Market Information
Asia Pacific

The Biotechnology Market in Korea

May 2001

Prepared by the Market Research Centre and the Canadian Trade Commissioner Service

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EXECUTIVE SUMMARY

The biotechnology industry in Korea was valued at $635 million¹ in 1998 and is expected to grow to $1.4 billion by the end of 2000. By August 2000, there were approximately 300 companies involved in some aspect of biotechnology. The Korean government has traditionally been heavily involved in all sectors of the economy, and biotechnology is no exception. Development has been slanted heavily toward the public sector through government-sponsored research organizations and academic institutions. The largest government funded research institute is the Korea Research Institute in Bioscience and Biotechnology (KRIBB),² with annual funding of approximately $52 million.

Other government funding for biotechnology includes the Biotech 2000 program, with a total investment of $22 billion. As of October 2000, the program has been extended to 2010 and aims to place the Korean biotechnology industry on par with other Group of Seven leading industrialized (G-7) countries.

Rapid growth is expected in the Korean pharmaceutical and biopharmaceutical industry as a result of technological developments and increased pressure to meet the needs of Korea's aging population. Korea's biomedical research base is showing impressive growth and is also contributing positively to the expansion of the nation's well established pharmaceutical market.

Agricultural biotechnology is also a strong sector in the Korean market. The National Institute of Agricultural Science and Technology has established the Korea Rice Genome Research Program and developed eight different genetically modified (GM) crops including rice, cayenne, Chinese cabbage, tobacco and tomatoes. However, Korea has not yet developed legislation to regulate the release of genetically modified organisms (GMOs) into the environment. The Rural Development Administration expects domestically produced GM crops to be available for sale in Korea by 2001.

Korea depends heavily on agricultural imports and has purchased large quantities of genetically modified corn and soybean products from the United States and other suppliers. Strong support for GM crops in North America suggests that Korea will continue to import these products. There have, however, been some efforts to influence the amount of GM food products that enter Korea through a tender by the state-run Agricultural and Fisheries Marketing Co-operation for non-GM soybeans. This tender may represent a barrier to trade under various World Trade Organization (WTO) agreements. As well, Korea has submitted notification to the WTO that labels will be required on GM corn, soybeans and bean sprouts as of March 2001. Canadian officials continue to watch the situation closely.

Although biomedical technology is expected to continue to dominate the industry, biofoods and agricultural biotechnology are expected to play an increased role. The significance of GM food products will drive this increase if the technology is proven safe to those who are currently concerned about its use. The Korean biotechnology sector is growing rapidly as governments and companies throughout Asia see the potential in biotechnology and add funding in order to make up a generally slow start in the industry. There will continue to be opportunities for Canadian companies in this market, particularly through joint ventures, strategic alliances and technology transfer agreements.

TABLE OF CONTENTS

EXECUTIVE SUMMARY

MARKET OVERVIEW

Key Factors Shaping Market Growth
Opportunities

COMPETITIVE ENVIRONMENT

Local Capabilities
International Competition
Canadian Position
Competitive Advantage through Canadian Government Policies and Initiatives

PRIVATE-SECTOR CUSTOMERS

PUBLIC-SECTOR CUSTOMERS

MARKET LOGISTICS

Channels of Distribution
Agents and Wholesalers
Joint Ventures and Strategic Alliances
Market-entry Considerations
Suggested Business Practices
Protection of Intellectual Property
Import Regulations
Local Standards, Certificates or Registrations
Export Credit Risks, Restrictions on Letters of Credit, Currency Controls

PROMOTIONAL EVENTS

KEY CONTACTS AND SUPPORT SERVICES

APPENDIX A

APPENDIX B

BIBLIOGRAPHY

OTHER REFERENCE MATERIALS

Useful Internet Sites

MARKET OVERVIEW

Since 1999, the Korean economy has shown strong signs of recovery from the Asian financial crisis of 1997-1998. Recovery is being attributed, in part, to much-needed financial and economic reforms. In response to international criticism, the Korean government has made an effort to liberalize the domestic economy, including making attempts at tempering the powerful business conglomerates-known as chaebol -that account for 80% of Korea's gross domestic product (GDP). Although these attempts have not been entirely successful, a more competitive market has developed. Hence, many firms from the United States, Japan and Western Europe have opted to retain their position in Korea and to wait for trade to return to pre-crisis levels.

The Korean government has traditionally been heavily involved in all sectors of the economy, and biotechnology is no exception. The biotechnology industry in Korea was estimated to be worth $645 million in 1998 and is estimated to grow to $1.4 billion by the end of 2000. By August 2000, there were approximately 300 companies involved in some aspect of biotechnology in Korea. The Korean definition of a biotechnology company includes those involved in engineering technologies such as genetic recombination, cell fusion, protein engineering, cell cultivation, biological processing, and fermentation technology. The same definition, with the exclusion of fermentation technology, applies to North American companies.

Source: Lee, Sang-yeun. "Growing Organically," Korea Trade and Investment, 2000.

Development in the Korean biotechnology industry has been slanted heavily toward the public sector through government-sponsored research organizations and academic institutions. Leading research institutions include the Korea Research Institute in Bioscience and Biotechnology (KRIBB), Seoul National University and Kyongbuk University. KRIBB is the primary focus for government-sponsored biotechnology research in Korea, with annual funding of approximately $52 million. The Korean government has also supported the development of biotechnology through other funding programs, including the Highly Advanced National Project (HAN) announced in 1992. The HAN was intended to make Korea one of the top seven technologically advanced nations in the world. The first phase, investment in research and development, was completed in 1994; the biotechnology component of the program was supplemented by the Biotech 2000 program. Biotech 2000 is intended to increase Korean biotechnology capabilities to the level of other G-7 countries and to capture 5% of the world's biotechnology products market by 2007.

Biotech 2000 was designed in three stages: infrastructure development and improvement of R&D capacity (Stage 1, 1994-1997); completion of fundamentalresearch (Stage 2, 1997-2002); and manufacturing for export markets (Stage 3, 2002-2007). Co-ordinated by the Ministry of Science and Technology, the program is supported by key government ministries ³ as well as industry, universities and research institutions. Total investment for the project is estimated at $22 billion.  

To supplement the Biotech 2000 program, the Korean government, through the National Science and Technology Council, announced in July 2000 a further $165 billion for health-care and biotechnology research and development through to 2010. Included in the funding is support for a biotechnology complex and private-sector research into genetics, DNA chips and new drug development. The biotechnology complex currently under construction in Osong, North Chungchong Province, will serve as the focal point for Korean biotechnology research. Health-care related government agencies, including the National Institute of Health and the Korea Food and Drug Administration, will relocate to the new facility by 2003. The Government is also planning to establish human genome research centres at two medical schools by the end of 2000, with the number increasing to 10 centres at an undisclosed time.

In October 2000, the Korean government announced modifications to the Biotech 2000 program, including expanding Stage 2 through 2003, and the entire program through 2010. Government news releases forecast the industry will be competitive with world leaders by 2010 and will include 900 start-up companies. To accomplish this goal, the Government plans to increase the funding available to finance industry growth.

* Estimate
Source: Rhee, Sang-KI, "Biotechnology in Korea," Korea Research Institute of Bioscience and Biotechnology, 1999.

The Biotech 2000 program also emphasizes international co-operation in biotechnology through joint venture, research and technology transfer agreements. The Korean government has successfully negotiated agreements under this program with institutions in China, the United Kingdom, Russia, Japan and Israel. Agreements with Canada include a graduate student exchange program between the Korean Research Institute of Bioscience and Biotechnology and the University of Montreal, as well as research collaboration between KRIBB and the University of Western Ontario. The Canadian National Research Council has also signed research partnerships with the Korea Institute for Science and Technology and the Korea Institute for Chemistry.

The Ministry of Commerce, Industry and Energy, through the Chemical and Biotechnology Industries Division, has assumed the following responsibilities for biotechnology in Korea:

• to formulate and implement policies for the promotion of chemical and biotechnology industries;
• to build infrastructure for chemical and biotechnology industries;
• to promote R&D to strengthen the international competitiveness of chemical and biotechnology industries; and
• to respond to international conventions within the biotechnology industry.

As well, the Ministry has adopted a five-year plan to further biotechnology development that includes infrastructure investments, support for companies and stronger links with the Ministry of Agriculture and Forestry, the Ministry of Environment and the Ministry of Science and Technology. Infrastructure support includes a biotechnology centre to be constructed in the Techno Park in Inchon City by 2002. The Centre will be designed to meet current good manufacturing practices to allow for the development of medical and biotechnology products.

Medical Biotechnology

Approximately 6% of Korea's GDP is committed to public health care. The health-care sector, in general, is well-developed. Hospitals and clinics are equipped with sophisticated technology and are often staffed by Western-educated physicians. Korea has operated a universal health insurance system since 1989; coverage is currently at 100% of the population-a dramatic rise from 14.5% in 1977. The health-care system is governed by the Korean Ministry of Health and Welfare (MOHW), a department that has recently undergone significant organizational restructuring. The Ministry's Public Health Policy Bureau has assumed responsibility for food and drug development, while the Office of Planning and Management is now overseeing international co-operative programs. In addition, the MOHW has handed over the drug inspection and testing as well as management of pharmaceutical pricing and distribution to the Pharmaceutical Affairs Bureau within the Korea Food and Drug Administration (KFDA). The KFDA's Department of Natural Medicines and Biologicals is responsible for all biotechnologyderived medications and viral products.

