Pharma in Hyangnam "Unstable employment cannot yield good medicine production"

Pharmaceutical organizations organized a labor-management representative forum at the Hyangnam Pharmaceutical Complex

Altogether appeal, "Drug price reform will deteriorate revenues and cut down jobs"

Landscape of Hyangnam Pharmaceutical Complex

The pharmaceutical industry gathered at the Hyangnam Pharmaceutical Complex to appeal for a halt to the government's drug price reduction plans. Workers at the complex, where many small and mid-sized pharmaceutical companies are located, expressed fears of job instability, and the possibility of future labor struggles was raised.

The "Emergency Response Committee for Drug Price System Reform for the Development of the Pharmaceutical and Biotech Industry" (the Committee), composed of major industry organizations, held a labor-management meeting on the 22nd at the Hyangnam Pharmaceutical Complex in Hwaseong, Gyeonggi Province. The Committee requested a reconsideration of the government's reform. The committee is consisted of the Korea Pharmaceutical and Bio-Pharma Manufacturers Association (KPBMA), the Korea Biomedicine Industry Association, the Korea Pharmaceutical Traders Association, the Korea Drug Research Association, and the Korea Pharmaceutical Industry Cooperative.

The event was organized for the Committee and the labor-management of the Hyangnam complex to review the risks and impact that the reform plan, which includes large-scale price cuts, would have on the industry and production sites.

The event's participants warned, "The large-scale drug price cuts pushed by the government are a declaration of abandonment of the future of the domestic pharmaceutical industry, run counter to the demand of these days for job stability, and collapse the national health safety net."

In November last year, the MOHW reported to the Health Insurance Policy Review Committee its plan to lower the price calculation rate for generics and patent-expired drugs from 53.55% to around 40%. The reform is scheduled to be finalized by the Health Insurance Policy Review Committee in February and implemented in July. A month after a press conference held at the KPBMA in Seocho-gu on the 22nd of last month, the pharmaceutical industry once again publicly stated dissatisfaction against the government.

The "Emergency Response Committee for Drug Price System Reform for the Development of the Pharmaceutical and Biotech Industry" (the Committee), composed of major industry organizations, held a labor-management meeting on the 22nd at the Hyangnam Pharmaceutical Complex in Hwaseong, Gyeonggi Province. 

Participants stated, "If the government's reform is implemented as is, it will result in the virtual collapse of the domestic pharmaceutical industry and lead to fatal consequences that jeopardize the health and lives of the public." 

Hyangnam Pharmaceutical Complex is Korea's largest pharmaceutical production hub, housing 39 business sites from 36 companies.

Attendees unanimously agreed that rapid price cuts could deal a severe blow to the entire industry, including job instability, a contraction in R&D investment, and a weakened production base.

Participants stated, "If rapid and unprecedented price cuts are implemented, the damage will be concentrated on domestic pharmaceutical companies, including those in Hyangnam, making a loss of up to KRW 3.6 trillion." The industry fears that deteriorating profitability will hinder investment in facilities for quality innovation, infrastructure improvements, and R&D.

Oh Sang-jun, Chairman of the Southern Gyeonggi branch of the Chemical Workers' Union under the Federation of Korean Trade Unions (FKTU), voiced his opinion, saying, "Workers may fear job instability due to the government's price cuts. If employment is unstable, good medicine cannot be produced. The government should stop pushing unilaterally and instead consult with pharmaceutical workers to implement an effective drug pricing policy. If necessary, we will resort to struggle."

Labor and management representatives from the five organizations in the Committee predicted that more than 10% of the industry's 120,000 workers would inevitably face unemployment. They also pointed out that a contraction in the production of low-profit essential medicines and domestic ethical drugs would ultimately increase reliance on expensive imported drugs, causing serious problems for public health.

The labor-management representatives emphasized, "Stop the unilateral push for drug price cuts and guarantee job stability in the domestic pharmaceutical industry," and added, "Officials in charge of healthcare safety should actively foster the industry." 

Officials from companies in the Hyangnam complex also repeatedly highlighted the side effects.

Wonsuk Lee, CEO of Daehan Nupharm, urged, "The reform plan is becoming a profitability shock to small and mid-sized domestic pharmaceutical companies, highly dependent on generics. Small businesses will be unable to handle even the fixed costs for facility investment and quality control. Before pushing an unreasonable plan that ignores the industry's reality, please prepare a reasonable alternative through communication."

Lee Deok-hee, Chairman of the Il-dong Pharmaceutical labor union, said, "We have had the unfortunate experience of conducting restructuring due to liquidity limits while continuously making bold investments of 20% of sales to grow future competitiveness," and added, "Price cuts will lead to permanent workers becoming temporary workers and indirect employment leading to dismissals, which could greatly shake the job stability and the very existence of the pharmaceutical industry."

On this day, the Medicine and Cosmetics Division of the National Federation of Chemical Workers' Unions under the FKTU issued a statement calling for a "full reconsideration of the drug price system reform and the protection of pharmaceutical jobs."

The Medicine and Cosmetics Division urged: ▲reconsideration of the reform, ▲the establishment of a social discussion body involving pharmaceutical workers and unions, and ▲the preparation of measures to protect jobs and ensure employment stability.

Lee Dong-in, Executive Secretary of the division, suggested the possibility of a struggle, stating, "We will respond strongly against job instability and restructuring caused by the reform," and added, "We will inform the public of the voices of pharmaceutical workers through various means and continuously raise issues regarding the reform plan."

Yunhong Noh, President of the KPBMA, argued, "If the reform is forced through in its original form, the industrial foundation will collapse, and the production of essential medicines will contract. Hyangnam, which is home to small- and mid-sized companies, could face job instability and economic contraction due to changes in the business environment," and "A policy that ignores the voices of the industrial field can never succeed."

Cho Yong-jun, Chairman of the Korea Pharmaceutical Industry Cooperative, appealed, "The generic drug price reform plan could pose serious business risks to small and mid-sized pharmaceutical companies," and added, "Rather than a unilateral cut, a phased approach is needed after analyzing the practical impact on employment and investment. Rapid change destroys even the best policy's ecosystem. Companies should be allowed enough time to improve their system."