South Korean pharmaceuticals market set to expand at 7.1% CAGR

South Korea has a highly developed and growing economy, which is reflected in Business Monitor International’s forecast for the country’s pharmaceutical market. Drug market expenditure is forecast to reach almost 19,327 billion won ($19.33 billion) at consumer prices in 2014, with a forecast compound annual growth rate (CAGR) of 7.1% in local currency terms, supported by an aging population with rising demand for drugs as well as the planned liberalization of the health insurance sector. By 2019, pharmaceutical expenditure is expected to have reached 26,500 billion won ($26.50 billion).

Changes to South Korea’s medicine pricing and purchasing regime were announced in the first half of 2010. The government is planning to reduce maximum drug prices by 15%-25% over the three years starting from October 2010. BMI expects that increased volume consumption will offset much of these negative pricing pressures. However, if volume growth fails to materialize, market values could be affected more severely.

BMI describes South Korea as a transitional pharmaceutical market. Characteristic of an emerging market, combined sales of prescription drugs and over-the-counter (OTC) medicines are forecast to post high single-digit CAGRs over the next five years. However, the operating environment is similar to that seen in traditional markets.