Many traditional pharmaceutical companies, both internationally and in Korea, are turning their attention to the potential of biopharmaceuticals and biotechnology processes for the development of new drugs, particularly as the science behind biotechnology develops. As yet, the distinction between pharmaceuticals and biopharmaceuticals is not clear. In fact, many pharmaceutical products may not be considered biotechnology products, but have been derived through biotechnology processes. As a result, an examination of the Korean pharmaceutical industry is an essential part of understanding opportunities for Canadian biotechnology companies in this market.

Valued at just over $8 billion, the Korean pharmaceuticals industry is the tenth largest in the world and the third largest in Asia after Japan and China. Imports account for approximately 13% of the market. The market is expected to continue expanding at a rate of 10% annually over the next several years. Before the Asian financial crisis, the market for brand-name pharmaceuticals was growing at an annual rate of 20-25%, while demand for generic prescription drugs was increasing at an average annual rate of 15%. Demand for over-the-counter products (OTCs) was growing at a slightly lower rate of 8% before the collapse. Industry experts expect the market to fully regain 1997-1998 losses by the end of 2000. The Korean pharmaceutical market is dominated by domestic companies, with international companies accounting for approximately 18% of the sector.

Rapid growth is expected in the Korean pharmaceutical industry as a result of technological developments and increased pressure to meet the needs of Korea's aging population. Korea's biomedical research base is showing impressive growth and is also contributing positively to the expansion of the nation's already well-established pharmaceutical market. Research and development investment for new drugs reached a value of $123 million in 1998. For the first time, Korean pharmaceutical companies are establishing themselves as innovators with 43 companies working on the development of 137 new drugs, many of which are now in Phase I and II trials. Korea is one of the largest exporters of antibiotics and vaccines to Southeast Asia and China and has also developed expertise in other biomedical products including human growth hormones, blood proteins, biomedical enzymes, diagnostic kits, and microbial agents.

Pharmaceutical companies in Korea have a history of licensing and distributing products from foreign companies, and these licensing agreements are often the first step in a long-term, joint-venture relationship. The local manufacturing sector has traditionally been dominated by branded generics, products that would not be considered new drugs by international standards, but rather simply a new drug on the Korean market or new formulations of existing products.

The success of the pharmaceutical sector in Korea stems largely from the importance placed on personal health and well-being in Korean culture. Koreans have relied on the curative properties of herbal medicines for centuries and have now invested the same faith in the power of modern preparations to heal or prevent illness. Modern medicines have not, however, superceded traditional remedies; rather, they are often prescribed in conjunction with herbal or Chinese treatments.

Over-the-Counter Products

Asian culture strongly encourages the use of preventative medicine resulting in a large market for non-prescription products that claim to promote overall health. OTCs in the Asian market include vitamins and dietary supplements, which account for 31.1% of sales in this category. In 1998, the market for OTCs in Korea was valued at $2.15 billion. The market is expected to grow between 10% and 15% through 2000. The industry is predicted to be valued at $2.3 billion by 2003.

The market for OTC products is dominated by small number of domestic manufactures, including Dong-A Pharmaceutical Co. Ltd., and Il Dong Pharmaceutical. The importance of traditional medicines and tonics has made it difficult for international companies to create a strong presence here independently. Joint ventures and strategic alliances are a popular method of gaining access to the market; Janssen Korea and Glaxo Wellcome are the international leaders. OTC products are currently available at pharmacies and, since 1998, at grocery stores, Chinese medicine shops and department stores.

Nutraceuticals

Formal scientific investigation into the effects of the ginseng root and similar products has resulted in greater public interest in special nutritive foods. Companies should note that many of the nutraceuticals sold in pill or dosage form in North America are consumed as regular foods in South Korea. Ginseng, gingko biloba, and barley, for example, are often taken as tea or confectionaries, whether or not for specific medicinal benefits. There is a also a distinct market in Korea for tonics and bottled nutrient drinks, enhanced with vitamins or herbal extracts, that claim to promote overall health and vitality. These drinks are consumed regularly by Koreans and are often referred to as "soft drinks." They include Royal Jelly, mushroom and ginseng drinks.

The overall nutritional products market in the Asia-Pacific region is expected to have a value of $71.9 billion in 2002, an increase of 62% over 1997 figures. Nutraceutical sales alone are expected to be worth $19.2 billion in 2002, up from $15.5 billion in 1997. The vast majority of these sales will be made in Japan, China and Korea. Although Korea lacks the clear definition and regulatory environment of the Japanese Foods for Specific Health Use (FOSHU) industry, the Korean market is developing quickly. Domestic production of special nutrient foods is increasing steadily, as are imports of herbal extracts and related items. Of particular interest to Korean consumers are child-specific products that claim to enhance children's academic performance.

Agricultural Biotechnology

The major R&D institutions for agricultural biotechnology in Korea include the Plant Molecular Biotechnology and Biotechnology Research Centre at Gyeongsang National University (PMBBRC); the Biotechnology Research Centre at the Rural Development Administration; the National Institute of Agricultural Science and Technology, funded by the Ministry of Agriculture and Forestry; and the Bioresources Research Group at the Genetic Engineering Research Institute, which is part of KRIBB.

The National Institute of Agricultural Science and Technology has established the Korea Rice Genome Research Program and developed eight different genetically modified (GM) crops including rice, cayenne, Chinese cabbage, tobacco and tomatoes. While Korea has not yet developed legislation to regulate the release of GMOs into the environment, the Rural Development Administration expects domestically produced GM crops to be available for sale in Korea by 2001. Research institutes are also working on biotechnology applications for processed foods, as well as techniques for developing food enzymes, carbohydrate substances, and amino acids.

Scientists at Chonnam National University and Scigen Harvest Co., in a joint research arrangement, announced in October 2000 preliminary results on a high-yield genetically modified rice. If commercialized, the new rice will reduce Korean reliance on food imports by millions of dollars annually. The rice is currently undergoing various safety and nutritional tests.

Korea depends heavily on agricultural imports and the United States is the country's largest supplier. Strong support for GM crops in the United States has resulted in a significant portion of food imports that contain GM ingredients. An estimated one quarter of all soybeans consumed in Korea in 1999 were believed to be genetically modified. The U.S. Department of Agriculture predicts that as much as 50% of the U.S. soybean crop for 2000 will be GM varieties, resulting in an increased portion of GM soybeans in Korean imports. However, the Korea Agricultural and Fisheries Marketing

Co-operation, which purchases approximately 275 000 tonnes of soybeans annually, announced early in 2000 that they would seek non-GM soybeans for import. As a government-supported organization, this announcement may represent a barrier to trade under various WTO agreements. Canadian officials continue to watch the situation closely.

Korea has also submitted notification to the WTO that labels will be required on GM corn, soybeans and bean sprouts as of March 2001 in order to protect consumer's rights to know what is in food. Any food processed with these products will also require labels by July 2001, however, foods that do not contain recombinant DNA (as detected through proteins) will be exempted. Foods currently targeted for labelling include powdered soybeans and corn, corn starch, tofu, processed tofu, soymilk, soybean paste, hot pepper paste, popcorn, and formulated foods for children made from corn or soybeans. There are also plans to institute labels for GM potatoes in March 2002.

Canada has sent a response to the WTO notification of these actions, requesting clarification and expressing Canadian government objections to a mandatory labelling program. Canada continues to work bilaterally and multilaterally through the WTO notification process, the APEC Food Safety Working Group, the Canada-Korea Special Partnership Working Group, and other fora to address these trade issues.

Environmental Biotechnology

Steady economic growth over previous decades, including urbanization and industrialization, has occurred in Korea with little regard to the environmental consequences. The country now faces significant pollution problems and is seeking solutions through advanced technologies. The environmental biotechnology sector is not as advanced as other biotechnology sectors in Korea, but the potential is significant and companies are working to establish specializations in this market.

The domestic market for environmental biotechnologies was estimated to be worth $406 million by 2000, with growth to $1.9 billion by 2005 to represent 10% of Korea's biotechnology market. While predictions for the industry appear steep, the demand for bioremediation products is expected to increase. Korean companies are investing in R&D for products including decomposition material for contaminated soil, processing systems based on regeneration of contaminated waste, biological detection of pollutant chemicals, microbial products for wastewater treatment, and biomass technologies. The Korean government is supporting growth in this industry by investing in academic programs to train research scientists and support for research facilities.

Key Factors Shaping Market Growth

The Korean biotechnology sector is growing rapidly as governments and companies throughout Asia see the potential in biotechnology and add funding in order to make up a generally slow start in the industry. The international investment community, however, has not yet been willing to invest heavily in this emerging market. One consideration for fund managers is the potential for U.S. Food and Drug Administration (FDA) approval for a company's products. FDA approval is a long and expensive process, but is necessary to access the affluent U.S. market, and also serves as a benchmark for approval in other areas of the world. Many Korean biotechnology companies are looking to avoid the times and costs associated with FDA approval and focus instead on developing biotechnology based raw materials for drug development, and biochip technology as an entry strategy to the U.S. market.

