HONG KONG – The trade feud between South Korea and Japan has worsened since the beginning of July, when the Japanese government said it would impose new regulations on exports to Korea. The new policies are mostly applied to elements of semiconductor technology but also includes some pharmaceutical components and devices, leading to concerns that the regulations will affect Korea's pharmaceutical sector.
The new regulations took effect on July 4 and tightened the export of certain key chemicals for manufacturing semiconductors and displays. The Korean government announced on July 14 that Japan considered removing Korea from a 27-country 'White List' in early August; the list facilitates trading over 1,100 strategic commodities between Japan and the 27 countries. If Korea is excluded from the White List, Japanese companies must receive approval for each export contract from their government, which may take up to 90 days.
First among the concerns is the fact that Japan is the second largest exporter of pharmaceutical products to Korea. According to the Korean Pharmaceutical Traders Association, in 2018, the value of pharmaceutical raw materials imported from Japan reached about $303.4 million, 15% of the total import cost of pharmaceutical raw materials. Imports of finished drugs from Japan amounted to $266.7 million, accounting for 6% of that category. There are real concerns that many of Korea's drugmakers will face manufacturing problems if Korea is removed from the list.
"After Japan edits the White List, it may delist strategic commodities that might include some pharmaceutical raw materials. If so, it will affect the Korean pharmaceutical industry," a spokesman from the Korean Pharmaceutical Traders Association told BioWorld.
In addition, some of the devices for Korean drug manufacturing such as virus filters and X-ray tubes are imported from Japan. Virus filters are particularly necessary when producing materials for antibodies and vaccines, and Japan is the biggest producer of filters worldwide. Some of Korea's pharmaceutical companies, including Samsung Biologics Co. Ltd., use Japanese virus filters.
There are other virus filter producers in Europe; however, it won't be easy for Korean contract manufacturing organizations (CMOs) like Samsung Biologics to change importers. CMOs must use the materials and products that their client companies approve, which means it would take a lot of time and process to partner with new importers. Moreover, they may need reapproval from the FDA or the EMA to meet clients' needs.
A spokesman at Samsung Biologics told BioWorld that "things will be fine for months as we have secured stocks of Japanese products, including virus filters. But if Japan's additional rules restrict import of the products, we might have to find other ways to supply the biopharmaceutical products on time."
Another concern is that pharmacists and Korean customers may boycott the drugs imported from Japan if Japan tightens the regulations. That would lead to an impact on sales of Korea-Japan joint ventures and Japanese pharmaceutical companies based in Korea. Those actions have already started: two of the Korean regional pharmacist associations – the Jeonbuk Pharmaceutical Association and the Geyongnam Pharmaceutical Association – have said they would not sell Japanese medicines. Nono Japan, a popular website that promotes a boycott of Japanese products imported to Korea, lists Japanese pharmaceutical products such as Actinum (fursultiamine hydrochloride), Albothyl (policresulen) and Whituben (acetaminophen) from Takeda, and Cabagin (methylmethionine sulfonium chloride) from Kowa Co. Ltd. The users of the website post alternative medicines with similar ingredients to encourage consumers to buy non-Japanese products.
As yet, there has been little visible damage to the Korean pharmaceutical industry. Experts say that the real change will start after Japan's decision on the White List, and still, some Japanese products can be substituted by Korean products. Also, the pharmacists' movement won't have much effect on the sales of Japanese pharmaceutical companies in Korea.
The boycott of the Korean pharmacist associations and consumers also will not have much impact on sales of imported Japanese medicines. According to the Korean Pharmaceutical Association, more than 95% of Japanese medicine imported to Korea is "professional medicine" that prescribed by doctors. That means there is not much Japanese medicine that a pharmacist can sell over the counter. As of July 22, none of the doctors' organizations of Korea have announced a boycott of Japanese medicine.