SEOUL - A recent deal covering cooperation in domestic and global sales between South Korea's second largest pharmaceutical company, Green Cross, and 10-ranked LG Life Sciences has not yet triggered any similar tie-ups by other major drug players.

The signing of a memorandum of understanding on April 1 by the chief executive officers of vaccine-focused Green Cross and LG Life Sciences marked the first such business alliance among top-tier Korean drug makers.

The alliance is aimed at generating a synergy between the two players and at combining each partner's strengths. LG Life Sciences is known for its strength in sales outside Korea while Green Cross is armed with a superior sales network in the domestic market.

Cooperation between LG and Green Cross, however, is unlikely to trigger matching business alliances by other Korean pharmaceutical firms any time soon, state-run Korea Development Institute economist Yun Hee-Suk said in an interview.

The health ministry has focused on promoting business cooperation among Korean outfits, but one obstacle is that local companies don't feel the need for such alliances, Yun said.

Even though the government has using both carrots and sticks to promote alliances, Yun said, yet local drug firms are "not in a hurry for change."

"When you can keep your business running well with only a couple of products, generics and non-medical items such as health drinks, you don't feel the need to change," Yun explained.

LG Expects Wide Form of Cooperation, Including R&D, With Green Cross

LG Life Sciences spokesman Park Chul-Hwa, meanwhile, said he expects broader cooperation with Green Cross in the future.

"LG Life Insurance and Green Cross could further enhance their current alliance for a wider form of cooperation including R&D if this latest cooperation on sales and marketing proceeds well," said Park, who added that 40 percent of LG Life Sciences' sales are generated outside Korea.

"Since we are now building up our sales networks in the Middle East, India and China, Green Cross could be able to take advantage of LG Life Sciences' overseas network to boost exports of its flu vaccines and other products," said Park Chul-Hwa, LG Life Sciences spokesman. "Under the MOU, LG Life Sciences also will be take advantage of Green Cross' domestic sales channels to boost our sales."

Park said while there have been many strategic alliances with multinational pharmaceutical companies, the Green Cross-LG Life Sciences deal is the first domestic partnership or business alliance between top-echelon Korean companies.

LG Life's pipeline ranges from biosimilar EPO products and human growth hormones to antibodies, vaccines and chemical drugs aimed at fighting infections, metabolic disease and cardiovascular ailments. The company is also developing generics and branded generics.

Park said LG has been expanding its sales presence outside Korea.

LG Life Sciences signed an exclusive license, supply and distribution agreement with China's Double-Crane Pharmaceutical, under which the Chinese company will sell - inside China - LG's DPP-4 inhibitor Gemigliptin for treatment of diabetes (Also see "Korea's LG Life Sciences Signs Deal With China's Double-Crane Covering DPP-4 Inhibitor Gemigliptin" - Scrip, 18 January, 2010.).

LG Life Sciences Has Sales Offices in China, India, Middle East

The deal with the Chinese pharmaceutical company is expected to help boost LG Life's drive to strengthen its presence in other global markets including Turkey, Russia, South America and India, Park said. LG Life Sciences has already opened sales branches in China, India and the Middle East.

LG Group, the parent of LG Life Sciences, is moving to create a firm foundation in the global pharmaceutical and healthcare community through its electronics giant LG Electronics, South Korea's second-largest electronics producer.

LG Electronics and the Seoul-based International Vaccine Institute have tightened cooperation in the area of vaccines aimed at Africa by signing a memorandum of understanding (Also see "Korea's LG Electronics Teams Up With International Vaccine Institute To Inoculate Kids In Kenya, Ethiopia" - Scrip, 6 April, 2010.).

Although Green Cross exports its vaccines to more than 50 countries across Asia, South America and Europe, the cooperation with LG Life is focused on further enhancing Green Cross sales globally, said Green Cross spokesman Park Jun-Young.

"We are cooperating with LG Life Sciences as part of our main effort to remarkably increase our sales in foreign countries," Park said.

Of the many Korean pharmaceutical players, vaccine producer Green Cross was the biggest beneficiary of demand for vaccines triggered the A/H1N1 flu pandemic last year. Increased demand for its vaccines triggered a remarkable upgrade in its ranking to the number two spot from number five (Also see "Demand For A/H1N1 Vaccine Catapults Green Cross Into No. 2 Spot In Korea; Company Ramps Up Biosimilar Pipeline" - Scrip, 3 February, 2010.).

Park said the bid by Green Cross to expand its business to the biosimilar sector could also gain momentum from the new sales cooperation with LG Life Sciences.

- Peter Chang (p.chang@elsevier.com)

LG Life Sciences-Green Cross Tie-up Might Not Trigger Matching Alliances By Other Korean Drug Makers

More from Archive

More from Scrip