Contracted generics 94%↓ over 5 years…entries suppressed

333 bioequivalence-certified items last year…86%↓ from 2,358 items in 2019

The number of contracted generic approvals dropped due to strengthened joint development regulation

Last year, 1.7 generics were approved per bioequivalence study…dropped from 29 approvals in 2019

New entries of generic drugs have significantly decreased, with the number of items with certified bioequivalence reduced by 86% compared to five years ago. The number of generics approved through the entrustment method without conducting independent bioequivalence testing has dropped by more than 90%. Since the implementation of the tiered drug pricing system and the joint development regulation, new entries of contracted generics have been suppressed.

According to the '2025 Food and Drug Statistical Annual Summary' published by the Ministry of Food and Drug Safety on the 27th, there were 333 bioequivalence-certified items last year, a 6.1% decrease from the previous year.

Bioequivalence-certified items are products recognized as equivalent to the original drug, and they consist mostly of newly approved generics. Since reaching 2,358 items in 2019, bioequivalence certifications have shown a continuous downward trend, shrinking by 85.9% over the five-year period.

The number of bioequivalence testing and contracted generics with certified bioequivalence by year (unit: number, source: MFDS). BLUE: in-house GREEN: contracted

The number of entries for contracted generics approved has dropped. Contracted generics refer to those approved by outsourcing the entire manufacturing process to another company without performing an independent bioequivalence study.

Last year, the number of bioequivalence certifications for contracted generics was 139. While this is a slight increase from 136 in 2023, it represents a 93.9% contraction compared to the 2,277 items recorded in 2019.

The reduction in contracted generics due to the reorganization of the drug pricing system and the strengthening of approval regulations led to a significant decrease in new entries, which in turn resulted in a decline in the total number of generic approvals.

Under the reformed drug pricing system implemented in 2020, a tiered pricing model was introduced where the ceiling price becomes lower the later a drug is listed for reimbursement. If more than 20 generics are already registered for a specific ingredient, the ceiling price for a newly listed item is set at 85% of the existing lowest price. It is analyzed that the motivation for new approvals has been significantly dampened as the drug prices for generics entering the market late have dropped substantially.

Starting from July 2021, the revised Pharmaceutical Affairs Act limited the number of incremental transition drugs and generics that can be approved using a single clinical trial. In cases where a product is manufactured using the same site, prescription, and manufacturing method as a pharmaceutical company that conducted its own bioequivalence study, the use of that bioequivalence data is limited to three times. This means that only four generics can be approved per single bioequivalence study.

Previously, there were no regulations on the number of contracted generics approved per bioequivalence study, which led to an excessive number of approvals. However, as approvals were limited to a maximum of three contracted generics per study, a reduction in the number of new approvals became inevitable.

Contracted generic approvals reached 515 cases in 2017 but surged more than fourfold within two years before turning downward to 1,405 cases in 2020 and 573 cases in 2021. Since 2022, the figure has remained below 200 for three consecutive years.

The number of generics approved per bioequivalence study has also decreased significantly. In 2019, the number of generics approved through direct bioequivalence testing was 81, accounting for less than 4% of all bioequivalence-certified items. At that time, approximately 29 generics were approved per single bioequivalence study. However, as the number of contracted generics decreased, the number of generics approved through direct testing exceeded the number of contracted generic approvals in 2023 for the first time in 23 years since 2011.

In 2011, the 543 products with completed bioequivalence studies outnumbered the 366 contracted products, but the proportion of contracted products became much larger afterward. Last year as well, the number of generics recognized through direct bioequivalence testing exceeded contracted generics by 55 cases. As of last year, 1.7 generics were approved per bioequivalence study, a 94.1% decrease compared to 2019.

The industry anticipates that if the reduction of the generic drug price calculation standard is implemented, new generic entries will be further restricted.

The drug pricing system improvement plan reported by the Ministry of Health and Welfare to the Health Insurance Policy Review Committee last month includes lowering the price calculation rate for generics and patent-expired drugs from 53.55% to the 40% range.

Under the current drug pricing system, effective since 2012, generics receive a premium of up to 59.5% of the original drug price before patent expiration upon initial listing, which then drops to 53.55% after one year. Patent-expired original drugs are also reduced to 53.55% of their pre-expiration price. The new calculation standard for generic drugs is highly likely to be set between 40% and 45%.

As the drug pricing standard was set at 45% from 53.55%, the maximum price for generics is calculated to decrease by 16.0%. If the standard is finalized at 40%, the maximum price reduction rate for generics will increase to 25.3% as the previous KRW 53.55 would drop to KRW 40.