The Korean Pharmaceutical Industry and the Expansion of the General Pharmaceuticals Market in the 1950-1960s*

Sihn, Kyu Hwan

Abstract

After the Liberation, the Korean economy was dependent on relief supplies and aid after the ruin of the colonial regime and war. The pharmaceutical business also searched for their share in the delivery of military supplies and the distribution of relief supplies. The supply-side pharmaceutical policy made the pharmaceutical market a wholesale business. The gravity of the situation led to an increased importation of medical supplies, and wholesalers took the lead in establishing the distribution structure, whereas consumers and pharmaceutical business were relatively intimidated. The aid provided by the International Cooperation Administration (ICA) marked a turning point in the Korean pharmaceutical industry after the middle of the 1950s. ICA supplied raw materials and equipment funds, while the pharmaceutical business imported advanced technology and capital. The government invited the local production of medical substances, whereas pharmaceutical businesses replaced imported medical substances with locally produced antibiotics. After the 1960s, the production of antibiotics reached saturation. Pharmaceutical businesses needed new markets to break through the stalemate, so they turned their attention to vitamins and health tonics as general pharmaceuticals, as these were suitable for mass production and mass consumption. The modernized patent medicine market after the Opening of Korea was transformed into the contemporized general pharmaceuticals market equipped with the up-to-date facilities and technology in 1960s. Pharmaceutical businesses had to advertise these new products extensively and reform the distribution structure to achieve high profits. With the introduction of TV broadcasting, these businesses invested in TV advertising and generated sizable sales figures. They also established retail pharmacy and chain stores to reform the distribution structure. The end result was a dramatic expansion of the general pharmaceuticals market. The market for vitamins and health tonics showed particularly explosive growth. As Korean industrial workers worked night and day to increase exports in the 1960s, they needed vitamins and health tonics for recovery from fatigue and to support vitality. The expansion of the general pharmaceuticals market was accompanied by increases in numbers of pharmaceutical companies. Competition intensified between pharmaceutical companies, leading some companies to search for new survival plans. The pharmaceutical industry underwent structural reform in 1960s, replacing imported medical substances with local products and inventing the new market of general pharmaceuticals. The market for vitamins and health tonics was increased, and a successful product could support a pharmaceutical company. On the contrary, a general pharmaceutical could affect the very existence of the company: if a company chased a popular product and the imitation bubble burst, then the company have lost its competitiveness in the world market.