[The Editors' Verdict] Pharmaceutical Sovereignty Is Essential for K-Bio

Kyung-ho Lee, Head of Bio Startups and Ventures Division

원본보기 아이콘

On the 5th (local time), Mansukh Mandaviya, India's Minister of Health, announced, "We have started producing 38 active pharmaceutical ingredients (APIs) that we had relied on imports for over the past one and a half years." India is a veritable pharmaceutical powerhouse. It produces more than 50% of the world's vaccine demand, supplies 40% of the U.S. generic drug demand, 25% of the UK's, and accounts for 20% of the global generic market. Among overseas countries excluding the U.S., India has the largest number of manufacturing facilities approved by the U.S. Food and Drug Administration (FDA).

However, India has depended on China for essential active pharmaceutical ingredients. Even five years ago, over 90% of APIs were imported from China. Following border disputes with China, India declared self-sufficiency, and the necessity for localization increased further amid the COVID-19 pandemic. Through the Production Linked Incentive (PLI) scheme, India decided to invest 2.4 trillion Korean won. As a result, the current dependence on China has decreased to about 70%, and it is expected to fall below 50% within the next five years.

In the world's largest market, the U.S., shortages of medicines ranging from children's cold medicines to saline solutions, antibiotics, and anticancer drugs continue. According to a study by the University of Utah, the number of shortage cases was 295 at the end of 2022 and rose to 301 in the first quarter of this year, marking the highest level in the past five years. In the first quarter of 2023, 47 medicines newly entered shortage status. To reduce costs, the U.S. has relocated most API manufacturing facilities to low-cost countries such as China and India. As of 2021, about 87% of generic drug API manufacturing facilities and about 63% of finished product manufacturing facilities approved by the U.S. FDA are located outside the U.S., with most in India and China. The U.S. is promoting the expansion of essential API production and providing incentives.

As of 2022, South Korea has 138 API manufacturers and 1,538 API items. Their annual production value is 2.8361 trillion Korean won, which is about 9% of the 38.1 trillion Korean won production value of 381 finished drug manufacturers. This accounts for about 2% of the global API market size (145 trillion Korean won as of 2020). The self-sufficiency rate of APIs dropped sharply from 35.4% in 2017 to 24.4% in 2021 and 11.9% in 2022 within a year. The top two import countries are China (15.4%) and India (14.2%). According to the Korea Pharmaceutical and Bio-Pharma Manufacturers Association, among 386 essential national medicines, only 54% are domestically manufactured.

To foster K-Bio and secure pharmaceutical sovereignty, a roadmap for API self-sufficiency must be established, and clear incentives should be offered as carrots. There is also a need to heed calls to expand drug pricing policies that favor finished drugs using domestically produced APIs. The U.S. has expressed concerns that "unpredictable events like COVID-19 and supply chain or international issues can cause direct harm to patients and act as an absolute threat to national health security."

The Indian Minister of Health said, "API production is not a game that ends overnight. The best part is that the government has made its intentions clear by starting the PLI plan. The industry has received it positively." He added, "The government has added fuel to the fire, and now it is the responsibility of companies to realize it." This is a point we should also take to heart.

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.