Raising South Korea's self-sufficiency in raw materials for essential medicines will require reforming how public hospitals buy drugs, not just supporting production, industry officials say. Even if the government encourages domestic production of pharmaceutical ingredients, prioritizing price at the purchasing stage leaves little incentive to use locally made materials, which cost relatively more.
Public medical institutions currently screen bidders for qualifications and ability to fulfill contracts, but price remains the decisive factor in awarding contracts, according to industry sources on the 26th. When products that meet licensing and quality standards compete, price determines the winner, leaving no separate evaluation of whether domestic raw materials are used, whether local production capacity is maintained or how stable the supply chain is.
Competition on lowest price can push finished-drug makers toward cheaper imported ingredients and away from domestic ones. Weaker demand then chills investment in local production, eroding the manufacturing base that would be needed as a substitute if overseas supply chains were disrupted.
Government support has also been weighted toward developing production technology. The Ministry of Health and Welfare does not currently operate any program that regularly purchases domestically produced ingredients for essential medicines or guarantees volumes over the long term. The Ministry of Food and Drug Safety has supported the development of manufacturing and quality-control technology for essential medicines with heavy import dependence since 2022, but mechanisms to guarantee demand for the resulting output are lacking.
The European Union uses public procurement as a supply-chain policy tool. The Critical Medicines Act, provisionally agreed by the Council of the EU and the European Parliament in May this year, requires that public procurement of critical medicines take into account supply-chain resilience and other criteria, not price alone.
In South Korea, some are calling for procurement rules to be changed first for essential medicines whose supply disruptions would have the greatest impact on public health. Lee Jae-kook, vice chairman of the Korea Pharmaceutical and Bio-Pharma Manufacturers Association, said public medical institutions such as national university hospitals should be the first to buy national essential medicines made with domestic raw materials. "Only if public procurement creates a certain level of demand, starting with core products, can companies invest in production facilities over the long term," the vice chairman said.