Venture Capital Development

There are currently 146 venture capital firms (VC) in Korea. A great number of these firms have a capital base of under $15 million and were created as a result the sharp rise in the KOSDAQ index. Around 25 larger VC firms have a demonstrated interest in the biotechnology sector. These companies are seriously looking overseas for investment because of the small number of credible biotech start-ups in Korea. A few firms have already invested in biotechnology firms in the United States and Canada. Isotechnika, a biotechnology firm based in Edmonton, has been able to fund its growth with a $5 million investment from a Korean venture capital fund in 1999.

In addition, large conglomerates such as LG, SK and Samsung have set up VC funds to invest in companies that will bring new business to their pharmaceutical arm. By working with these partners, Canadian biotech firms can attract investment, reach markets that may otherwise have been inaccessible and minimise the loss of management control on their company.

Korean venture capital firms are allowed to invest up to 30% of their paid-in capital in foreign venture firms. Larger firms are usually interested in overseas investment opportunities and there are a number of cases of investments mostly in Silicon Valley. VCs have so far invested mostly in the IT sector, although the biotechnology sector looks promising.

Medical Biotechnology

Medical biotechnology is expected to continue to dominate the industry in the future. With the recent success of the Human Genome Project in producing a rough draft of the human genome, other genomics projects have begun internationally. A number of Korean companies, including Macrogen, are looking to map the Korean genome in an effort to identify specific traits that lead to disease in Koreans. KRIBB has also ventured into genomics and launched a research project in July 2000. The program will focus on genetic research to find cures for stomach and liver cancer, the most common deadly diseases for Koreans. The KRIBB project will cover a 10-year period with public and private funding. Investment in the program will be $230 million and include 30 universities and nine research institutes around the country.

Traditionally, prescription and dispensation of drugs have not been separated in Korea. Pharmacists often dispense prescription drugs without a doctor's prescription, just as physicians and clinics frequently sell medications directly to their patients. However, in late 2000, the MOHW implemented a policy known as Separation Between Prescribing and Dispensing (SBPD) designed to clarify these practices. Doctors will be concentrating on issuing prescriptions and pharmacists will see a large reduction in the number of drugs that can be sold without prescription.

Key industry participants voiced concerns over the Separation Between Prescribing and Dispensing (SBPD), claiming that sales of pharmaceuticals will decline as a result of the change since doctors will no longer profit from prescribing and dispensing medicine and since drug purchasing will become less convenient for individual consumers. Other changes as a result of the new policy include an increase in doctor's fees and diagnostic charges to make up for lost revenues, as well as increased costs of medications to make up for reduced sales. Demand for specific drugs, such as oral antibiotics, is expected to wane as a result of SBPD-related regulations regarding their use and sales of prescription drugs produced by multinational corporations are expected to increase because doctors are now prescribing brand name products rather than local generic drugs. Furthermore, insurance reimbursement rates for pharmaceuticals will decline as a result of SBPD-a decline that will, in turn, lower consumer drug expenditure as a portion of total medical costs. Changing insurance rates will likely have the greatest impact on drug manufacturers that depend mainly on established sales relationships with hospitals and clinics. In response, leading domestic pharmaceutical companies are likely to target pharmacists more in their advertising campaigns and to invest more heavily in the promotion of OTC products.

A related policy, the Deregulation of Product Sales program, was implemented in July 1999. The policy authorizes the sale of 62 product lines at non-pharmaceutical stores. Although domestic production of 42 of the approved products has been halted and products that were expected to be included (such as digestants, pain relievers, and constipation treatments) were omitted, the policy will likely induce growth in the affected niche markets, since visibility and accessibility of the approved products will improve.

Agricultural Biotechnology

Although biomedical technology is expected to continue to dominate the industry, biofoods and agricultural biotechnology are expected to play an increased role. The significance of GM food products will drive this increase if the technology is proven safe to those who are currently concerned about its use.

Research in this sector is developing quickly, but is currently limited by lack of legislative protection and outstanding concerns about consumer safety. The strongest consumer reaction in Asia against GM foods has been seen in Japan and Korea. Both governments are developing food labelling rules, and Korea implemented legislation in March 2000. A number of Korean soybean and corn importers have specifically demanded GM-free varieties, although these varieties are still imported for animal feed.

There have been some public protests against GM food products in Korea. Some concerned citizens have been particularly disturbed by field testing that is undertaken without legislated regulations or a monitoring agency and have demanded a moratorium until biosafety and bioethics legislation can be publically debated and enacted. In response to public protest, new legislation was prepared in 2000 to address GM food products, including mandatory labelling for soybean, soybean sprout, and corn effective from March 1, 2001. Potato is expected to be included in this rule in 2002.

Opportunities

Over the last decade, Korea has witnessed a significant increase in non-communicable illnesses such as cardiovascular disease, diabetes, cancer (especially stomach cancer), and chronic respiratory disease. Prevalence of hypertension, gastric ulcers and inflammation, arthritis, hepatitis and circulatory disease is also rising. Diseases of the circulatory system alone account for close to 30% of all deaths in Korea, followed by cancer at 20%. Experts estimate that by 2020, lifestyle- and environment-related diseases will account for nearly 60% of all illnesses in Korea. A study undertaken by the Korea Public Health and Social Research Institute found that 30% of Koreans currently suffer from chronic ailments, costing approximately 1% of Korea's GDP annually. Accordingly, opportunities exist for Canadian suppliers of health-care products used in the prevention or treatment of these diseases.

In the agricultural sector, opportunities exist for Canadian companies specializing in GMO technologies. Despite consumer concerns and planned labelling requirements, the Korean government is still a strong supporter of agricultural genetic research. A number of institutes throughout the country are working on developing new varieties of staple products and Canadian companies with expertise in these areas will find opportunities for research partnerships, strategic alliances and technology transfer agreements. There will also continue to be a market for Canadian agricultural biotechnology products in Korea, although proposed labelling requirements may see the demand decrease after 2001.

Actual and Planned Projects

• Biotechnology scientists in Korea and Russia have established the Korea- Russian Biotechnology Forum to focus on research into a treatment for heart disease using an undersea microcosm found off the coast of both countries. Other projects include enzyme-based drugs, and cancer testing kits. Joint research was expected to begin in November 2000.
• The Green Cross Vaccine Corporation (GCVC), a joint-venture pharmaceutical company between Korea Green Cross and Rhein Biotech, announced the creation of the Green Cross Vaccine Research Centre in July 2000. The Centre will focus on vaccines against rotavirus, meningitis and anthrax. GCVC is positioning itself to become one of the world's five largest vaccine companies.
• The regional government of Inchon plans to build a bioventure centre within the Songdo Techno Park. This will be supplemented by a biotechnology commercialization centre scheduled for 2002. The centre will include facilities for education and training. The venture centre and commercialization facility will eventually be joined to form a biotechnology cluster focussed on biomedical and biochemical technologies.
• In Taejon, the Taeduck Research Complex is adding a biomedical focus and plans to form a regional biomedical support centre in co-operation with local universities and the KRIBB.
• The North Chungchong government is focussing on attracting bio-venture companies to its Osong Medicine and Health Complex. Other biotechnology sectors to be nurtured include food, agricultural biotechnology and chemicals through additional infrastructure projects in Chunchon City, Kangwon.
• North Kyongsang Province is planning a "biotechno belt" to focus on agricultural biotechnology in the northern part of the province. The fist phase is planned for Andong, with additional investments moving east and west.
• South Kyongsang Province is planning biotechnology clusters in Kimhae and Chinju to focus on biomedicine, agricultural biotechnology and bioengineering.
• North Cholla has plans for a biotechnology research cluster, with supporting venture capital clusters around Chongup. The cluster will focus on all major sectors within biotechnology.
• South Cholla has designated Kwangju as the regional centre for biotechnology with a focus on agricultural biotechnology and biofoods. No concrete plans have yet been made to develop the industry.

COMPETITIVE ENVIRONMENT

Local Capabilities

Korea is the world's tenth-largest manufacturer of pharmaceuticals. Local production is estimated at $7.4 billion, with more than 270 domestic firms serving the sector. Of these, 46 Korean pharmaceutical companies are conducting research and development work and 200 have obtained Korea Good Manufacturing Practice certification. In July 1999, the KFDA announced the nation's first locally developed drug, an anti-cancer treatment called "SunPla," developed by SK Chemical Company.

South Korean firms have been steadily building their capacity for developing and marketing novel products, as well as maintaining their long-established reputation for manufacturing pharmaceutical generics. Central government pricing and export policies that support domestic pharmaceutical enterprises have contributed significantly to local capabilities in the sector. Currently, at least 12 pharmaceutical companies have annual sales over $150 million. Korea exports a significant portion of its production and is one of the largest exporters of antibiotics and vaccines to Southeast Asia and China. (See Appendix B for a list of the top 20 Korean pharmaceutical companies and their

Source: Lee, Sang-yeun. "Growing Organically," Korea Trade and Investment, 2000.

