One of President Moon Jae-in’s healthcare policies is to encourage people to visit primary medical institutions more often to treat minor ailments in the early stage.

If Moon turns his plan into action, people with chronic diseases will likely visit neighborhood hospitals more frequently than before. This, combined with the introduction of the risk sharing agreements (RSA) – a payment model wherein healthcare payers and biopharmaceutical manufacturers set coverage and reimbursement levels according to a drug’s effectiveness and utilization – will result in people turning toward smaller clinics, also benefitting small- and medium-sized pharmaceutical companies.

Meritz Securities Co. made these and other points in its recent report analyzing the effects the liberal Moon Jae-in administration will have on the nation’s medical and pharmaceutical industries.

One of Moon’s healthcare policy focuses is on strengthening first-tier hospitals with 30 or fewer beds to induce chronic patients to visit the local hospital for treating minor symptoms, rather than seeking treatment at large hospitals, the report said. Moon aims to change negative public sentiment regarding small clinics to decrease traffic at large hospitals and to restore trust in neighborhood clinics.

Moon Jae-in is making a stump tour in the run-up to the May 10 presidential election, vowing to revitalize small hospitals and pharmaceutical companies to help working-class people lead healthier lives than before.

The move is expected to benefit small-to-midsize pharmaceutical companies that cater to smaller clinics. This notwithstanding, Meritz predicts a tougher business environment field for small pharmaceutical companies because of stricter rebate regulations and increasing competition from midsized companies, which must now compete for the same market.

Regarding applying risk sharing agreements (RSA), Meritz predicts that it will expand medicine accessibility, leading to reasonable price controls. Foreign companies have been wary of entering Korea because of strict price regulations that forced them to sell at a much lower cost than in other nations. Industry experts say international pharmaceuticals will make more efforts to enter the country if they can have more pricing leverage.

The move will also benefit domestic firms that are also looking to expand abroad, Meritz noted, saying that local businesses can now avoid selling at a low price in foreign countries tied by low price set in the home market.

The Moon administration will also likely prepare for mega trends in the healthcare sector, which includes solving the problem of the rapidly aging society. Currently, patients over the age of 60 account for almost half (48.7 percent) of all national medical expenditure.

Although Meritz said it remains dubious about abrupt changes in the existing regulations, the report predicted pressure on the domestic pharmaceutical market to adjust for these problems would increase.

yjc@docdocdoc.co.kr

<© Korea Biomedical Review, All rights reserved.>