Country Report: Korea

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KOREA BE INSPIRED

"When I left Janssen, I never imagined joining a Korean company," recalls Choi Tae-Hung, sipping a freshly brewed yujacha tea in his office on a crisp autumn morning as he gazes down at the busy, sundrenched streets of Seoul below. "I thought that the global business of Korean pharmaceutical companies would be very limited due to a lack of competitive R&D or marketing capabilities." Choi spent two decades at Janssen before moving on, but when he did, it was to become president of Korean pharmaceutical company Boryung in 2013. "After speaking to a number of people within the industry, I realized that everyone was talking about big changes in strategic direction for domestic pharmaceutical companies. The new focus for these businesses was on the global market," explains Choi.

Photo Credits : Ines Nandin

Korea's chaebols, the country's large conglomerates, have in large part been responsible for building the country's reputation in the fields of electronics, shipbuilding and automotive. Today, Korea's government is looking to develop growth in new sectors outside of this traditional base; pharma has been selected as one of these new sectors. The race is now on to position Korea as the Asian hub for pharma R&D and new drug development (NDD), something that only a few years ago would have been unthinkable: a situation mirrored in other Asian countries such as Taiwan and Singapore.

Chung Seung, Minister of Food and Drug Safety

"In the past, Korea's pharmaceutical makers focused mostly on generics," admits Korea's Minister of Health and Welfare Moon Hyung-Pyo. "However, today they are in the process of transforming into brand-name manufacturers by investing more in R&D and developing innovative drugs. The Korean government is very active in helping the drug industry to become truly worldclass. With all of these factors combined together, Korea's healthcare industry will soon join the ranks of global healthcare power houses."

Moon Hyung-Pyo, Minister of Health & Welfare of Korea

"Korea is in a unique position in terms of new drug development," explains Lee Kyeong-Ho, chairman and CEO of the Korea Pharmaceutical Manufacturers Association (KPMA). Indeed, Korea has already successfully brought 22 new drugs to the market between 1999 and 2014, two of which have been approved by the US FDA. "Korean companies have had an interesting experience in developing innovation, but not game-changing innovative new drugs which require significant money and manpower that we do not have enough of yet," Lee continues. "Nevertheless, we do have successful experience in creating incremental innovation, and this has been an excellent experience for Korean companies," he adds.

Jung Kee-Taig, President, KHIDI

Leading the charge in boosting Korea's regional competitiveness for pharma and R&D is the Korea Health Industry Development Institute (KHIDI), Korea's sole public institution designed to foster growth in the healthcare industries, like pharmaceuticals, healthcare technology, cosmetics, and health systems. "It has already been eight years since global healthcare was selected as one of 17 growth engines of our nation, and we have been somewhat successful in inbound business like attracting foreign patients and physicians for training," remarks Jung Kee-Taig, president of KHIDI. "In terms of outbound business, we hope to create those success cases more frequently and this business can be a mature and major industry for Korea's growth by 2020." "Koreans really want to win and be number one in everything, rather than being perceived as the little brother of China or Japan," says UCB Korea managing director Tom Roberts.

Lee Kyeong-Ho, Chairman and CEO, KPMA

There is a solid support system behind Korea's Pharma Vision 2020. "The level of quality approval in Korea compared to Europe and the US for products like biologics is usually the same; sometimes it is even better but this is not recognized worldwide," says Chung Seung, Minister of Food and Drug Safety. Since becoming Minister in 2013, Seung has already taken a number of efforts to ensure the Ministry actively participates in forums, working groups and international organizations to promote Korean medical products. In July 2014, Korea officially joined PIC/S, which created a framework where international creditworthiness of domestic medical products' quality can be elevated. "We will actively provide support to develop biological products such as stem cell therapy products by fully implementing a 'Support Scheme for Global Biological Products', which aims at becoming one of the world's top seven powerhouses in the biological product field by 2017. The Ministry will rigorously support commercialization of vaccines, biosimilars, stem cell therapy products and gene therapy products. We will also support domestic pharmaceutical companies advancing into the global vaccine market while also expanding our self-sufficiency rate from 32 to 70 percent in the domestic vaccine market over the next six years."

