Korean drug majors line up for local alliances

After Japan, it is now Korean pharmaceutical companies which are exploring opportunities in India.

Twenty Korean firms, including Daewoong Pharma & Company, LG Lifesciences, Yu Yu Inc, Yuhan Corporation, SK Chemicals, CJ Corp, Cellontech and Choong Wae Pharma Corporation, are in talks with local companies, according to industry sources.

Ranbaxy, Cipla, Nicholas Piramal, Indoco Remedies, Lupin and Suven Pharma are some players with which the Korean firms are in talks with for technical, marketing and product outsourcing pacts.

The $104.53 billion Korean pharmacuetical industry has 802 manufacturing units, including 241 formulations and 355 active pharmaceutical ingredient (API) units. Samsung Fine Chemicals and Deawoo Chemicals are the two leading Korean companies which supply APIs to the Indian industry.

Though Korean pharmaceutical firms are strong in technology, they are looking to outsource to Indian  companies because of the cost advantage. As for Indian companies,  they can have access to better technology.

Another important factor is that Korean companies are not strong in formulations and, hence, it makes sense to have marketing tie-ups with Indian counterparts for branded products, said the source.

"The companies are also keen to have financial collaborations with Indian companies, and even acquisitions in India," the source added.

The leading Korean pharmaceutical industry body Korean Pharmaceutical Manufacturers' Association (KPMA) has signed a memorandum of understanding with the Indian Drug Manufacturers' Association (IDMA) to initiate working relationship in technical and trade areas. IDMA represents over 90 per cent of the Indian drug manufacturers.

Last week, KPMA president Jeung Soo Kim led a delegation of the top 20 Korean companies to India, visiting the sites of a few majors.

Industry analysts said the pact between KPMA and IDMA would open up wider opportunities for their members to explore drug research and production alliances. IDMA president Suresh Kare said the interest of Korean companies was an endorsement of the industry's capabilities.