Chinese API importers outnumber domestic manufacturers in Korea

Number of Chinese API importers up by 96 over six years

Rising imports from China drive diversification of suppliers

Use of Chinese APIs in the domestic market is comparable to domestically manufactured volumes

The number of Chinese active pharmaceutical ingredient (API) suppliers importing APIs into Korea continues to rise. Compared to six years ago, nearly 100 more Chinese companies are now supplying APIs to the Korean market, significantly outnumbering domestic producers. The scale of Chinese API imports has also steadily grown, indicating an expanding influence of Chinese products in the domestic market. In addition, as pharmaceutical companies face price pressure and seek lower-cost APIs, the number of Indian suppliers has also grown substantially.

According to the Ministry of Food and Drug Safety on the 3rd, the total number of Chinese API importers in 2024 was recorded at 350. This represents an increase of 19 companies from the 331 recorded in 2023, within just one year.

Number of Chinese and Indian API importers and domestic API manufacturers by year (Unit: No. of companies; Source: MFDS)

The number of Chinese API importers has shown an upward trend year after year. In 2018, APIs were imported from a total of 254 Chinese companies, meaning 96 new importers have been added over the past six years. Although the number declined from 342 in 2021 to 333 in 2022 and 331 in 2023, it rose again in 2024.

As the scale of Chinese API imports continues to grow, the number of newly identified importers is also increasing.

The value of Chinese API imports rose from USD 678.09 million in 2018 to USD 816.32 million in 2024, representing a 20.4% increase over six years.

Domestic pharmaceutical companies prefer inexpensive imported APIs to reduce costs, leading to a sustained increase in imports from China and diversification of import sources. In 2014, China ranked 6th among domestic drug import sources, but by 2024, it had jumped to 3rd place.

The number of Chinese importers now exceeds that of domestic API manufacturers. In 2024, there were 315 domestic API producers, 35 fewer than Chinese importers. While domestic producers were 12 fewer than Chinese importers in 2018 (242 domestic vs. 256 Chinese), the gap widened to 23 in 2024.

The volume of Chinese APIs used in the domestic market is comparable to that of domestically produced APIs.

In 2024, total API production amounted to KRW 4.4007 trillion. Excluding exports worth USD 2.17314 billion, APIs valued at KRW 1.43 trillion were used in the domestic market, calculated using an average 2024 exchange rate of KRW 1,367 per USD.

This calculation indicates that Chinese API used domestically last year amounted to KRW 1.1159 trillion. Considering that Chinese API is cheaper than domestic products, this suggests that domestic companies actually use more Chinese API than domestic API.

The number of companies importing active pharmaceutical ingredients from India is also steadily increasing. In 2018, 192 companies imported Indian API, but by 2024, this number had risen to 241, an increase of 49 companies over six years. In 2024, the gap between the number of companies importing Indian API and those producing domestically was only 74.

Concerns are spreading that if generic drug prices fall further, the avoidance of relatively expensive domestic APIs will intensify.

Under the revised drug pricing system scheduled to take effect this July, the pricing benchmark for generics will drop from 53.55% of the price of the original drug before patent expiration to the 40% range. A setting between 40% and 45% is regarded as most likely. Arithmetically, lowering the maximum generic price from 53.55% to 40% implies a 25% deterioration in profitability.

An industry insider stated, “Ongoing drug price-cut policies have significantly expanded efforts to source low-cost APIs from import suppliers in China and India. If the price of generics, a core revenue source for domestic pharmaceutical companies, drops sharply, they will inevitably have to further reduce API costs to cut expenses.”