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South Korean pharma dreams struggle

01 October 2019 Sophie Cairns

In September, South Korean drugmaker Hanmi Pharmaceutical signed a collaboration agreement with US biotech Phanes Therapeutics focusing on dual- and multi-antibody-based immunotherapy treatments. While the deal was one of many that took place in the pharma sector that month, it came as Hanmi Pharmaceutical, and fellow South Korean drug maker Kolon Life Science, struggle to recover from several high-profile setbacks.

South Korea’s government has invested significantly into its pharmaceutical and biotech sectors over the last few years. The country hopes to transform what its sees as key strategic technologies into future economic growth drivers. In April 2019, the Ministry of Health and Welfare (MoHW) said it planned to invest KRW477.9 billion (USD400 million) in the country's pharmaceutical and biotech sectors in 2019. In particular, South Korea’s investment into pharmaceutical R&D is growing rapidly, with the domestic pharma industry on track to invest KRW1.7 trillion into research and development into new treatments in 2019, according to the Korea Health Industry Development Institute (KHIDI).

However, South Korea’s goals for the pharma sector have been dented by high-profile setbacks. Last year, Hanmi terminated clinical development of its lung cancer treatment Olita, after experiencing difficulties in recruiting patients for clinical trials of the treatment, as well as competition from AstraZeneca’s Tagrisso. The decision followed Boehringer Ingelheim’s termination of a USD800-million licensing deal struck in 2016 for Olita, after two patients died from severe adverse effects.

In January 2019, Eli Lilly returned the licensing rights for rheumatoid arthritis (RA) candidate LY3337641/HM71224 to Hanmi, based on interim clinical data. On top of that, in July 2019, Janssen Pharmaceutical ended a USD915-billion agreement and returned the rights to obesity and diabetes candidate HM12525A to Hanmi, after the candidate demonstrated in two mid-stage studies that it required further development to manage blood sugar levels in obese patients with diabetes.

In another blow to South Korea’s ambitions, the country’s first approved homegrown gene therapy - Kolon Life Science’s Invossa – has also suffered several high-profile setbacks. In August 2019, the US FDA issued a Continue Clinical Hold letter on Phase III clinical development of Invossa for osteoarthritis, pending additional required data. The letter follows a decision by South Korea’s Ministry of Food and Drug Safety (MFDS) to revoke the marketing authorisation of Invossa in May 2019, alleging that Kolon Life Science had falsely reported ingredients used, intentionally not disclosing additional data it discovered on the problem before submitting the drug for approval and failed to provide a scientific cause for the mix-up.” While Kolon Life Science has stated: “We provided the materials requested by the Korea Food and Drug Administration in a transparent manner, responded sincerely to the inquiries, and cooperated with us in the best way to investigate the site" (translation by IHS Markit)” and made legal appeals, the revocation of marketing approval has been upheld in South Korea.

What does this mean for overseas pharmaceutical companies? On the face of it, the setbacks would indicate potentially lower competition from homegrown South Korean treatments, for the time being. AstraZeneca, for example, struck a positive tone on South Korea in June, when chairman Leif Johansson announced the company planned to invest USD630 million into the country’s biotech and healthcare sectors over the next five years. IHS Markit forecasts that South Korea’s pharma sector will grow by 2.9% in 2019 and 3.0% in 2020 to reach KRW31.0 trillion in 2020.

The Pharmaceutical Research and Manufacturers of America (PhRMA), however, has struck a more cautious tone regarding market access in South Korea. PhRMA said in February that it had requested that the United States Trade Representative (USTR) designate four countries, including South Korea, as priority foreign countries (PFC) in its annual Special 301 Report.

"Damaging price controls in Canada, Japan, Korea and many other countries are jeopardising American exports and limiting access to new medicines," said Brian Toohey, PhRMA's senior vice-president for international advocacy.

Looking ahead, South Korea has pledged to continue to invest in its pharma and biotech sectors. While there are few homegrown truly innovative drugs in the near-term, overseas drug makers will probably face a growing field of rivals over the medium term, as the government’s investment eventually pays off.

Posted 01 October 2019 by Sophie Cairns, Senior Analyst, IHS Life Sciences

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