The Korean biotechnology industry, which currently employs approximately 5000 researchers, is expected to be worth $1.4 billion by the end of 2000. The country has developed significant research and production capacity and has successfully exported a number of products. Biochemicals, including amino acids and lysine, account for 47% of all biotechnology exports, followed by biomedical products (38.6%) and biofoods (11.9%).

In September 2000, Macrogen announced that it had decoded 98.9% of the genetic sequence of the microbe Zymomonas mobilis, the raw material for alcohol. The company used the same techniques as those applied to the Human Genome Project, and with this achievement, Korea became the eighth country in the world to successfully decode the genetic structure of an organism. The results of the work will be made available on the GenBank, a public database of DNA sequencing. Applications of this work include research into bio-mass fuels, immunizing agents, and other industrial applications.

International Competition

By far, the largest biotechnology industry in the world is the United States, with Germany, the United Kingdom, France and Canada following. The Korean pharmaceutical market has a strong international presence, with most of the world's leading multinational firms doing business in the nation. The United States is the primary source of medical drugs, followed by Japan and the United Kingdom.

*January-July
Source: World Trade Atlas, September 1999.

*January-July
Source: World Trade Atlas, September 1999.

Foreign-invested firms are also developing rapidly in this sector. International competition is expected to increase as a result of Korea's streamlining of import regulations. Since July 1999, imported drugs are no longer discriminated against for national health insurance coverage and reimbursement. As well, the Ministry of Health and Welfare has permitted foreign manufacturers without production facilities in Korea to out-source their production to domestic pharmaceutical firms. The changes are expected to increase international participation in the local pharmaceutical market and to intensify competition between domestic firms. The changes may also lead to a surge in imitation products of foreign-manufactured in response to the dominance of foreign companies.

Source:PJP Publications, "Scrip's Yearbook 2000," February 2000.

Despite the presence of multinationals in the market, there are still a number of small and medium-sized enterprises working on critical early-stage work in drug discovery.

More than 90% of advanced biotechnology products on the world market are health related, and it is expected that about three quarters of the total world demand for biotechnology will continue to be in the health sector. World sales of biopharmaceuticals have grown more than sevenfold over the past decade, and should exceed $26 billion by 2003 with North America, Japan and Europe accounting for 84% of all sales. The biopharmaceutical portion of world prescription drug sales is expected to triple from 5% to 15% by 2005.

Canadian Position

Korea is Canada's third-largest export market in the Asia-Pacific region. While Canadian exports to Korea declined as a result of the 1997-1998 economic crisis, trade is expected to regain momentum as the Korean won continues to appreciate. Some recovery is already apparent. The 1999/1998 percentage change in Korean imports of Canadian pharmaceutical products is recorded as 32%.

The Canadian biotechnology industry has flourished over the last several years. With almost 500 companies, collective revenues of more than $1.9 billion and research expenditures of more than $1.5 billion, Canada is poised to become a world leader in pharmaceutical research and production.

Examples of Canadian activity in the Korean market include Axcan Pharma and their agreement to license in drugs developed by Ilyand Pharma. As well, Isotechnika is actively marketing its diagnostic kits in Korea with its partner Global Damon Pharm.

Competitive Advantage through Canadian Government Policies and Initiatives

Fostering growth in the Canadian biotechnology sector is consistent investment in R&D, financial support by private and public agencies, a solid regulatory framework, strong human resources and general public acceptance of biotechnology-derived products. In 1999, the federal government announced a $550 million increase in health research funding over three years, and reinforced biotechnology as an important growth sector for the future. The funding announcement included the creation of the Canadian Institutes of Health Research, $200 million in additional funding for the Canadian Foundation for Innovation, and $150 million in additional funding for Technology Partnerships Canada. This commitment to biotechnology was strengthened in the federal budget of February 2000 with the announcement of $160 million to fund five genomic science centres across Canada, $900 million for university and hospital research infrastructure, and $900 million for additional research chairs at Canadian universities. The Government has also allotted $90 million to strengthen Canada's regulatory capacity in the area of biotechnology.

Canada's positive relations with the world's most prominent economies, as well as its global reputation for scientific excellence, give Canadian companies an advantage in expanding their businesses to overseas markets. Canada is well-positioned to provide joint-venture partnerships and commercialization expertise as well as a broad range of products resulting from Canada's R&D efforts.

Export Development Corporation

Export Development Corporation (EDC) offers export financing and insurance to Canadian exporters. Additionally, insurance can be provided for larger transactions that are subject to the terms and conditions established by the buyer. EDC prefers to work through letters of credit, bank credits or bank guarantees. Approval for financing is considered on a case-by-case basis.

Canadian Commercial Corporation

The Canadian Commercial Corporation (CCC) gives Canadian companies access to financing and better payment terms under the Progress Payment Program (PPP). The PPP concept was developed as a partnership between major Canadian financial institutions and the CCC. It enables the exporter's bank to open a project line of credit for the exporter's benefit, based on CCC approval of the project and the exporter's ability to perform. The CCC will also act as a prime contractor on behalf of Canadian small and medium-sized enterprises, giving those businesses increased credibility and competitive advantage.

Program for Export Market Development

The Program for Export Market Development (PEMD) helps Canadian companies enter new markets by sharing the costs of activities that companies normally could not or would not undertake alone, thereby reducing risks involved in entering a foreign market.  Eligible costs and activities include market visits, trade fairs, incoming buyers, product testing for market certification, legal fees for international marketing agreements, transportation costs of offshore company trainees, product demonstration costs, promotional materials, and other costs necessary to execute a market development plan. Activity costs are shared on a pre-approved, 50/50 basis.

The PEMD refundable contribution ranges from $5,000 to a maximum of $50,000. Preference is given to companies with fewer than 100 employees for a firm in the manufacturing sector and 50 in the service industry, or with annual sales between $250,000 and $10 million. Other components of the program include international bid preparation (Capital Project Bidding) and, for trade associations, developing international marketing activities for their membership. For additional information visit http://www.infoexport.gc.ca/pemd-e.asp or call 1-888-811-1119.

WIN Exports

WIN Exports, a database of Canadian exporters and their capabilities, is used by trade commissioners around the world and by Team Canada Inc partners in Canada to match Canadian suppliers with foreign business leads, and to share information on trade events. To register your company in WIN Exports or for more information, visit http://www.infoexport.gc.ca/winexports/home_e.html or call 1-888-811-1119.

New Exporters to Overseas

The New Exporters to Overseas (NEXOS) program helps Canadian companies that have not yet exported to Europe. NEXOS introduces the essentials of exporting and provides practical information and first-hand exposure to European markets. Contact the Department of Foreign Affairs and International Trade, European Business Development Section (RENB) or visit http://www.infoexport.gc.ca/nexos-e.asp for more information about NEXOS.

Technology Partnerships Canada

Industry Canada's Technology Partnerships Canada is an investment loan fund of $250 million that was created to assist in the development and eventual export of hightechnology products. Investment loans must be fully repaid and are intended to help ensure that products with high potential actually reach the market. Sectors within bioindustries supported by the program include: therapeutics, including clinical trials in phases I and II; diagnostics, including clinical trials in phases I and II; agri-food; aquaculture; and bio-remediation. For further information, contact Technology Partnerships Canada at 1-800-266-7531 or consult the Internet at http://tpc.ic.gc.ca.

PRIVATE-SECTOR CUSTOMERS

There are three major categories of hospitals in Korea, all of which purchase biomedical products: national hospitals. the largest of the public hospitals, which serve as national referral centres; private and corporate hospitals, run and maintained by private-sector conglomerates; and general hospitals, either public or private, with more than 80 beds. Most treatment is provided in corporate or private hospitals and clinics. Koreans prefer to attend large or university hospitals since the quality of smaller local hospitals and clinics, which often do not have access to the most advanced medical equipment, varies greatly. As a result, a number of smaller hospitals have had to close over the last few years.

Source:  Espicom Business Intelligence. Comparative Data, July 1999.

Private hospitals are concentrated in urban areas, particularly in Seoul, Pusan, and the provinces of Kyonggi and South-Kyoungsang. Private hospitals are reimbursed through a combination of the national health insurance system and patient co-payments on a fee-for-service basis. There are also more than 30 000 specialized and general clinics, dispensaries and dental offices in the country. Most of these establishments purchase equipment and supplies through local distributors or general trading companies.

There are more than 20 000 pharmacies in Korea, most of which are independently owned. Chains were banned until 1998, and every outlet must have a qualified pharmacist.

Source: Espicom Business Intelligence, "World Pharmaceutical Markets-Korea," June 2000.

Vendor Lists

Companies in Korea often use vendor lists to source supplies. To be placed on a vendor list, the supplier must visit the technical department of a company and present the necessary qualifications to show both a superior product and the necessary aftersales support. Supporting documents should include, where applicable, a company brochure, annual report, products catalogues describing range and technical aspects of specific products, and references from other clients. Once the technical department has been convinced of the company's capabilities, the supplier must approach the purchasing department and repeat the process.