However, becoming a top-tier nation for pharmaceuticals will take time and effort. Hakim Djaballah, CEO of Institut Pasteur Korea, believes that without attracting the international know-how necessary for solid tech transfer, the goals of Pharma Vision 2020 are more of a dream than reality. "The infrastructure for basic research is already in place and translational research is beginning to take off, but the infrastructure to take that into a product still does not exist," comments Djaballah. "Compared to other countries with facilities for API production, Korea is still at the starting line. It does not mean they cannot achieve it; Korea is geographically attractive and the country just needs to invest in building the industry scale infrastructure to produce APIs."

Hakim Djaballah, CEO, Institut Pasteur Korea

KORINNOVATION

Local flagship company Boryung has found success with its newly developed angiotension receptor blocker (ARB) Kanarb. Nine molecules currently exist worldwide in this category of antihypertensives, and Kanarb is currently ranked eighth. "Boryung is the only domestic company that has developed a drug from start to finish, including outlicensing. Of course, other companies have developed new chemical entities (NCEs). But in terms of experience Boryung is different. From discovery and development to product launch and internationalization, Boryung has experiences that other companies cannot imitate," explains Choi Tae-Hong, Boryung's president. "Given Kanarb's competitiveness, multinationals are our new competitors."

Choi Tae-Hong, CEO, Boryung

Could Boryung be one of the two top 50 companies that are planned in Korea's Pharma Vision 2020? "Our own strategic objective is not to make Boryung a top 50 company in terms of sales size, but rather to make Boryung the best company in Korea in terms of marketing and R&D capability," Choi reveals. "My dream is for Boryung to be at least number one in Korea. I do not know what the company's rank in 2020 will be globally, but that is not so important as long as we achieve our strategic goal year by year."

Lee Gwan-Sun, President & CEO, Hanmi Pharm

Hanmi is a Korean pharma heavyweight, and is the highest R&D spender in the Korean pharma sector, with KRW 100 billion (USD 90 million) invested in 2013. "We can lead Korean pharmaceutical companies in the R&D field," believes Lee Gwan-Sun, Hanmi's CEO. "We are interactive in some external R&D activities from recent venture companies and from a very early stage we can select some candidates or compounds which can be a synergy with our current pipelines. In that sense, Hanmi can be a role model."

Lee Han-Koo, President, Daehwa Pharmaceuticals

Founded in 1984 and listed in 2002, with three production centers and three R&D facilities, Daehwa Pharmaceutical's anticancer drug DHP107 aims to provide an oral version of Paclitaxel – a new 'Made in Korea' product. As Lee Han-Koo, president of Daehwa, explains, "there is no such thing as a single injection for oncology. One drug has to be used in conjunction with other anticancer drugs, such as enhancers that need to be interactive with each other. DHP107 avoids this situation altogether." After finishing clinical trials, Lee hopes to receive approval for DHP107 by the end of 2015 and start marketing the product first in Korea and then to other emerging markets in the region. Daehwa currently exports to 22 markets worldwide; Lee is bullish about future growth: "Of course we will expand to satisfy all people's needs," he explains. "However, the methods of expanding could be diversified. For example, we have recently signed a technical contract with Iran. We send the products first and will build a plant later. We also will have made our spot in Chengdu, China. Furthermore, following the market situation and requests, we will expand our business territory to the whole world."

Courtesy: Boryung

Ambition and innovation is not limited to the biggest or best funded Korean labs; domestic companies of all sizes and levels of experience are prioritizing R&D investment and planning to develop new drugs in the future. Korea Pharma is a prime example, and Chairman Park Jae-Don explains they have become involved in "several R&D projects with a few different partners" over the past few years. One such project is a "pre-clinical trial for a dementia treatment based on osmotin, an ingredient extracted from tobacco leaves, in conjunction with Kyeong-Sang University," while they are also working with an "overseas partner to develop a product that treats disease caused by bacteria resistant to CEPA antibiotics, and are currently conducting late phase clinical trials."

"Most Korean pharmaceutical companies think they need to develop new drugs by following a manual, without having the necessary technology or infrastructure first, or in other words, without the capacity to do so," says Kim Won-Bae, vice chairman of Dong-A Pharmaceutical, another Korean giant with ambitions to enter the global top 100 pharma companies in the next ten years. "Rather, we think we should focus on what we are capable of doing. So we deal with traditional drugs that have already been verified and used." In 2014, the US FDA approved Dong-A's antibiotic tedizolid marketed under the name Sivextro, the second ever such approval for a Korean innovative drug.

