[Public Voices] Establishing Pharmaceutical Sovereignty Is the Shortcut to Becoming a Pharmaceutical and Bio Powerhouse

Urgent Need for Drug Price Incentives and Tax Benefits
to Safeguard Public Health and Secure Future Growth

Since the onset of COVID-19, the pharmaceutical and bio industries have emerged as key national strategic sectors, but they are facing fierce challenges both domestically and internationally. Unstable international situations such as the US-China trade conflict and the Russia-Ukraine war continue, and the triple burden of high interest rates, high inflation, and high exchange rates places a heavy strain on companies. Although the government is pouring out industrial promotion policies under the plan to leap forward as a bio-health-centered nation, many on the ground find it difficult to feel the effects. Government policies that contradict the industrial promotion stance, such as regulations focused solely on drug price reductions, are also holding back progress.

So, what is the breakthrough that can capture both economic growth and the securing of public health rights? The United States found the answer in the pharmaceutical and bio industries. At the early stage of the COVID-19 outbreak, through the ultra-fast operation called Operation Warp Speed, the US made large-scale investments and advance vaccine purchases from pharmaceutical companies such as AstraZeneca, Johnson & Johnson, and Pfizer, successfully developing vaccines in a short period as the operation name suggested. The vaccines, developed at lightning speed, were first supplied to its own citizens and also sold worldwide, resulting in Pfizer’s COVID-19 vaccine “Comirnaty” generating sales of $36.7 billion (approximately 46 trillion KRW) in 2021 alone.

The US is also focusing on securing the national pharmaceutical supply chain. The “National Biotechnology and Biomanufacturing Initiative” executive order signed by President Joe Biden in September last year aims to strengthen domestic production systems for essential medicines consumed in the US and diversify pharmaceutical supply chains, with an investment of $2 billion (approximately 2.5 trillion KRW) planned. Advanced countries such as Europe and Japan are also investing national capabilities in strengthening competitiveness in the pharmaceutical and bio industries and pharmaceutical supply chains after experiencing the COVID-19 pandemic.

In South Korea, securing pharmaceutical sovereignty and strengthening the competitiveness of the pharmaceutical and bio industries have emerged as critical issues. This is in preparation for new infectious disease threats that may recur even after COVID-19, protecting public health through stable pharmaceutical supply chains, and securing future growth engines that will drive economic growth.

However, the pharmaceutical self-sufficiency rate, a core indicator of pharmaceutical sovereignty, remains insufficient. The self-sufficiency rate for finished pharmaceuticals was 60.1% in 2021, down more than 20 percentage points from 80.3% ten years ago. In particular, the self-sufficiency rate for active pharmaceutical ingredients (APIs) is only 24.4%, requiring urgent improvement. A 20% level of API self-sufficiency is a serious problem that can no longer be neglected.

Effective government support such as drug price incentives and tax benefits for medicines using domestically produced APIs is urgently needed. If APIs, which are currently fully dependent on overseas sources, are replaced with domestic ones, benefits such as drug price advantages should be provided, and an environment that promotes the development of infectious disease vaccines through public-private collaboration should be established. The government’s support principle for the industry should also shift to a “selection and concentration” focus. Only about 15% of the government’s bio R&D budget goes to corporate support, with the remainder allocated to academia and research institutions. Investment in late-stage development, such as clinical phases 2 and 3, should be significantly increased to enhance commercialization potential.

Since the emergence of a second or third COVID-19 is inevitable, establishing pharmaceutical sovereignty is a matter of national sustainability. Claiming to be a pharmaceutical and bio powerhouse without securing pharmaceutical sovereignty is like building a castle in the air. Firmly laying the foundation of pharmaceutical sovereignty is ultimately the cornerstone for becoming a pharmaceutical and bio powerhouse. The domestic pharmaceutical and bio industries continue to grow by continuously investing in R&D and quality innovation and gaining recognition for competitiveness in the global market. In the post-COVID era, the pharmaceutical and bio industries will more faithfully fulfill their historic responsibility as a pillar protecting public health and as a future growth engine for the national economy by establishing pharmaceutical sovereignty.

Won Hee-mok, Chairman of the Korea Pharmaceutical and Bio-Pharma Manufacturers Association