South Korea is a dynamic market for innovators in medical devices, life sciences and biotech. Geographic concentration, advanced healthcare infrastructure, an aggressive business culture and government support combine to make this an attractive entry point for many western players.
While visiting Intralink’s offices in Seoul, I sat down with colleagues and clients in our Medtech & Life Sciences practice to discuss the trends dictating entry into and success in South Korea.
Read on to learn whether this should be your next target market.
Healthcare in South Korea is a swiftly-growing field, owing to rapidly shifting demographics and lifestyle trends.
South Korea is currently the fastest-aging developed country in the world, quickly catching up with the proportion of older people in Japan's population. A quarter of South Korean's are expected to be over 65 by 2025.
Meanwhile, Koreans’ sedentary lifestyle, alcohol and tobacco use are driving increases in non-communicable diseases such as diabetes and hypertension.
To combat these trends and establish the country as a leader in the biomedical field, the South Korean government has announced strong support for clinical trials, biopharmaceuticals and AI in medtech and life sciences – all of which bring big opportunities for western firms.
Further good news is the way entry into South Korea’s healthcare and life sciences markets is simplified by the concentration of healthcare and research. The “Big Five” hospitals – Samsung Medical Center, Asan Medical Center (pictured above), Seoul National University Hospital, Severance Hospital and Seoul St Mary’s Hospital – are all in the capital and dominate research and quality of care. And new entrants should look at the Big Five as clinical evaluation sites as well as customers.
The highly concentrated market, a strong domestic healthcare scene and healthy appetite for foreign technologies favor companies with competitive products.
The Ministry of Food & Drug Safety (MFDS) is the Korean regulatory body for pharmaceuticals and medical devices. But an important point to know is having approval in the US or EU makes gaining Korean approval much smoother. A Korean-developed genomic test even used FDA approval to secure approval in Korea – after having been rejected by MFDS!
In addition, the Korean government has established major initiatives to spur innovation in the medtech and pharma sectors – slashing reviewal times for AI-enabled tech from 90 to 30 days, loosening restrictions on data sharing, providing direct stimulus for the purchase of novel equipment, and even expanding compassionate use cases for pre-approval technology.
If you have an eye on Korea, be sure to evaluate reimbursement categories as part of your regulatory strategy. The country has near-universal healthcare, but a misalignment in pricing can erase other competitive advantages.
So, the overall healthcare market is growing quickly, buoyed by strong government support. Let’s take a closer look at four segments of particular relevance to western companies.
1. Medical devices
South Korea has an attractive medical device industry, valued at $5.72 billion (2018). With 11 hospital beds per 1,000 citizens – the second highest ratio in the world - there’s significant demand for devices, 63% of which is satisfied by foreign companies.
Bear in mind that devices in Korea are classified based on risk, from Class I through to Class IV, and international manufacturers need a designated importer or Korean representative to ensure regulatory compliance and reporting on safety and efficacy. Distributors typically look for reimbursable products with high margins due to the rigid reimbursement structure. Other value propositions may be difficult to sell.
2. Clinical trials
South Korea is currently ranked #6 globally in the number of clinical trials conducted, with a goal to reach #5 – making it a key market for life sciences companies. Seoul alone hosts more clinical trials than any other city in the world.
Korea’s position as a destination for clinical research is supported by the Korean National Enterprise for Clinical Trials (KoNECT), a non-profit funded by the Korean Ministry of Health & Welfare. And local CROs favor partnerships or equity shares with foreign CROs to increase their reach. This may be a promising avenue for western CROs with unique technologies to expand their reach, but it’s important to vet and benchmark your partners thoroughly before making any approach.
The pharmaceutical industry in South Korea has historically been oriented towards producing generics and biosimilars, but recent government support for biopharmaceutical development and clinical research has created excellent market conditions for new entrants.
No company better exemplifies this new wave than SK Biosciences, which finalized a deal worth $115 million less than a year after being spun out.
Overall, Korean drug makers’ out-licensing revenues tripled from 2017 to 2018. The government’s ambition is to become APAC’s version of Switzerland – a lofty goal perhaps, but not one to be underestimated.
Genomic testing is also growing in Korean research and clinical settings.
Macrogen holds 60% market share, followed by Theagen Etex, DNA Link, Chunlab, and Lab Genomics. There are over 400 NGS devices in use in South Korea, of which 300 are supplied by Illumina.
In addition to the testing companies above, the Big Five hospitals and research institutions are the main players – so these are the organizations for western firms to get to know. Available tests are NIPT, NBS, cancer screening TOT (NGS Cancer panel test), Exome and Metagenome, and reimbursement is available for tests conducted at hospitals or qualified research centers.
Highly attractive market
South Korea is a vibrant market in which western firms can grow in the biotech, medtech and life sciences fields. And focused government support is further enhancing the opportunities by bolstering clinical and biotech research, as well as the confluence of medtech, biotech and artificial intelligence.
It’s important to understand the macro landscape as well as factors influencing your specific business, but the opportunities are most definitely there for western firms that have innovative products to offer and take a smart approach.
If you’re ready to take a closer look at South Korea in comparison with neighboring markets, contact me today at firstname.lastname@example.org to schedule a consultation.