Fostering the Pharmaceutical Industry Depends on the Clinical Research Organization (CRO) Sector

[Asia Economy Reporter Hwang Yoon-joo] There is a call to focus on fostering the Clinical Research Organization (CRO) industry to enhance the development competitiveness of the domestic pharmaceutical industry and to boost exports of pharmaceuticals and technology. A CRO refers to a specialized institution to which pharmaceutical companies outsource clinical trial design, consulting, data management, and regulatory affairs to reduce new drug development costs.

According to the "Current Status of the Clinical Research Organization (CRO) Related Service Market and Overseas Expansion Plans" released on the 18th by the Korea International Trade Association's Institute for International Trade and Commerce, the domestic CRO industry size rapidly grew at an average annual rate of 11.5%, from 294.1 billion KRW in 2014 to 455.1 billion KRW in 2018. During the same period, domestic CRO companies' sales grew at an average annual rate of 21.1%, raising the domestic market share led by foreign CROs from 33.3% in 2014 to 46.3% in 2018.

Supported by this, exports of bio-service industries such as clinical trials and contract manufacturing of pharmaceuticals, centered on domestic CROs, grew at an average annual rate of 36.3%, from 339.8 billion KRW in 2016 to 631.3 billion KRW in 2018. Additionally, new drug technology exports by the domestic pharmaceutical industry increased from 2.31922 billion USD in 2016 to 3.9604 billion USD in the first half of 2019, marking a turning point toward becoming a pharmaceutical advanced country.

However, despite such growth, the global market share of the domestic pharmaceutical industry remains at 1.2%, and that of the domestic CRO industry stays at around 3.2%.

The report pointed out, "Since the global CROs began actively entering the Asian and Korean markets after 2000, and domestic pharmaceutical companies prefer foreign CROs considering overseas expansion of new drugs, using foreign CROs can lead to higher costs compared to domestic CROs, leakage of new drug technology and data, and loss of research and development (R&D) know-how."

It added, "To accumulate new drug development experience and success know-how domestically and enhance competitiveness, active collaboration between domestic pharmaceutical companies and domestic CROs should be encouraged. It is necessary to establish legal recognition of the CRO industry through amendments to pharmaceutical industry-related laws, create a basis for support policies by establishing the CRO industry within the standard industry classification, and foster experts."

Lee Jin-hyung, senior researcher at the Institute for International Trade and Commerce, said, "If collaboration within the industry is efficiently achieved through support for the CRO industry, it will become a successful case of synergy creation through the convergence of manufacturing and services. CROs are not only a promising next-generation industry but also should be fostered on a whole-of-government basis in terms of responding to future infectious diseases such as COVID-19."