Healthcare Resource Guide: South Korea

South Korea Statistics

Summary

Market Entry

Current Market Trends

Main Competitors

Current Demand

Registration Process

Barriers

Trade Events

CS Contacts

Best Prospects

Market Size

Capital: Seoul

Population: 51.7 Million

GDP: USD 1.573 trillion

Currency: Korean Won (W)

Language: Korean

Summary

Current issues facing the medical device industry in South Korea include reimbursement pricing and the new healthcare technology assessment system for medical devices. The U.S. Embassy in Korea works closely with partners to ensure that U.S. medical device industry interests are represented.

Medical Devices and Equipment

Unit: USD thousands

 

2015

2016

2017

2018 (est.)

Total Market Size

4,651,626

5,058,911

5,479,994

5,920,286

Total Local Production

4,418,290

4,826,067

5,148,678

5,457,599

Total Exports

2,710,720

2,918,523

3,164,210

3,417,347

Total Imports

2,944,056

3,151,367

3,495,526

3,880,034

Imports from the U.S.

1,374,400

1,473,991

1,641,105

1,821,627

Exchange Rate: 1 USD

1,132

1,161

1,131

1,100

Total Market Size = (Total Local Production + Total Imports) – (Total Exports)

Source: Korea Medical Devices Industry Association, KMDIA

The Korean medical device market is estimated to reach USD 5.9 billion in 2018. U.S. medical device manufacturers carefully watch government pricing and reimbursement policy as Korea grapples with cost containment under its national healthcare system.

The importation of medical devices requires the assignment of an importer or representative based in South Korea to manage medical device approvals and to ensure regulatory compliance. As part of pre-market approval requirements, the Government of Korea requires testing reports on safety and efficacy. In addition to medical device approvals, companies also need to negotiate pricing terms with the Korean Health Insurance Review & Assessment Service (HIRA).

Healthcare Policy Issues

Innovative pharmaceutical companies in South Korea face non-tariff barriers to trade that substantially limit incentives to invest in the development of new medicines for patients. One study found that during the 2007–2014 period, new drug prices in South Korea were less than half of the average (44%) in Organization for Economic Co-operation and Development (OECD) countries. Issues of concern include a complex and lengthy regulatory approval process, after which it can take up to another 24 months to be listed for reimbursement; and therapeutic reference pricing, which bases the prices of patented drugs on heavily discounted off-patent originators and generic products deemed to be in the same therapeutic class. Additionally, in 2016 South Korea issued a revised pricing policy (known as the “7.7 Pricing Policy”) that authorized premium pricing based on certain discriminatory criteria. The policy requires that a drug obtain its first approval in the world in South Korea, or meet localization requirements such as conducting clinical trials and manufacturing in South Korea, to benefit from premium pricing.

Market Entry

All domestic and foreign medical devices are subject to pre-market licenses from the Ministry of Drug and Safety (MFDS, formerly KFDA).

  • Distribution/Business Practices/Key Competitive factors

Medical devices are distributed mainly through local distributors. A local distributor may directly cover the whole country on an exclusive basis or a master distributor may contract with other regional sub-dealers for sales nationwide.

Sales leads for medical devices in Korea are normally created through steady communication with local subsidiaries or between distributors/commission agents and physicians on an individual basis. Local representatives call on physicians frequently and provide information on products to maintain good relationships.

One reliable distributor to cover the country on an exclusive basis is highly recommended for the Korean market since Korea is a geographically small country, and major users for high end medical devices are limited to general hospitals and university hospitals. More than one distributor often confuses clients in terms of representation and prices and diminishes the reliability of the foreign supplier.

Current Market Trends

Korea depends on high-end medical devices from the U.S., EU, and Japan, to supply about 60% of total market demand. Korean companies manufacture comparatively lower-end (mid-technology) medical devices.

Main Competitors

Currently, the United States has the largest import market share in Korea, followed by the EU and Japan.

Current Demand

In 2018, total imports of medical devices were estimated at USD 3.5 billion, with U.S. imports totaling over USD 1.6 billion. While U.S. market share represents approximately 47% of the import market, demand for foreign advanced and innovative medical devices showed relatively slow growth in 2018.

