharm successfully established direct sales in the U.S. with its self-developed epilepsy treatment 'Xcopri.' This marks the first instance of a Korean pharmaceutical company building a direct sales system in the U.S. based on its own new drug. The company believes that efficient market penetration is possible even with a limited workforce, prompting its decision to pursue direct sales.
An SK Biopharm official stated, "The starting point for our direct sales success was the selection of the disease. We determined that central nervous system (CNS) disorders could be efficiently commercialized with a specialized sales team of about 80 to 120 people, compared to chronic diseases."
The strategy for securing sales leadership is not limited to direct sales. Vietnam is noted for its strong pharmacy-centered distribution structure. Dongwha Pharmaceutical acquired a 51% stake in the Vietnamese pharmacy chain Trung Son Pharma for approximately 39.1 billion won in 2023, aiming to secure local sales channels. This approach focuses on establishing distribution networks rather than merely exporting products.
The pharmaceutical market in emerging countries places significant importance on brand recognition, making it difficult for latecomers to disrupt market share once an initial foothold is established. The company plans to use its position in the Vietnamese pharmaceutical market as a springboard to expand into the Southeast Asian pharmaceutical and beauty markets. A Dongwha Pharmaceutical official remarked, "Many companies start their overseas expansion with quick and low-cost product exports. We decided to acquire the Vietnamese pharmacy chain to build direct relationships and trust with local consumers."
An industry insider noted, "Pharmaceuticals face varying insurance systems and regulations in each country, making it challenging to establish local sales networks. While the initial investment burden is significant, it is meaningful as it allows for securing market leadership after establishing a presence."
* This article has been translated by AI.
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