Pharmaceutical Companies Fiercely Competing for New Medicine

Major domestic pharmaceutical companies are reportedly increasing the budget for research and development (R&D) this year compared to year 2001.

According to the Korea Drug Research Association on the 16th, the average ratio of R&D budget to total sales anticipated for this year for 17 major member companies is 7.5 percent, which is a high increase from 3 to 5 percent out of total sales that almost all pharmaceutical companies invest for research and development so far.

Pharmaceutical companies said that they would spend most of the budget on the undergoing clinical tests or on the development of new medicine and facility investment. This shift is geared toward developing new medicine in order to cope with foreign companies that are making inroads in the domestic markets.

The budget for R&D of Hanmi pharmaceutical Co. is 14 billion won, increasing by 52 percent from 9.2 billion won last year, and Kwangdong Pharm. Co. increased its budget to 7.5 billion won, raising it by 56 percent, and Boryung Pharm. Co. increased its budget by 48 percent with 9.6 billion won.

LGCI, which invests most R&D expenditure among domestic companies, allotted 60 billion won for R&D. The sum is same as that of last year, but the ratio of R&D to total sales reaches 29.9 percent, which other companies envy.

An official of the pharmaceutical department in Cheil Jedang said, "Considerable numbers of domestic pharmaceutical companies are processing clinical tests in foreign countries in order to avoid restrictions, and are likely to develop world-famous new medicine."

Daewoong Pharmaceutical Co., which has not set a goal for sale in 2002 yet as it settles accounts in March, reportedly will allot 15 billion won for R&D, which is an increase of 3 billion won from last year. Daewoong Pharm Co. will intensively invest in expansion of facilities of the Research Institute of Biotechnology, which opened last September.

An official of the Ministry of Health and Welfare praised the pharmaceutical companies’ increasing R&D expenditure, saying, "It is partly caused by the increase of sales due to the separation of pharmacy and clinic, but it is desirable to cope with the change of markets caused by foreign pharmaceutical companies which are drawing back the sale right of original medicine entrusted to domestic companies."

hanscho@donga.com