Registration Process

  • Pre-market License

All medical devices are required to obtain marketing clearance from the Ministry of Food and Drug Safety (MFDS) before they are manufactured in or imported into Korea. As of April 8, 2012, Korea Good Manufacturing Practice (KGMP) certification is required at manufacturers’ sites overseas (Class 3 and 4) or in Korea through their importers by documents (Class 2), depending on cases and criteria. KGMP certification should be obtained to apply for a pre-market license.

Currently, medical devices are classified into four categories in Korea depending upon technical attributes and product use. MFDS requires pre-market notification for class I devices and pre-market approval for class II, III, and IV devices. Class III and IV devices must pass the most stringent technical review by MFDS with authorized labs to prove their safety and effectiveness. Since MFDS issues product licenses only to locally based firms, all foreign suppliers must submit required documentation and receive necessary approvals through their Korean importers, or U.S. supplier’s corporation located in Korea.

The lead time for approval is typically 6-12 months, including company-working time for preparing applications. Although MFDS indicates its requirements for the approval in relevant regulations, specific detailed requirements could be different according to each product item. Thus, U.S. firms should closely work with their Korean importers to determine MFDS’s requirements on a case-by-case basis to obtain approvals.

Reimbursement

Korea has a compulsory national healthcare system, called National Health Insurance (NHI) System:

  • National single payer in Korea
  • Introduced in 1977
  • Has covered entire population from 1989

Over 97.5% of citizens in Korea pay a premium and have the right to access to any physicians and medical institutions. The remaining 2.5% of the population are covered by a Medical Aid Program for the poor.

Barriers

  • National Health Insurance Program & Reimbursement pricing

South Korea has a compulsory National Health Insurance (NHI) system for 51 million citizens. The NHI system was introduced in 1977 and covered the entire population by 1989. The Korean government administers funds, coverage, coding, payment and pricing.

  • Tariffs

Due to the Korea-US Free Trade Agreement (KORUS FTA) implemented on March 15, 2012, tariffs of the most imported medical devices in Korea received duty-free treatment.

Trade Events

Name: Korea International Medical & Hospital Equipment Show (KIMES) 2019

Date: March 14-17, 2019

Location: Convention & Exhibition Center (COEX), Seoul, Korea

Website: http://www.kimes.kr/eng/

Description: KIMES is a total healthcare-related show. It is the largest showcase for medical devices and technologies in Korea. The range of exhibits at KIMES include consultation, diagnosis central supply, clinical examination, hospital accommodation, emergency equipment, radiology, medical information system, surgical apparatus, traditional medicine, cure apparatus, pharmaceutical, physiotherapy apparatus, obesity cure, healthcare, ophthalmic apparatus, medical device component, medical service, dental apparatus, disposable apparatus and others.

Local Associations

Korea Medical Devices Industry Association (KMDIA): http://eng.kmdia.or.kr/

U.S. Commercial Service Contact Information

Name: Yoon-shil Chay

Position: Senior Commercial Specialist

Email: yoonshil.chay@trade.gov

Phone: 82-2-397-4439



Best Prospects

The following were the top 10 medical devices imported to Korea in 2017:

  • Soft contact lenses
  • Intravascular catheters
  • Dialyzers for hemodialysis
  • IVD reagents for clinical immunochemistry
  • Knee joint prostheses
  • MRI devices
  • CT systems
  • Sight corrective ophthalmic lenses
  • Staples for internal use (non-absorbent)
  • Analyzing products

Market Size

Healthcare spending (including investment)

 

... as percent of GDP:

7.6%

Hospitals, Procedures, Healthcare Professionals

Number of hospitals (including small clinics)

69,808

…Public (including military hospitals)

3,768

Number of hospital beds:

701,744

... available beds per capita

0.014

...of which in general hospitals

150,160

Physicians

100,241

...of which surgeons

5,952

...of which internists

15,031

...of which pediatricians

5,612

Dentists

25,300

Demographics

Population

51.3 million

Life expectancy men/women

77.7/84.2

Infant mortality

2.7/1,000 live births

Percent of population older than 65

13.6%

...projection, 2030

24.5%

Annual deaths

285,534

...caused by [Cancer]

79,729

...caused by [Cardiac disease]

17,239

Prevalence of [Pneumonia]

313,233


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