South Korean Market Becoming Attractive Investment Option

South Korea's healthcare industry is becoming an increasingly attractive target for foreign direct investment (FDI). An ageing population, changes in trade policies and the regulatory environment are the key driving forces for rising levels of foreign direct investment.

Further, local pharmaceutical companies are significantly increasing their R&D expenditure for novel drugs and medications. R&D spending, which has historically been as low as 0.3% of GDP, increased to 3% in 2004. Although South Korea has yet to produce any medicines that would be regarded as novel by international standards, government efforts to boost the biotech sector are starting to get results.

The retail market has also adopted a more mature profile in recent years. Although dominated by low-cost generics in volume terms, high-value imports are a growing component of the market. Further, as pharmacies increasingly wrest control of distribution from clinics, the retail sector offers newly liberalised distribution opportunities for foreign firms. OTC products account for 35% of overall market value, which is expected to reach US$18.2bn by 2009.