Jae-Don Park, Chairman, Korea Pharma

BURGEONING BIOTECH

One of the pillars leading the growth of Korea's pharmaceutical industry is biotech, as seen through the large amount of resources being expended in this area by both the government and the private sector. One of the leading forces in expediting Korea's growth in biotech is the Korea Research Institute of Bioscience and Biotechnology (KRIBB). Its current president, Oh Tae-Kwang, has been working to restructure the institute to best fit the needs of Korea's next generation of scientists, by fusing Korea's strength in IT and nanotechnology with biotechnology. "KRIBB wants to serve an important role in composing the bio industry ecosystem," Oh remarks. "We are building a system for 20 major companies and 130 small and medium-sized enterprises to collaborate together over five sectors. Previously, these sectors worked independently and without coherence; now they interact with each other extensively, which will lead them to the global market." KRIBB's vision is to be a global research institute leading bio-innovation by 2018, with a goal of producing five world-class platform technologies by that time as well as having one of the top research infrastructures in the world.

Kim Won-Bae, Vice Chairman, Dong-A ST

The market in Korea is abounding with numerous ambitious startup biotech companies. Abion, originally a startup venture of Seoul National University to provide molecular pathology analysis services in 2007, is one such example. In 2009, the company began conducting studies for potential new pharmaceutical development and in just a few short years has three new projects in the pipeline, most notably a siRNA therapeutic project for the development of a chemo-radio sensitizer for the treatment of advanced cervical cancer and head and neck cancer caused by HPV. "Our primary target market for siRNA therapeutics is the US market," says Abion's CEO Shin Young-Kee. "The number of patients with advanced cervical cancer is relatively small; however it is a good market to validate whether our concepts on siRNA therapeutic development are correct or not. We consider the key pharmerging countries such as Russia, China or India as secondary markets in the future."

Oh Tae - Kwang, CEO, KRIBB

Many of these bioventures have benefited from the support and protection of one of the national or provincial government's various biotech incubator projects. The province of Chungcheongbuk-do has developed the largest and most extensive of these centers, the Osong Bio Valley. "We had set the goal of attracting six national health policy institutes to this cluster and have succeeded, and already have more than 60 different pharmaceutical and biotech companies that have established offices within the Osong complex," explains Lee Si-Jong, governor of Chungcheongbuk-do. "With the health policy institutes in Osong, the ministries and national agencies across the river in Sejong, there is no other city in the world where you can find as much political and regulatory infrastructure in close proximity to healthcare and life science cluster. In two or three years time we will have developed a rectangular belt of R&D clusters for different niches in healthcare," explains Lee. "We expect to see some tangible success of these development projects within that timeframe."

Shin Young-Kee, CEO, Abion

Medipost, one of the 60 life science companies with facilities in Osong, was founded in 2000 as a public umbilical cord blood bank by Yang Yoon-Sun, a former clinical pathologist at Samsung Medical Center in Seoul and medical professor at Sungkyunkwan University and Korea University. In 2012, the company's lead product Cartistem was approved for marketing by the MFDS and is currently undergoing an FDA approved Phase IIa trial in the US. Stem cell therapies such as Cartistem "are such a revolutionary, innovative area of medicine, there is no existing regulatory framework in place," says Yang, who highlights that "Medipost is playing a key role in this process in Korea and elsewhere, because we are working closely with regulators for these regulatory changes."

Lee Shi-Jong, Governor, Chungcheongbuk-do

In the field of oncolytic viral therapies, SillaJen is a global leader and has published several papers in Nature and Nature Medicine on their groundbreaking work. CEO Moon Eun-Sang describes their lead product candidate, an oncolytic vaccinia virus that they call Pexa-Vec, as a "bona fide medical breakthrough of immense proportions," one that "doesn't represent just a cancer treatment, but an actual cure for cancer." SillaJen is "the first company to try to develop an oncolytic vaccinia virus," says Moon, who adds that they "can deliver the vaccinia virus to tumors intravenously as well as intratumorally, while the other oncolytic candidates that are suitable for solid tumor cancers must be injected intratumorally." Clinical trials have generated a lot of excitement so far, and Moon explains that "in our phase II A trial, out of 30 patients, 21 demonstrated partial tumor responses, and four were completely cured." "At present," he concludes, "we are preparing to begin a global phase III clinical trial for Pexa-Vec's efficacy as a treatment for hepatocellular carcinoma."

