The Indian pharma exporters, who are keen on expanding their business geographically, will have a better trade opportunity in South Korean market, as the companies can avail the customs duty benefit of almost six per cent owing to the Comprehensive Economic Partnership Agreement (CEPA) signed between the two countries, says the Pharmaceuticals Export Promotion Council (Pharmexcil).

Pharmexcil, which led a six-member delegation consisting of some of the major Indian pharma firms including Hyderabad-based Aurobindo Pharma, Mumbai-based Lupin Ltd and Calyx Chemicals and Ahmedabad-based Torrent Pharma and Claris LifeSciences in March, has identified a huge potential for Indian generic exporters in South Korean market. The council and a delegate from the Indian drug regulatory authority have conducted meetings with the South Korean drug regulators thus establishing a platform for communication for future activities, said Dr P V Appaji, executive director, Pharmexcil.

“With CEPA on place, the Indian pharma exporters, including the manufacturers and traders, will be eligible to get a duty waiver of five to six per cent. This opens a good opportunity of preferential advantage for the Indian companies to improve their pharma trade to South Korea. We can also explore the opportunities in Indian companies working with the South Korean companies in various activities in pharma manufacturing and research,” said Appaji.

There are approximately over 2,000 indigenous pharmaceutical companies present in the South Korea. Korean companies have been keen to partner foreign companies where there is joint investment in R&D as well as through licensing agreements, he added.

The CEPA, a comprehensive type of free trade agreement (FTA), is expected to act as a stepping stone for the governments and traders of both the countries to establish strategic partnership with a high degree of trade complementarity. The agreement provides a comprehensive coverage of trade in goods and services and investments.

Through the agreement, signed in August 2009, India has eliminated duties on almost 75 per cent of products imported from South Korea on a custom-value basis. South Korea has also removed duties on 93 per cent of its products from India during the eight years starting from the signing date of CEPA and the deal is expected to beef up the bilateral trade between the two countries up to US$ 3.3 billion, from a total of US$ 15.6 billion recorded in 2008, predicts the Korea Institute for International Economic Policy.

According to Espicom Pharmaceutical Market Intelligence report, Korea’s pharmaceutical market had a value of US$ 12.02bn in 2008 and is one of the most promising in the world. As per the study, the South Korean pharma market is expected to grow at an average annual rate of around 5 per cent, bringing it to US$ 15.41 billion by 2013.

A Pharmexcil data reveals that the Indian pharma companies exported US$ 76.37 million worth of bulk drugs, US$ 11.55 million worth of formulations and US$ 1.5 million worth of herbal products to the South Korean market in 2009. The exports was US$ 69.43 per cent worth of bulk drugs, US$ 8.76 worth of formulations and US$ 1.26 per cent of herbal products in 2008. The compound annual growth rate for the last three years is marked at 20.89 per cent in bulk drugs, 11.74 per cent in formulations and over 24 per cent in herbal products exports over the past three years.

The pharma imports from South Korea has been recorded at 7.56 per cent compounded growth per annum in bulk drugs and almost 10 per cent in formulations for the same period. In 2009, US$ 22.49 million worth of bulk drugs and US$ 13.56 million worth of formulations were imported from South Korea, whereas the import revenue was of US$ 18.77 million for bulk drugs and US$ 11.47 million for formulations in the year 2008.