PUBLIC-SECTOR CUSTOMERS

There are close to 70 public hospitals situated throughout South Korea, as well as a number of health-care centres and long-term care facilities. As with private hospitals, products and services received at public hospitals and alternate sites are reimbursed through the national health insurance scheme and patient co-payments. Public medical establishments acquire equipment and supplies through local distributors and the central government.

The Korean government is also a strong supporter of research institutes that focus on biotechnology. These institutes are often associated with universities and larger research facilities and should be approached individually for sales potential.

Government Procurement Regulations

The central government purchases items through the Supply Administration, Republic of Korea (SAROK) on an open-tender basis. Companies can access information on tenders upon request, either in local English-language newspapers or through SAROK's procurement offices overseas. The Korean government also publishes three-year forecasts of major government requirements every April. Bids must be submitted within 40 calendar days of an invitation to bid.

The Ministry of Health and Welfare determines public health-care procurement needs and submits specifications to the Ministry of Commerce, Industry and Energy (MOCIE). MOCIE then considers whether or not the requirements can be met locally. During the drafting stage of such requirements, it is not uncommon for these agencies to consult with registered traders of foreign supplies.

MARKET LOGISTICS

Korea's larger urban centres-Seoul, Taegu, Pusan, Kyonggi, and Kangwan-offer large consumer markets and operate as gateways to wider distribution throughout the country. Although foreign firms use a variety of channels to distribute their products and services in Korea, the most common and effective method is through the appointment of a local agent or distributor. Other channels of distribution include selling through general trading companies, initiating joint ventures, and marketing products directly to hospitals, dispensaries, laboratories, and other end users. Canadian companies are urged to contact the Canadian Embassy in Seoul for a list of appropriate agents, distributors and general trading companies.

Channels of Distribution

Agents and Wholesalers

Although agents are highly recommended, registered companies that are experienced in the Korean market can promote products directly to hospitals, pharmacies, healthcare centres, and private practices. As a result of the SBPD policy instituted in July 1999, pharmaceutical sales should be directed at pharmacies rather than medical clinics. Major department stores have also become potential customers since the MOHW authorized sales of several OTC products at non-pharmaceutical retailers. Most supermarkets and convenience stores are already selling a number of products included in the list of authorized drugs, such as insecticides, external disinfectants, health drinks and supplements.

Joint Ventures and Strategic Alliances

Canadian companies wishing to establish themselves in the Korean market may benefit from forming partnerships with domestic firms or other foreign suppliers, particularly in the pharmaceutical sector. This is generally the most popular method used to enter the market. Alliances may facilitate R&D, clinical testing, and marketing of products in Korea. Collaborations offer consolidated resources and market knowledge, and can be advantageous to smaller companies that are new to the region.

Some large joint ventures are subject to authorization by the Ministry of Finance and Economy (MOFE). The MOFE grants approval for foreign investment on the basis of an application made either directly to the MOFE or to the Governor of the Bank of Korea. Once established, a foreign-owned venture can apply for a certificate of registration from the MOFE's Registry of Foreign Invested Enterprises, which entitles the bearer to tax exemptions, subsidies and depreciation allowances. Companies interested in investment in Korea should contact the Korea Investment Service Centre (KISC).

Market-entry Considerations

The Korean government is still protective of domestic manufacturers and has, in the past, employed a number of non-tariff barriers to support local industry. However, recent reforms have eased participation of foreign suppliers in the health-care market. For example, foreign drug manufacturers are no longer required to sell their products under a Korean partner's name, and international companies are no longer precluded from marketing services such as hospital management in the country.

Companies should nevertheless note that having a local partner is still necessary for undertaking Korea's complex certification process for health-care products, as well as for establishing effective business networks in the health-care community.

Suggested Business Practices

The exchange of business cards is important and plays an essential role in initial meetings. Have one side translated to Korean and never hand out business cards back-printed in Japanese. Even if you do not have an official title, create one for your Korean card. The lack of a title is, at best, considered a puzzling omission by most Koreans. A title will allow the Koreans to place you in your organization and calculate the appropriate level of response to your visit. One should politely hand a business card over upon meeting (while still standing) and receive a card in return. Take time to review the card, reviewing names and titles, and then place it on the table. Koreans will place business cards in the order of the seating plan and use this practice to keep names straight during meetings.

For appointments, it is respectful to arrive on time or a few minutes late, but not early. Koreans generally keep a full schedule, and early arrivals tend to disrupt that schedule. Arriving more than five minutes late begins to be demeaning to the host. At an initial meeting, be prepared to discuss whether this is your first visit to Korea, a little about your family, favourite sports (golf is a clear favourite of Koreans) and your age. Koreans are interested in relative position and seniority.

Korean professionals employ the custom of bowing to those senior to them as a form of greeting and to show respect. The junior person initiates the bow, bending from the waist to an angle of between 30 and 45 degrees from vertical. The more senior person will acknowledge by returning a less accentuated bow. It is also considered a show of respect by Koreans to take and receive articles using two hands rather than one. This is carried over into the handshake by extending the right hand and cupping the left hand below and around the right elbow. Foreign visitors should employ a simple handshake when greeting and taking leave. They should not be surprised however, to be exposed to a two-handed handshake and a bow or two during the course of their initial meeting.

It is important to have a formal introduction to any person or company with whom you want to do business in Korea. Meeting the right people in a Korean company is always easier when having the right introduction. Use of a proper intermediary is desirable in your business contacts. If the person whom you wish to meet has respect for your intermediary, chances are they will have equal respect for you. Legal documents are not as important as human rapport and relationships in Korea. An informal agreement with a trusted party is often considered far more secure than any written document.

Protection of Intellectual Property

Korea belongs to a number of international conventions, including the World Intellectual Property Organization, the Paris Convention for the Protection of Industrial Property, and the Universal Copyright Convention. However, some foreign companies still complain about instances of intellectual property (IP) infringements by Korean companies. In response to international pressure and as a result of Korea itself developing technology that it would like to protect, Korea has enacted laws which have significantly improved the protection of IP rights. However, concerns remain about enforcement by the Korean government. The agency responsible for intellectual property in Korea is the Korean Intellectual Property Office (KIPO).

Patents

Korean patent law offers protection for a period of 15 years from the date of publication of the patent application in Korea. The law also allows for the extension of a patent for up to five years if the actual marketing of a product was delayed for a long period of time due to statutory testing periods. Penalties against infringement are meaningful and patents are enforced, though some prodding may be necessary. Companies are advised to work with a lawyer in Korea when applying for patents. There have been problems where foreign companies were unable to defend their patent rights because of minor but legal loopholes that have been exploited by Korean competitors. As is thecase worldwide, the patent application process must be carried out meticulously.

Import Regulations

Generally, tariffs, import licences and import procedures all favour the import of raw materials, industrial equipment and high-tech components rather than finished goods. Import procedures have been liberalized, but importing into Korea can still be a difficult and complicated endeavour. Korea is a very nationalistic country and imported products often face tough competition from local products regardless of cost or quality. Discriminatory anti-imports policies have been eliminated as Korea adjusted to the new rules of international trade and some government officials have even talked publicly about the economic benefits of imports, but corporations and individuals remain nationalistic in their purchasing decisions.

Imported pharmaceutical products were not eligible for reimbursement by the Korean health care system until July 1999. There were some initial problems with a lack of transparency in determining prices resulting in reimbursement prices being set below costs for imported products. After consultations with the Ministry of Health and Welfare and the industry, prices were increased, but there is still some dissatisfaction with price levels. As of May 2000, prices for reimbursed products are to be based on the average price of the same product in seven major international markets.

All pharmaceutical products that will not be added to the state's reimbursement lists must obtain a Standard Retail Price (SRP) under the system administered by the Korean Pharmaceutical Manufacturers Association (KPMA), the Korean Pharmaceutical Traders Association (KPTA) and the Korean Pharmacists Association (KPA). A pharmaceutical supplier must submit its preferred price for a product to either the KPMA or KPTA who will decide if the price is reasonable, based on specific criteria. The product may not be sold until a price is agreed upon. Prices for imported products tend to be higher than for locally produced items and for this reason, there are numerous objections to the system as a non-technical barrier to trade. The system is due for reform and there are some discussions under way to determine an alternative.

If a pharmaceutical product is to be accepted as a reimbursed item, the distributor must obtain a Medical Insurance Price (MIP) in a similar manner to the SRP described above. The MIP system is managed by the Insurance Management Division of the MOHW. Preferred prices are submitted to the KPMA who will make a recommendation to MOHW. The Ministry then decides on a price after considering potential effects on the national insurance budget.

Local Standards, Certificates or Registrations

Before health products are permitted to enter the Korean market, they must first receive a licence from the Ministry of Health and Welfare and undergo inspection by the KFDA. The KFDA operates through its headquarters in Seoul and six regional agencies located in Seoul, Pusan, Inchôn, Taegu, Kwangju, and Taejon. Examinations of imported products, including evaluation of the hygienic state and labelling of the items, are conducted at the Division of Imported Goods Inspection branches of each agency. New regulations in effect from September 1, 1999 have alleviated some of the complexity associated with product documentation, reporting, and local testing of individual product shipments. In general, the Korean importer or agent will undertake the bureaucratic exercise of registration.

