Develop or perish
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‘Drug development necessary for pharmaceutical companies’ survival’
By Jung Min-ho, Kim Eil-chul
Developing a new medicine requires significant amounts of patience and capital. According to the Korea Drug Research Association, a think tank, developing a drug takes an average of nine years and 36 billion won ($30 million).
Drug development also entails a lot of risk; there is a high probability that the potential medicine will fail to reach the market because of side effects or regulations.
Thus, for pharmaceutical firms that lack time and resources, it makes more sense to buy sales rights for drugs manufactured by overseas companies and focus on developing marketing strategies for domestic consumers rather than developing their own products.
This has been the business model in the Korea pharmaceutical industry for decades. But Kim Seung-ho, the founder and CEO of Boryung Pharmaceutical Co., believes times have changed.
Kim Seung-ho, the founder of Boryung Pharmaceutical, speaks during an interview. / Korea Times photo by Choi Won-suk
“There are two types of pharmaceutical companies ― those who are capable of developing their own drugs and those who aren’t,” he said. “Boryung is the former.”
In 2010, the Ministry of Food and Drug Safety approved Kanarb, a new high blood pressure drug developed by Boryung.
Among the 24 self-developed drugs originally developed by Korean companies, Kanarb is the most popular here and abroad.
Its domestic sales revenue spiked to 40 billion won last year from 10 billion won in 2011, while its exports jumped to $76 million from $30 million during the same period. For the first six months of this year, the figure has already surpassed $129 million.
“This is just the beginning,” Kim said. “Our ultimate goal is to compete with global firms with more medicines that the world has not yet seen.”
He noted that the size of global market for high blood pressure drugs is believed to be about $36 billion.
Kim delivers a speech during a celebration event to open a Kanarb manufacturing plant in Ansan, Gyeonggi Province, on Sept. 9, 2010. / Courtesy of Boryung Pharmaceutical
So far, Kanarb has been exported to about 30 countries mainly in Southeast Asia and South America. The company now aspires to sell the drug to the United States, Japan and European countries.
And the prospects are bright. Boryung already got the green light from Japan’s Pharmaceuticals and Medical Devices Agency (PMDA) to begin a clinical test for Kanarb later this year. This is the first PMDA approval for a Korean-developed product.
“It took 12 years and 50 billion won to develop Kanarb and put it on the market, but our efforts are paying off handsomely,” Kim said. “The success highlighted what we are able to and should do for the future.”
Boryung has other projects in its pipeline. Kim said the firm is focusing on circulatory organ and cancer treatments.
With the rapid changes in the global business environment, drug development has become necessary for a pharmaceutical company’s survival, he added.
“In recent years, global companies have become more active in buying small companies with promising projects that did not yet reach the market,” he said.
“It’s important to ensure the Korean pharma industry’s long-term competitiveness before it’s too late. Companies that fail to do so in the near future might never be able to.”
For example, Merck & Co., one of the world’s largest pharmaceutical companies, took over Idenix Pharmaceuticals, a biotechnology firm, last year in a $3.85 billion deal to expand its research for hepatitis treatments.
Korea’s pharmaceutical industry is valued at 20 trillion won, only 1.5 percent of that of the world.
“When it comes to surgical treatment, Korea is already considered among the world’s best,” he said. “It’s time for Korea’s pharmaceutical industry to surge. I would like to play a leading role in it.”
Humble beginnings
When Kim decided to run a pharmacy in 1957, few people talked about hope. Only a few years have passed since the devastating Korean War (1950-53), and the country was still suffering.
His family ran a drugstore when he was growing up, so “it was natural for me to think of getting into the same business when I had little money and few options,” he said.
With only a bicycle and a rented space of less than 17 square meters in Seoul, he started Boryung Drugstore, which was later renamed Boryung Pharmaceutical. Today, the company’s annual revenue is around 350 billion won.
There was little room for product differentiation in terms of product quality and type at the time, so Kim tried to improve his company’s customer service instead.
“First of all, I tried to be nice to customers. Also, I displayed medicines in my pharmacy in a more organized way and sold them at lower prices than at other drugstores. When a customer couldn’t find a certain medicine at my place, I tried my best to obtain it from somewhere else,” he said. “All these little changes combined ultimately made a major difference.”
His strength is his ability to persuade people, which helped him close great deals with foreign firms. He is also a brilliant marketer.
In 1966, when international business cooperation was rare for small and medium Korean firms, Kim formed a partnership with a Japanese company to produce Yongkaksan, an herbal cough suppressant and expectorant, in Korea. It was a big hit.
In 1972, Kim made a similar deal with a French firm to produce Gelfos, a stomach medicine, here. It was another great success.
“For many years, I tried to learn from foreign companies, but I felt eventually what my company had to do was to develop new drugs,” he said.
Kim believes he was very lucky to achieve a success from scratch, but he said he never relied on luck.
When asked about the secrets of his success, he responded, “I tried hard to take advantage of opportunities that good luck brought to my life. When bad luck brought problems, I worked hard to solve them.”
‘It’s the people that matter’
Perhaps Boryung’s biggest crisis was a flood that submerged its only factory in Anyang, Gyeonggi Province, in 1977.
It was the worst flood in Korean history, damaging almost everything inside the factory. Kim said he was devastated, but he realized that the crisis was also an opportunity to see how much people cared about the company, he said.
With a united spirit, staff members strived to save the firm. Letters of encouragement poured in. Thanks to the flood, the company grew stronger, he recalled.
“After all, medicine is for the people ― for those who take it and those who make it,” he said. “That will continue to be my working philosophy.”