The pet treatment sector, a promising blue ocean market, has lured major Korean pharmaceutical companies since 2021.
However, despite optimistic projections and significant investments, as late entrants, Korean pharmaceutical companies are battling to secure a footing amidst established competitors.
The interest of pharmaceutical giants in pet care was primarily spurred by the sector's rapid emergence as a booming market.
According to the Korea Rural Economic Institute (KREI), the domestic pet-related industry is set to grow from 3.3 trillion won ($2.4 billion) in 2020 to 6 trillion won by 2027.
Also, the global animal pharmaceutical market is projected to expand at a steady annual growth rate of 9.6 percent, leaping from $158 billion in 2020 to an anticipated $328 billion by 2028, according to Grand View Research, a market research firm.
Leading players began exploring this niche around 2021.
Yuhan Corp., for instance, launched Gedacure, a treatment for Canine Cognitive Dysfunction Syndrome (CDS) – often referred to as pet dementia.
The drug's main component, crisdesalazine, is known to counteract Alzheimer's symptoms by reducing amyloid plaques and preventing neural cell death.
Other contenders include Dongkuk Pharmaceuticals, which introduced Canidol, a pet version of its best-selling drug Insadol, a periodontal disease treatment, and Daewoong Pharmaceuticals' subsidiary Daewoong Pet recently rolled out Epicle, an enzyme supplement for pets with exocrine pancreatic insufficiency.
GC Veterinary products achieved milestones like developing the world's first canine influenza vaccine and filing patents for pet-specific formulations.
While established companies dive in, new entrants are gearing up, too. Vaxcell-Bio Therapeutics is on the brink of commercializing Vaxleukin-15, an immunotherapy drug for pet cancer, and Curacle is collaborating with the Companion Animal New Drug (CAND) Research Team to repurpose CU06, originally developed for vascular endothelial dysfunction for humans, as a treatment for canine kidney failure.
In addition, Samjin Pharmaceutical and Samil Pharmaceuticals recently passed a motion to change the articles of association at their shareholders' meetings and announced their entry into the veterinary drug market.
However, not all ventures have been fruitful. Despite the anticipated boom, many pharmaceutical firms are reporting losses.
Daewoong Pet posted an operating loss of 799.6 million won last year, marking a significant setback from the previous year's operating loss of 169.23 million won.
The loss was greater than the company's sales of 577.41 million won in the same year.
GC Green Vet, stemming from GC Green Cross Labcell's diagnostic business expertise, also faced a staggering 47 percent increase in operational losses last year to 3.3 billion won.
In response, industry watchers believe that although the market size is growing, it will take time for pharmaceutical companies to establish themselves in the market due to the large number of existing players.
With over 900 enterprises including global pharmaceutical behemoth Boehringer Ingelheim in fierce competition, gaining a market share seems challenging.
According to the Korea Animal Health Products Association, domestically, there are 477 manufacturing companies and 441 importers in the sector in 2020. Notably, for pet pharmaceuticals, there are a total of 172 companies competing.
Industry insiders suggest that while the market potential is vast, the saturation of pre-existing players creates hurdles for newer participants.
“As domestic pharmaceutical companies are just entering the business, it seems difficult to see immediate returns,” an industry official told Korea Biomedical Review. “With so many existing players, it will take time for pharmaceutical companies to establish themselves in the market.”
The official stressed that given the growing population that has pets, coupled with the ever-growing pet population, there's little doubt about the industry's potential.
“However, the real challenge lies in distinguishing oneself in an already bustling marketplace,” he added.
Another official agreed.
“The market entry barriers for domestic companies are high due to the dominance of foreign products that have introduced various product lines ahead of domestic companies,” he said.
The official also stressed that in the case of veterinary drugs, it is difficult for small and medium-sized enterprises to develop new drugs for animals due to the strengthening of regulations by the Animal and Plant Quarantine Agency and insufficient government support.
The government will lower barriers to help pharmaceutical companies
The Korean government aims to develop the “green biotechnology” industry into a 10 trillion won domestic market by 2027. Green biotechnology refers to the application of biotechnology to agriculture and forestry to create value-added products by adding biotechnology to unprocessed primary foods.
It is noteworthy that veterinary drugs are included in the top three promising areas of green biotechnology.
As a result, from the fourth quarter of this year, it is expected that pharmaceutical companies will be able to produce veterinary drugs in their existing drug manufacturing facilities, further accelerating their entry into the market.
In July, the Ministry of Agriculture, Food and Rural Affairs issued a legislative preview of a partial amendment to the law related to the facility standards for manufacturers, importers, and sellers of veterinary pharmacies and veterinary drugs.
According to the preliminary legislation, a new regulation has been established to allow those who are licensed to manufacture drugs under the Pharmaceutical Affairs Act to manufacture veterinary drugs at the same facility where they manufacture human drugs.
Currently, pharmaceutical companies are required to set up a separate dedicated veterinary manufacturing facility to produce veterinary drugs, but the new regulation allows them to utilize their existing facilities, easing regulations.
However, considering the impact on the existing animal drug industry, which is centered on livestock, the target animals are limited to pets, and the drugs are limited to 22 ingredients that are licensed for both human and animal use.
The medicines are used for six types of pets, including dogs, cats, rabbits, and hamsters, and include 22 ingredients, including neomycin, lidocaine, mebendazole, cefazolin, insulin, telmisartan, and heparin.