Pharmaceuticals

Imported pharmaceutical products are subject to approval by the KFDA and registration by the KPTA. The KPTA, a quasi-government trade organization for drug importers and exporters, operates the Drug Inspection Centre. The KPTA is responsible for strengthening standards with respect to in-house quality control for imported items, pricing and labelling, investigation of heavy metal residue in imported herbs, and use of herbs. Pharmaceuticals must also be registered with the National Institute of Safety Research. There are 58 hospitals in Korea designated by the MHW to carry out Phase III clinical trials, which must be conducted according to Korean Good Clinical Practice (GCP) standards. The requirements for clinical trials in Korea may be waived if the product has been on the market in two other countries for at least three years.

Agricultural Biotechnology Products

Agricultural commodities produced with biotechnology are not distinguished from non-GM products as exports from Canada. However, as of March 2001, all GM soybeans, bean sprouts, and corn sold in Korea must be labelled as a GMO product. 

All agricultural products, whether genetically modified or not, must meet necessary labelling requirements, phytosanitary standards and quarantine restrictions before being allowed into Korea.

Export Credit Risks, Restrictions on Letters of Credit, Currency Controls

In July 1998, Korea amended its regulations restricting the use of letters of credit for goods with tariffs of over 10% and in cases where the terms for repayment were greater than one year.

The Korean government encourages an irrevocable letter of credit (L/C), opened before shipment, as a method of payment for imports by Korean importers. Banks usually require most importers to pay 100% of the value before the L/C is issued, as much as two months in advance of shipment.

PROMOTIONAL EVENTS

BIO 2001
June 24-28, 2001
San Diego Convention Center
San Diego, California

Organizer :
Biotechnology Industry Organization
1625 K St. NW, Suite 1100
Washington, DC 20006
Tel.: (202) 857-0237
Fax: (202) 857-0244
Internet: http://www.bio.org/events.html

Bio Korea 2001
Fall 2001 (to be confirmed)

Organizer :
COEX Convention Centre
Seoul, Korea
Bioindustry Association of Korea
28-1 Yoido-dong
Yungdungpo-gu
Seoul, Korea
Tel.: (82-2) 761-3176
Fax: (82-2) 780-3524

Genome Japan and Drug Discovery Japan
March 26-29, 2001
Tokyo, Japan

Organizer :
Cambridge Healthtech Institute
1037 Chestnut St.
Newton Upper Falls, MA 02464
Tel.: (617) 630-1300
Fax: (617) 630-1325

2001 China Biotech & Pharm Exhibition
March 28-31, 2001
Shanghai Mart
Shanghai, China

Organizer :
Modern Biotechnology and Pharmaceutical
Industry Office
Shanghai International Modern Exhibition Co.,
Ltd Tel.: (86-21) 6361-8702
Fax: (86-21) 6329-5774
Internet: http://www.bio-engine.com

KEY CONTACTS AND SUPPORT SERVICES

Canadian Government Contacts

Canadian Embassy-Seoul
10th Floor, Kolon Building
45 Mugyo-Dong, Jung-Ku
Seoul 100-170, Korea
Tel.: (82-2) 3455-6000
Fax: (82-2) 755-0686
Contact: Jean-Philippe Linteau, Second Secretary
E-mail: jean-philippe.linteau@dfait-maeci.gc.ca
Internet: http://www.infoexport.gc.ca

Agriculture and Agri-Food Canada
Market and Industry Services Branch
Sir John Carling Building
930 Carling Ave.
Ottawa, ON K1A 0C5
Tel.: (613) 759-7744
Fax: (613) 759-7499
Contact: Jo-Anne Stewart
E-mail: stewartja@agr.gc.ca
Internet: http://www.agr.ca

Canadian Commercial Corporation (CCC)
50 O'Connor St., Suite 1100
Ottawa, ON K1A 0S6
Tel.: 1-800-748-8191 or (613) 996-0034
Fax: (613) 995-2121
Internet: http://www.ccc.ca

Department of Foreign Affairs and International Trade
125 Sussex Dr.
Ottawa, ON K1A 0G2
Korea and Oceania Division (PKE)
Tel.: (613) 995-8744
Fax. (613) 996-1248
Contact: Lynne Thomson, Business
Development Officer-Korea
E-mail: lynne.thomson@dfait-maeci.gc.ca
Market Support Division (TCM)
Contact: Patricia Filteau, Trade Commissioner
Tel.: (613) 996-1431
Fax: (613) 943-8820
E-mail: patricia.filteau@dfait-maeci.gc.ca

Export Development Corporation (EDC)
151 O'Connor St.
Ottawa, ON K1A 1K3
Tel.: 1-888-332-3320 or (613) 598-2500
Fax: (613) 237-2690
E-mail: export@edc-see.ca
Internet: http://www.edc.ca

Health Canada
International Affairs Directorate
Brooke Claxton Building, Room 814A
Postal Locator 0908A, Tunney's Pasture
Ottawa, ON K1A 0K9
Tel.: (613) 941-3136
Fax: (613) 952-7417
Internet: http://www.hc-sc.gc.ca
Therapeutic Products Program Office
Holland Cross, Tower "B," 2nd Floor
Address Locator: 3102D1
1600 Scott St.
Ottawa, ON K1A 1B6
Internet: http://www.hc-sc.gc.ca

Industry Canada
Life Sciences Branch
PO Box 940, Station A
1801 Hollis St.
Halifax, NS B3J 2V9
Tel.: (902) 426-9958
Fax: (902) 426-2624
Contact: Mark Craig, Bio-Industries
E-mail: craig.mark@ic.gc.ca
Internet: http://strategis.gc.ca

Korean Government and Trade Contacts in Canada

Embassy of the Republic of Korea
150 Boteller St.
Ottawa, ON K1P 5H3
Tel.: (613) 244-5010
Fax: (613) 244-5034
Internet: http://www.emb-korea.ottawa.on.ca

Consulates General:
Montreal
1002 Sherbrooke St. W, Suite 2500
Montreal, QC H3A 3L6
Tel.: (514) 845-3243
Fax: (514) 845-8517

Toronto
555 Avenue Rd.
Toronto, ON M4V 2J7
Tel.: (416) 920-3809
Fax: (416) 924-7305
Internet: http://www.consulatekorea-tor.org

Vancouver
1600-1090 W Georgia St.
Vancouver, BC V6E 3V7
Tel.: (604) 681-9581
Fax: (604) 681-4864

Winnipeg
191 Yale Ave.
Winnipeg, MB R3M 0L2
Tel.: (204) 477-0490
Fax: (204) 478-1582

Korea Exchange Bank of Canada
Mississauga Branch
Sussex Centre, West Tower, Suite 120
90 Burnhamthorpe Rd. W
Mississauga, ON L5B 3C3
Tel.: (905) 272-3130
Fax: (905) 272-3430

Korea Trade Centre
Toronto
PO Box 9, Suite 600 Thomson Bldg.
65 Queen St. W
Toronto, ON M5H 2M5
Tel.: (416) 368-3399
Fax: (416) 368-2893

Vancouver
Suite 1710, One Bentall Centre
505 Burrard St.
Vancouver, BC V7X 1M6
Tel.: (604) 683-1820
Fax: (604) 687-6249

Korean Government Contacts

Korea Food and Drug Administration (KFDA)
Division of Biotechnology
San 5, Nokbun-dong, Enpyung-gu
Seoul 122-020, Korea
Tel.: (82-2) 380-1800
Fax: (82-2) 357-4737
Internet: http://www.kfda.go.kr/english/index.html

Korea International Trade Association
KWTC Bldg., 159-1 Samsung-dong
Kangnam-Gu
Seoul, Korea
Tel.: (82-2) 551-5114
Fax: (82-2) 782-9702
Internet: http://www.kita.or.kr

Korean Intellectual Property Office
Government Complex, Daejeon
Dundon-dong, Seo-gu
Daejeon Metropolitan City 302-701, Korea
Tel.: (82-44) 481-5027
Fax: (82-44) 481-3455
E-mail: paul@kipo.go.kr
Internet: http://www.kipo.go.kr/ehtml/eIndex.html

Korea Investment Service Centre
KOTRA Bldg., 300-9, Yumgok-dong, Seocho-ku
Seoul, Korea
Tel.: (82-2) 3460-7619
Fax: (82-2) 3460-7942
Internet: http://www.kisc.org

Korea Trade and Investment Promotion Agency (KOTRA)
300-9, Yumgok-dong, Seocho-ku
Seocho PO Box 101
Seoul, Korea
Tel.: (82-2) 3460-7114
Fax: (82-2) 3460-7777
Internet: http://www.kotra.or.kr

Ministry of Agriculture and Forestry
1 Jungang-dong, Kwachon-city
Kyunggi-do 427-760, Korea
Tel.: (82-2) 503-7200
Internet: http://www.maf.go.kr

Ministry of Commerce, Industry and Energy
Kwachon-Shi, Kyonggi-Do
Seoul 427-760, Korea
Tel.: (82-2) 503-7171
Internet: http://www.mocie.go.kr/engindex.htm

