Warm inter-Korean relations may benefit GC Pharma, Dong-A ST

So Jae-hyeon  Published 2018.05.15  15:50  Updated 2018.05.15 15:50


The South Korean pharmaceutical industry is paying keen attention to which drugmakers will benefit from improving inter-Korean relations.

Since the inter-Korean summit in late April, analysts have been picking construction firms, once involved in joint projects by North Korea and South Korea, as those likely to earn more profits through inter-Korean exchanges.

In fact, companies related to tourism projects in Mt. Geumgang in the North such as Hyundai Elevator and Hyundai Merchant Marine saw their shares jumping significantly in recent days.

South Korean manufacturers having a plant in the Gaeseong Industrial Complex in the North such as Jaeyoung Solutec and Cheryong Industrial also rose, along with railway and construction firms.

In the pharma sector, some drugmakers are also expecting larger profits if inter-Korean exchanges begin in earnest.

GC Pharma is one of them.

As the first South Korean drugmaker, GC Pharma has a 50-50 joint venture company with a factory in North Korea.

In 2000, GC Pharma established “Jeongseong Green Cross Biopharmaceutical Joint Company” and started a factory operation in Pyongyang.

At the time, the South Korean firm shipped raw materials for Urokinase, produced by Jeongseong Green Cross Pharm, from Nampo Port in the North and brought in through Incheon Port in the South.

Over the years, soured inter-Korean relations have led to discontinuation of the drugmaker’s exchanges. However, GC Pharma is the only South Korean pharmaceutical firm that has a plant in the North, which is capable of producing more than 300,000 bottles a year.

Such prospect gives the company a chance that it could become the first South Korean drugmaker to manufacture products in the North if inter-Korean exchanges become more invigorated.

Dong-A ST is also hoping for more profits from thawing inter-Korean relationship.

The company is supplying tuberculosis treatment Croserin to the World Health Organization. As the WHO is stressing that North Korean TB patients need more aid, it is highly likely that Dong-A ST’s Croserin will go to the North.

The North’s high demand for IV fluids brightens the prospects of JW Pharmaceutical and CJ Healthcare, the two leading firms in the local IV fluid market.

The International Health Care Foundation, a South Korean group to support North Korea called Korean Sharing Movement, and NGO Food for the Hungry have supported the construction of a North Korean IV fluid factory. For the project, Daewoong Pharmaceutical also provided 400 million won ($373,000) worth of IV fluids for children.

“North Korea has a steady demand for basic vaccines and fluids. So, pharmaceutical companies with such products will be able to enter the market once the North begins exchanges with the South,” a financial industry source said. “There might be joint ventures and joint R&D bodies.”

However, drugmakers with a high chance of entering the North Korean market took a cautious stance.

“There could be good opportunities if the inter-Korean exchanges lead to reunification. But it is too early to mention our products’ entry into the North or export to the North now,” an official at a drugmaker said.

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