[Reporter’s View] Real crisis will come after COVID-19

Contrary to the hopes that peace will come with the end of the COVID-19 crisis so near, another crisis of the ‘three highs’ - high exchange rates, high interest rates, and high inflation – has now arrived.

 

Experts are predicting shock waves at the level of the 1997 IMF crisis and the 2009 global financial crisis or severer.

 

Externally, the exchange rate, trade balance, and current account are shaking at the same time.

 

Internally, red lights are flaring in Korea’s growth rate, price level, and interest rates.

 

The future outlook is also bleak.

 

Negative prospects are pouring in, that the low growth will continue for the time being, resulting in fewer jobs and a contraction in investment.

 

Some analysts believe we have already entered stagflation, in which high inflation and economic downturn occur at the same time.

 

Obviously, the domestic biopharmaceutical industry cannot be immune to this macroeconomic trend.

 

The high exchange rates, high interest rates, and high inflation constrain the pharma and bio companies from all directions.

 

Anxiety is growing bigger and bigger, and with the growing anxiety, companies contract.

 

Given that the long-term investments made by the industry are just beginning to bear fruit, concerns are being voiced that the potential of the K-pharmaceutical and bio industry will be nipped in the bud, without blooming to its full potential.

 

The Korean pharmaceutical and bio industry is considered to have made good progress during the past 3 years in the COVID-19 crisis.

 

Some companies have used the crisis as an opportunity to grow significantly or to attract large-scale investments.

 

It is not that the industry has fared well, but it is difficult to say that the COVID-19 crisis has been overcome solely by the capabilities owned by Korea’s pharmaceutical and bio industry.

 

Pharmaceuticals are consumer staples, therefore, the industry was not greatly affected by the surge of confirmed COVID-19 cases or strengthened social distancing measures, etc.

 

Also, much of the cash released through the quantitative easing measures competitively carried out by countries had flowed into the industry.

 

In such a sense, it is true COVID-19 did not greatly impact the pharmaceutical industry as much as other industries.

 

The government believes that COVID-19 will turn into an endemic by early next year.

 

The pandemic is finally coming to an end.

 

With the declaration of an endemic so near in sight, the pharmaceutical and bio companies are now on the testing bed.

 

How well the companies have built their foundation will be tested in the era of the ‘three highs.’ Experts have contrasting views on how long the factors of concern represented by the ‘three highs’ will last.

 

However still, one thing certain is that the companies must now brace for the long-term recession that is certain to come.

 

Executives would need to make cool-headed judgments about the situation and set the right direction.

 

The real crisis has only just begun.