Ministry of Environment
Government Complex-Gwacheon
Gwacheon City
Gyeonggi Province 427-760, Korea
Tel.: (82-2) 504-9244
Internet: http://www.me.go.kr/english/index.html

Ministry of Finance and Economy
Foreign Investment Division
1 Chungang-dong, Kwachun-shi
Kyonggi-do, South Korea
Tel.: (82-2) 503-9149
Fax: (82-2) 503-9076
Internet: http://www.mofe.go.kr

Ministry of Foreign Affairs and Trade
77-6, Sejongro, Chongno-gu
Seoul, Korea
Tel.: (82-2) 3703-2114
Fax: (82-2) 720-2686
Internet: http://www.mofat.go.kr/main/etop.html

Small and Medium Industry Promotion Corporation
24-3 Yoido-dong, Yongdungpo-gu
Seoul, Korea
Tel.: (82-2) 769-6700
Fax: (82-2) 782-9702
Internet: http://www.smipc.or.kr

Ministry of Science and Technology
Government Complex, Gwacheon
Gwacheon City
Kyunggi-Do 427-760, Korea
Tel.: (82-2) 503-7600
Internet: http://www.most.go.kr/index-e.html

Korean Associations

Association of Foreign Trading Agents of Korea (AFTAK)
218 Hangang-ro, 2-ga, Yongsang-gu
Seoul, Korea
Tel.: (82-2) 780-3377
Fax: (82-2) 785-4373
Internet: http://www.aftak.or.kr

Biotechnology Association of Korea (BAK)
BioIndustry Association of Korea
FKI Bldg.
28-I Yoido-dong, Youngdung-ku
Seoul, Korea
Tel.: (82-2) 761-3176
Fax: (82-2) 780-3524

Korean Biotechnology Research Association (KBRA)
28-1, Yoido-dong
Youngdungpo-gu
Seoul, Korea
Tel.: (82-2) 784-9058
Fax: (82-2) 782-8213
Internet: http://www.kbra.or.kr

Korea Drug Research Association
Hwasan Bldg., 4th Floor
474-15 , Bangbae-dong, Seocho-ku
Seoul 137-060, Korea
Tel.: (82-2) 525-3106
Fax: (82-2) 525-3109
Internet: http://www.kdra.or.kr (In Korean only)

Korea Medical Association
302-75 Dongbuichon-Dong, Yongsan-Ku
Seoul, Korea
Tel.: (82-2) 794-2474
Fax: (82-2) 792-1296
Internet: http://kma.org (In Korean only)

Korea Pharmaceutical Association (KPA)
1489-3 Seocho-Dong, Seocho-Ku
Seoul 137-073, Korea
Tel.: (82-2) 581-1201
Fax: (82-2) 585-7630
E-mail: pskor@chollian.net
Internet: http://www.psk.or.kr/pskhome.htm

Korea Pharmaceutical Manufacturers Association
990-2 Bangbae-dong, Seocho-ku
Seoul, Korea
Tel.: (82-2) 581-2101
Fax: (82-2) 581-2106
Internet: http://www.kpma.or.kr

Korea Pharmaceutical Traders Association
Trade Tower 1801
159-1 Sam-sung Dong, Kangnam-Ku
Seoul 135-729, Korea
Tel.: (82-2) 551-1843
Fax: (82-2) 551-1850
Internet: http://ktnet.co.kr/~kptakpta

Korea Pharmaceutical Wholesale Assosiation (KPWA)
1428-3 Seocho-Dong, Seocho-Ku
Seoul, Korea
Tel.: (82-2) 522-2921
Fax: (82-2) 522-0038

Korea Oriental Medical Assosiation (KOMA)
929-4 Jegi-Dong, Dongdaemoon-Ku
Seoul, Korea
Tel.: (82-2) 962-4374
Fax: (82-2) 962-5250

Korea Traditional Medicine Assosiation (KTMA)
79-15 Kongduck-Dong, Mapo-Ku
Seoul, Korea
Tel.: (82-2) 717-5185
Fax: (82-2) 717-5188

Korean Society of Agricultural Chemistry and Biotechnology (KSACB)
Department of Agricultural Chemistry
Seoul National University
Suwon 441-744, Korea
Tel.: (82-331) 290-2415
Fax: (82-331) 294-3929

Korean Research Institutes Gyeongsang National University
Plant Molecular Biology and Gene Manipulation
Research Centre
900 Kajwa-Dong Chinju
Gyeongman, Korea
Tel.: (82-591) 54-8331
Fax: (82-591) 54-9363
Internet: http://www.gsnu.ac.kr/english

Korea Advanced Institute of Science and Technology (KAIST)
BioProcess Engineering Research Centre
373-1 Kusung-Dong, Yusung
Daejon, Korea
Tel.: (82-42) 869-8801
Internet: http://www.kaist.ac.kr

Korea Institute of Science and Technology (KIST)
373-1, Koosung-dong
Yusung-ku, Daejeon, Korea
Tel.: (82-42) 869-4016
Fax: (82-42) 869-8160
Internet: http://www.kist.re.kr/Teams/kist/english/home.html

Korea Research Institute of Bioscience and Biotechnology (KRIBB)
PO Box 115, Yusung-ku
Taejonm 305-600, South Korea
Tel.: (82-42) 860-4114
Fax: (82-42) 861-1759
E-mail: admin@kribb.re.kr
Internet: http://www.kribb.re.kr

National Institute of Agricultural Science and Technology (NIAST)
249 Seodundong Kweonseonku
Suwon 441-707, Korea
Tel.: (82-31) 290-0114
Fax: (82-31) 290-0155
Internet: http://www.niast.go.kr

National Fisheries Research Development Institute (NFRDI)
408-1 Sirang-ri, Gijang-eup
Gijang-gun, Busan 619-902, Korea
Tel.: (82-51) 720-2114
Fax: (82-51) 720-2054
Internet: http://www.nfrda.re.kr

National Institute of Health (NIH)
San 5, Nokbun-dong, Enpyung-gu
Seoul 122-020, Korea
Tel.: (82-2) 380-1800
Fax: (82-2) 357-4737
Internet: http://www.nih.go.kr

National Institute of Environmental Research
#2-1 Site, Metropolitan Landfill Area
Kyungseo-Dong, Seo-Gu
Inchon Metropolitan City 404-170, Korea
Tel.: (82-32) 560-7006
Fax: (82-32) 568-0769
Internet: http://www.nier.go.kr

Rural Development Administration (RDA)
250th, Seodun-dong, Gwonseon-gu Suwon
Gyeonggi-do, Korea
Tel.: (82-31) 299-2200
Fax: (82-31) 299-2469
Internet: http://www.rda.go.kr

Seoul National University
San 56-1, Shilim-ding, Kwanak-gu
Seoul 151-742, Korea
Tel.: (82-2) 880-5114
Fax: (82-2) 885-5272
Internet: 
http://www.snu.ac.kr/engsnu

Institute of Molecular Biology and Genetics
Tel.: (82-2) 885-5116
Fax: (82-2) 874-1206
E-mail: progress@imbg.snu.ac.kr

Canadian Biotechnology Associations

Ag-West Biotech
101 - 111 Research Drive
Saskatoon, SK S7N 3R2
Tel.: (306) 975-1939
Fax: (306) 975-1966
E-mail: agwest@agwest.sk.ca
http://www.agwest.sk.ca/index1.htm

Alberta Biotechnology Association
1150, 10180 - 101 St.
Edmonton, AB T5J 3S7
Tel.: (780) 425-3815
Fax: (780) 423-3893
Contact: Myka Osinchuk
E-mail: myka@bioalberta.com
Internet: http://www.bioalberta.com

BioAtlantech
PO Box 636, Station A
Fredericton, NB E3B 5A6
Tel.: (506) 444-2444
Fax: (506) 444-5662
Contact: John Argall, Executive Director
E-mail: jargall@fundy.net
Internet: http://www.bioatlantech.nb.ca

BioEast
c/o Seabright Corporation Ltd.
Memorial University of Newfoundland
Spencer Hall
220 Prince Philip Dr.
St. John's, NF A1C 5S7
Tel.: (709) 737-4527
Fax: (709) 737-4029
Contact: David King, President
Internet: http://www.mun.ca/seabright/bioeast

BIONova
c/o Innovacorp
101 Research Dr.
PO Box 790
Dartmouth, NS B2Y 3Z7
Tel.: (902) 424-8670
Fax: (902) 424-4679
Contact: Bill Mills, Executive Director
E-mail: bmills@innovacorp.ns.ca

BIOTECanada
130 Albert St., Suite 420
Ottawa, ON K1P 5G2
Tel.: (613) 563-8849
Fax: (613) 563-8850
E-mail: info@biotech.ca
Internet: http://www.biotech.ca

British Columbia Biotechnology Alliance
3250 East Mall, Suite 220
Vancouver, BC V6T 1W5
Tel.: (604) 221-3026
Fax: (604) 221-3027
Contact: Theresa McCurry, Executive Director
Internet: http://www.biotech.bc.ca