MASTERS OF THEIR OWN DESTINY

Minister of Health Moon Hyungpyo accompanied Korea's president on a state visit to the Middle East in February. "This was the first time for a health minister to join the president during the state visit to Middle East countries," explains Moon, "which is a testament to the fact that the healthcare sector is one of key pillars of the Park administration's Creative Economy. Some GCC countries have chosen Korea as their healthcare partner as they are becoming more interested in setting up or improving their healthcare systems." Over 150,000 people from across the globe have come to Korea to take advantage of its health services.

Some countries have begun to look to Korea as a model and partner. Thus far, the most prevalent form of partnership has been that of Korean hospitals opening affiliates all across Asia, the Middle East and even the United States. Kim Han-Joong, chairman of the strategy committee at CHA Health Systems and board member of Samsung, believes that the strength of Korea's future global contribution to health lies in its ability to export health systems and health technology. "We have well-trained health professionals and cutting-edge facilities and equipment in our hospitals. Compared to the population, there is an abundance of hi-tech equipment in Korean hospitals, because the competition among hospitals here is very high. In terms of equipment competition, Korea's strength is in the area of information technology-biotechnology (IT-BT) convergence technologies as well as stem cell research and cell therapy."

Yang Yoon-Sun, President and CEO, Medipost

Kim concludes with Korea's plan of action for the coming years: "This country has developed healthcare systems based on the welfare model, but now we must turn from a welfare to industry model. Secondly, until now, the government has controlled much of the system, but it must become more market oriented. Thirdly, our interest has been historically limited to the domestic market; Korea must move from a domestic model to a global market."

Moon Eun-Sang, CEO, SillaJen

KONECTING THE DOTS

The growth of clinical trials in Korea has been remarkable in recent years. The number of clinical trials performed by multinationals has shot up from five in 2000 to 303 in 2012, with 367 clinical trials performed by local companies. In the same year, Seoul was ranked the number one city worldwide for clinical trial competitiveness, according to the US National Institute of Health, and Korea is ranked tenth worldwide.

Osong Bio Valley

Why has Korea become such a favorable country for doing clinical trials? Liz Chatwin, country president of AstraZeneca Korea, explains: "The clinical research facilities of institutions like Samsung Medical Center or Seoul National University are much better than anywhere else in the world, even the US. This is because they have a coordinated approach to research with all the phases of research under one roof. The implication of this is that institutions can mix expertise in pre-clinical research, translational science and clinical development in one place. They can then do clinical research very efficiently." Chatwin also attributes a well-tailored patient database to this efficiency. "Hospital patients can be identified rapidly to fit particular criteria for a clinical trial," she remarks. "Because the big institutions treat almost every type of patient with almost every diagnosis in their center, they can recruit individuals for just about any clinical study very quickly."

Kim Han-Joong, Chairman, CHA Strategy Committee

"With 50 million citizens all covered by a single public healthcare system, Korea has a much bigger pool than other countries in term of people exposed to clinical trials," adds Deborah Chee, president of the Korea National Enterprise for Clinical Trials (KoNECT). "The size of our economy and the characteristics of Korea's population as the fastest-growing ageing society worldwide provide us great potential. Our disease patterns are similar to that of western countries; for the elderly, the government focuses primarily on cancer and neurodegenerative diseases."

"With 50 million citizens all covered by a single public healthcare system, Korea has a much bigger pool than other countries in term of people exposed to clinical trials," adds Deborah Chee, president of the Korea National Enterprise for Clinical Trials (KoNECT). "The size of our economy and the characteristics of Korea's population as the fastest-growing ageing society worldwide provide us great potential. Our disease patterns are similar to that of western countries; for the elderly, the government focuses primarily on cancer and neurodegenerative diseases."

Chee, whose goal is to increase Korea's clinical trial positioning from tenth to fifth worldwide, notes that there are currently 15 supported regional clinical trial centers across the nation with financial support from the government and with matching funds from hospitals. Furthermore, in 2012 the government launched a program to identify new Global Centers of Excellence for Clinical Trials, of which KoNECT has selected five so far. "These centers should further the clinical trial capability of Korea, especially focusing on specialized areas like complex clinical trials, studies in special populations, and patient-oriented Phase I clinical trials," says Chee. "Korea is contracting more global Phase I studies for indications like oncology. So far about 160 sites have been accredited by the Ministry of Food and Drug Safety."

