Innovative Pharmaceutical Industry and Innovative Nation

From the beginning, the government used an innovation model akin to a triple helix, conditioning that academia, public and private research institutes, and industry should collaborate with each other in order to create new knowl­edge and products.

the South Korean pharmaceutical industry had a greater potential to win the global market.

On the one hand, the government’s policy turn toward herbal medicines renewed business interests among social actors who were directly and indirectly involved in the value chains of herbal medicines, changing the geography of herbal medicines in complex ways. For instance, one clear indicator demon­strative of renewed commercial interest in herbal medicines was the rise of the cultivating fields to mass-produce herbs as opposed to hunting and gather­ing medicinal herbs in the wild, let alone adopting and implementing good manufacturing/laboratory practices in circulating herbs and related products.^[798] Starting in the 1990s, a new social actor came to the surface in the business of herbs and herbal medicines, namely the herbal pharmaceutical industry. The herbal pharmaceutical industry refers to either a biotechnology company or a pharmaceutical company that utilizes and transforms herbs to produce com­mercial products. The emergence of the herbal pharmaceutical industry can be majorly attributed to governmental aspirations to arise as a competitive player in global markets.

The classification system of the pharmaceutical industry tells how the indus­try is imagined and understood by regulatory agencies. According to Korean Standard Industrial Classification (KSIC), the pharmaceutical industry is clas­sified under three different categories: the manufacturing industry, wholesale and retail industry, and service industry. The herbal pharmaceutical industry is more specifically subsumed under the manufacturing industry without appear­ing in the other two categories.

While in the 1990s the newly created herbal pharmaceutical industry was more focused on the pharmaceuticalization of herbal medicines, in the 2000s, the government pushed the industry to innovate herbal medicines as global hits. For 14 years, from 2001 to 2014, the governments spent about 309.2 billion KRW on developing and commercializing natural products and about 2 trillion KRW on national health insurance to reimburse natural

Classification as a Technology 227 drugs from 2003 to 2014.^[799] Accordingly, the nominal growth of the industry was 2 trillion KRW between 2010 and 2013, of which 34% accounted for han yak products, including ginseng, herbs, manufactured herbal medicines. However, a more dramatic explosion of the market was observed in medi­cal products and cosmetics based on or derived from Korean medicine and drugs.^[800]

Despite the astronomical size of the public funds that had been spent on the pharmaceuticalization of medicinal plants, along with loosened regulatory measures, only eight pharmaceuticals were recognized as innovative natural drugs by 2015 by the Korea Food and Drug Administration, targeting non-spe­cific chronic symptoms such as osteoarthritis and digestive troubles. Although they were approved as novel drugs, physicians of Korean medicine, who were excluded from prescribing and administering such drugs to their patients, con­tested the novelty of these eight natural drugs.

In 2015, the National Assembly of Korea instructed the Board of Audit and Inspection of Korea to inspect a series of government-driven projects about the development of natural drugs. Through months-long investigation into the R&D projects, attention was paid to the following three issues, in particular: the effective­ness of the projects, that is, cost-benefit analysis; regulatory procedures to approve innovative natural drugs; and appropriateness of safety and quality management. The board decided to repeal a special bill about natural drugs, putting a closure on relentless doubts about the novelty of natural drugs since its birth. However, in 2018, similar rhetoric was cited again. The government aimed to develop ten global products comparable to Artemisinin and Saponin and to extend the market share from 2.2% in 2017 to 4.4% in 2022.^[801] In late May 2018, the South Korean Ministry of Science and ICT announced that it would drive innovation growth in the domain of natural products and push interested industries, research insti­tutes, academia, and governmental agencies to collaborate intimately. In order to facilitate the growth of the bio-economy (economic growth pertaining to and

deriving from biotechnology) and natural products in the Korean peninsula, the government took the initiative again to develop higher value-added industry in natural products. For instance, in 2016, the government poured 140 billion KRW into research and development in natural products, which included the plan to utilize natural resources in North Korea because of the changing political envi­ronment between the North and South Korean governments.

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