[Reporter’s view] On improving self-sufficiency of APIs

The government said it has planned to lower reliance on imports of cutting-edge parts and raw materials from foreign countries to below 50%.

 

The Ministry of Trade, Industry, and Energy (MOTIE) recently announced a ‘3050 strategy for the industry supply chain,’ which aims to lower the reliance on imports from any single foreign country for 185 key categories that are utilized in semi-conductor, secondary battery, and automobiles to below 50% by 2030.

 

This strategy is intended to eradicate the root of the problem amid recent concerns about the ‘shortage of urea solution.’ In the bio-category, items such as biological media, biomedicines, and disposable bags were included.

 

However, active pharmaceutical ingredients were not included in this category because the selected items for the bio-category were mainly materials, parts, and equipment.

 

However, the pharmaceutical industry is pointing out that the rationale behind the current policy is closely related to the domestic API situation in Korea.

 

The problem is that Korea’s reliance on foreign raw materials is extremely high, particularly from a single country such as China.

 

This situation is the same for APIs.

 

Korea’s self-sufficiency rate of APIs is low, with growing reliance on imports from China.

 

In fact, according to the Ministry of Food and Drug Safety (MFDS), Korea's self-sufficiency rate for APIs had been merely 24.4% in2021.

 

Since 2008, Korea's self-sufficiency rate remains at 20% on average.

 

By country, Korea has improted the most from China, worth a total of $740.23 million (approximately 950 billion won) in 2021 alone.

 

This amount is over three times higher than the imports made from the second-highest country, India, which totaled at $225.35 million.

 

Similar to the urea situation, if the supply of APIs from China to Korea is blocked somehow, it would well hinder the production and supply of the finished drugs as well.

 

Depending on circumstances, this could worsen the issues like the repeated shortage of acetaminophen-based cold medicines that arose this year.

 

However, despite the suggestions that have been made on the necessity to increase the self-sufficiency of domestic raw material drugs, no specific aim has been set to resolve the self-sufficiency issue.

 

Additionally, there is a lack of social consensus on the level of self-sufficiency that would be deemed adequate.

 

Specifically, discussions on which and how much API should be produced is needed.

 

Currently, only statistics regarding the domestic production volume and the amount and country of origin for imported rAPIS are available.

 

Statistics on which APIs are being produced domestically and which are imported from foreign countries are not available.

 

Due to the current circumstances, Korea's response has been limited to implementing countermeasures, like assigning a task force if any issues emerge.

 

There are systems in place that designate drugs as national essential medicines or shortage prevention drugs; however, these systems pertain to finished drugs, so it does not directly address the self-sufficiency rate of APIs.

 

Although there are calls to increase the self-sufficiency rate of raw material drugs, no substantial progress has been made for its implementation.

 

Therefore, a policy with a clear goal needs to be set by identifying specific APIs that need domestic production, understanding the level of reliance on foreign sources for these materials, and evaluating the practicality of achieving domestic self-sufficiency, among others.

 

A potential strategy could be for the Ministry of Health and Welfare (MOHW) to lead the process by designating essential APIs, akin to how the MOTIE designated 185 key industrial materials.

 

Furthermore, pharmaceutical companies should receive incentives for utilizing domestic APIs over cheaper alternatives from China.

 

Additionally, when domestic APIs used, the companies should be eligible for broader preferential drug pricing and extended duration than existing standards.