Liz Chatwin, Country President, AstraZeneca Korea

The explosion in number and quality of trials in Korea certainly makes an attractive case to attract multinational CROs; but to what extent do these companies actually contribute to Korean research? Jack Lee, president of Korean CRO LSK Global, notes that the recent arrival of global CROs has drastically changed local CROs' sponsorship base. Moreover, global CROs present in Korea have the financial muscle to hire the best Korean talent, having been trained by local CROs. "CRAs of global CROs do not complete the life cycle of studies as CRAs hop around from one CRO to next," laments Lee. "They spend a couple years at each company and very few see a study from beginning to end. Global CROs do not contribute at all to Korean clinical drug development technology, because all the protocols, data management, statistics and project management are done at these companies' headquarters. It is nonsensical to believe that because we are active in global clinical trials, Korea will benefit from such activities. Global CROs do not teach us anything. They just use our trained labor, stolen from companies like mine. To them, Korea is like a clinical trial assembly plant country."

Deborah Chee, CEO, KoNECT

Albert Liou, Vice Chairman of PAREXEL Asia Pacific, takes a different tone on this issue, arguing that while "the clinical development industry in Korea has become more competitive, but also more collaborative." "Local CROs have their own strengths, including government support and a general 'home team advantage', while we have different strengths and assets as a global CRO, specifically our technological capabilities." As the local CROs have developed, PAREXEL has "greatly developed our role as a healthcare consultant," explains Liou. "Often, the Korean CRO will manage trials conducted in Korea," he says, while "PAREXEL provides eClinical trial technology, safety monitoring, and project management for trials conducted in other countries, and we work to together to maximize the returns from our shared clients' resources."

Jack Lee, President, LSK Global

FREE TRADE EVOLUTION

Following the implementation of the Korea-US free trade agreement (KORUS FTA) in 2012, Korea has lowered its import tariffs, enhanced its regulatory transparency, and attracted an influx investment from multinational pharmaceutical companies, especially in the form of JVs with domestic players. "Korea has signed free trade agreements with a number of parties; one part of that agreement was to ensure a proper IP protection scheme. Most relevant for us is the patent linkage system, implemented in March 2015, which will allow the base requirements to be met for proper protection of IP rights in the pharmaceutical sector." says Lee Sang-Suk, CEO of the Korea Research-based Pharmaceutical Industry Association (KRPIA).

Albert Liou, Vice Chairman, Asia Pacific Region, PAREXEL

In addition to Korea's excellent clinical trial infrastructure, multinationals also have at their disposal a plethora of local companies and research institutes with which they can work hand in hand to each other's mutual benefit. Novartis, which registered more clinical trials in Korea in 2013 than any other multinational, has found strategic ways to team up with the local community to further enhance Korea's creative economy. "One way is through co-marketing and distribution partnerships," says Brian Gladsden, president of Novartis Korea. "In this way we can complement each others' skills and capabilities in the marketplace to offer more to our customers and reach more patients. In addition, potential R&D collaborations could provide huge opportunities for both partners in Korea. Many domestic companies are looking to increase their R&D capabilities and are investing significantly in this area." Through the Novartis Venture Fund, investing in smaller companies in Korea also shows promise. "As of today, we have invested in three local companies and hopefully there will be an opportunity for similar investments in the future," continues Gladsden. "This provides a unique opportunity for knowledge-sharing, R&D capability-building, education and training. I believe that further collaboration between multinational and domestic companies, and investments in smaller Korean companies, are very much aligned with the Pharma 2020 Vision to grow the Korean pharmaceutical industry."

"Many Korean companies can be highly effective partners from the distribution and promotional perspective," concludes Gladsden. "Many of these businesses have long histories here, which provide in-depth local knowledge and expertise. Through mutually beneficial partnerships we can benefit from the local expertise and domestic partners can learn from the global experience of multinational companies as well. This is increasingly important as many domestic companies have aspirations to increase their presence worldwide. In addition, with the increased investment in R&D by many local players, multinationals have an excellent opportunity to partner on innovative new drug development that can ultimately benefit patients globally."

Brian Gladsden, President, Novartis Korea