Canadian Drug Manufacturers Association
4120 Young St., Suite 606
North York, ON M2P 2B8
Tel.: (416) 223-2333
Fax: (416) 223-2425
Internet: http://www.cdma-acfpp.org

Canadian Medical Association
1867 Alta Vista Dr.
Ottawa, ON K1G 3Y6
Tel.: (613) 731-9331
Internet: http://www.cma.ca

Canada's Research-Based Pharmaceutical Companies
302-1111 Prince of Wales Dr.
Ottawa, ON K2C 3T2
Tel.: (613) 727-1380
Fax: (613) 727-1407
Internet: http://www.canadapharma.org

Canadian Wholesale Drug Association (CDWA)
5255 Yonge St., Suite 505
Toronto, ON M2N 6P4
Tel.: (416) 222-3922
Fax: (416) 222-8960
Internet: http://www.cwda.com

Non-Prescription Drug Manufacturers Association of Canada
1111 Prince of Wales Dr., Suite 406
Ottawa, ON K2C 3T2
Tel.: (613) 723-0777
Fax: (613) 723-0779
E-mail: ndmac@ndmac.ca
Internet: http://www.ndmac.org

Quebec Bio-Industries Association
801 Route 344
PO Box 3158
L'Assomption, QC J5W 4M9
Tel.: (450) 589-4628
Fax: (450) 589-4866
E-mail: info@aqb.qc.ca
Internet: http://www.aqb.qc.ca

Toronto Biotechnology Initiative
64 Old Burnhamthorpe Rd.
Etobicoke, ON M9C 3J5
Tel.: (416) 626-1835
Fax: (416) 626-1423
Contact: David Harper
E-mail: davidh@yorkmedical.on.ca

Canadian Banks in Korea

Bank of Nova Scotia
C.P.O. Box 7783
9th Floor, The Korea Chamber of Commerce and Industry Building
#45, 4-ka, Namdaemun-ro, Chung-ku
Seoul, Korea
Tel.: (82-2) 757-7171
Fax: (82-2) 752-7189

National Bank of Canada
C.P.O. Box 584
6th Floor, Leema Building
146-1 Soosong-dong, Chongro-gu
Seoul, Korea
Tel.: (82-2) 736-1506
Fax: (82-2) 736-1508

Royal Bank of Canada
C.P.O. Box 5374
#1, 1-ka, Chong-ro, Chung-gu
Seoul 110-121, Korea
Tel.: (82-2) 730-7791
Fax: (82-2) 736-2995

APPENDIX A

Recent Company Details

• Macrogen Inc. was Korea's first purely biotechnology company to list on the Korean stock exchange in February 2000. The company specializes in altering the genetic characteristics of mice to make them more susceptible to cancer. In May 2000, the company formed a strategic alliance with Hewlett-Packard Korea in bio-informatics. The company is currently working to decode the Korean genome to look for causes of disease.
• Samsung announced in May 1999 plans to open a biochip research centre at Taeduk Science Town, supported Samsung Fine Chemical, Samsung Electronics, Samsung Advanced Institute of Technology and Samsung Medical Centre. They further announced the creation of Samsung Biotechnology in March 2000 and plan to invest approximately $250 million in biotechnology by 2005. The company plans to focus on biochips, biomedicine and environmental biotechnology applications.
• LG Chemical, a large conglomerate, has been active in the pharmaceutical industry since the 1980s and has recently announced the creation of a biotechnology component. In March 2000, LG Chemical announced plans to create a Bio-Fund to re-invest almost $100 million in life sciences. The company also announced a strategic alliance in July 2000 with BioPartners SA of Germany to market six biopharmaceuticals internationally. BioPartners will handle all clinical development regulatory affairs, registration, marketing, sales and distribution internationally while LG Chemical retains the Korean rights.
• Cheijedang has extensive experience with fermentation technology and is transforming its business lines to adapt previous work to bioengineering technology. The focus for the company's biotechnology activities will be vaccines; they have already had success with pseudomonas vaccines and lysine.
• Chongkundang manufactures human insulin and plans to have their product in commercial manufacturing by the end of 2000. The company has a technology transfer agreement with Hexal AG of Germany to produce a duodenal ulcer treatment.
• Dong-Ah Pharmaceuticals has developed a product to treat inflammation of the intestines, as well as anti-cancer drugs and anti-tuberculosis drugs.
• Hanwha Chemical Research and Development Centre announced plans in June 2000 to hire an additional 17 bioengineers and scientists by the end of 2000, with plans for hiring up to 90 by 2005. The company has also invested $65 million to work on medicines for central nervous system disorders and heart vessels.
• SK Chemical Co., in an agreement with Seoul National University and the Rural Development Administration of Texas State University, plan to establish a biotechnology venture firm to focus on developing treatments for cancer and other incurable diseases. The new company, IN2Gen, will also receive some funding from Easy Bio System, a Korean company. SK Co. has determined that biotechnology with be its next core business, after information technology, and has laid out long-term investment plans for the industry.
• Korea Green Cross Corporation is Korea's the fourth-largest pharmaceutical company. Products include human blood plasma, proteins, vaccines, antivirals, and diagnostic reagents.
• Unigen Ltd., based in Seoul, and Univera Pharmaceuticals, announced in July 2000 a licensing deal that allows Unigen access to Universa technologies and outlines plans to share future technologies.
• PanGenomics, established by professors at Seoul National University, is a start-up company that will focus on developing new drugs and diagnostic chips using genetic technologies. There are plans to release a chip designed to diagnose AIDS and hepatitis viruses in 2001. The company has also established a U.S. subsidiary in the Los Angeles and a strategic alliance with Dragon Genomics of Japan.
• Researchers at the Korea Research Institute of Bioscience and Biotechnology (KRIBB) and the Korea Advanced Institute of Science and Technology (KAIST) have established Bio Holdings, a bio-venture company. The company has attracted $3.3 million in capital and plan to support preliminary research and development in biotechnology. Research results will be transferred to other companies or used to create new start-ups.
• Scigenic Co. Ltd. acts as an incubator for promising medical technologies and has a separate unit, Scigen Harvest Co. which is developing research in high-yield, pest-resistant GM crops.
• Nexgen has developed two types of test kits to identify genetically modified food. The company expects sales to be strong once Korean labelling laws are introduced in March 2001.
• Dae Sung Microbiological Labs has recently listed on the Korean stock exchange and specializes in producing genetically modified animal feed.
• Bionex announced in April 2000 a new technology to spot individual variations in DNA that determine a person's susceptibility to disease and their ability to combat illness. The technology allows researchers to find genetic differences, known as SNPs (single nucleotide polymorphisms) must faster and at lower cost.
• ViroMed Ltd., a biotechnology company established by a professor from Seoul National University, secured $8 million in investments from Takara Shuzo Co. of Japan in March 2000. ViroMed is a gene therapy company with particular emphasis on renoviruses, and viruses related to tumors, cancer and AIDS. The company has previously established a joint venture partnership with Oxford Biomedica PLC.

APPENDIX B

Sources: Corporate Information, South Korea: http://www.corporateinformation.com/krcorp.html; Catalogue Library. http://www.smipc.or.kr/english/catalog/frame_cat05_30.html; the Canadian Embassy-Seoul

BIBLIOGRAPHY

AFX. "South Korea MOCIE to Establish Biotech Centre by 2002," June 2000.

Asia Pulse. "Korea's Bioindustry Gaining Momentum After Genome Announcement," June 2000.

Bioindustry Association of Korea. "Current Status of Bioindustry in Korea and an Introduction of BAK," November 1999.

Booth, Jason. "As Biotech Arrives in Asia, Analysts Caution Investors," Asian Wall Street Journal, September 2000.

Economic Times. "Koreans Fear Relishing Biotech," May 2000.

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OTHER REFERENCE MATERIALS

Useful Internet Sites

ASEAN-Korea Biotechnology Information Network: http://asean.kribb.re.kr

BioResearch Online: http://www.bioresearchonline.com

Canada Business Service Centres: http://www.cbsc.org

Canadian Commercial Corporation: http://www.ccc.ca

Department of Foreign Affairs and International Trade: http://www.dfait-maeci.gc.ca

ExportSource: http://exportsource.gc.ca

Health Canada: http://www.hc-sc.gc.ca

Industry Canada-Strategis: http://strategis.gc.ca

InfoExport: http://www.infoexport.gc.ca

Korea Food Research Institute: http://www.kfri.re.kr

Korea Government Homepage: http://www.korea.go.kr

Korea National Institute of Health: http://www.nih.go.kr

Korea Research and Development Information Centre: http://www.kordic.re.kr

Pharmaceutical Information Network: http://www.pharminfo.com

1 All monetary amounts are expressed in Canadian dollars, unless otherwise indicated. The conversion rate to Canadian dollars is based on IDD Information Services, Tradeline, September 2000.

2 For contact information regarding key organizations mentioned in this report, see Key Contacts and Support Services.

3 Supporting ministries include the Ministry of Commerce, Industry and Energy; Ministry of Education; Ministry of Environment; Ministry of Agriculture and Forestry; Ministry of Health and Welfare; and Ministry of Marine Affairs and Fisheries.