What Are The New Opportunities

For Orthopaedic Firms In South Ko-rea?

Provided by Solco Biomedical

Il Kim

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1. Korean Orthopaedic Market Overview

2. Opportunities & Risks in South Korean Orthopedic Market

3. Regulatory Process in South Korea

What are the new opportunities for Orthopaedic firms in South Korea?

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I. Korean Orthopaedic Market

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USA$ 100,801

Germany $ 19,596

Unit: : Million Dollar

Other $88,077

Japan $ 29,208

Ref.: Korea Health Industry Development Inst. (KHIDI)

U.K$ 8,477

France$ 8,890

Korea $ 3,902

World Medical Device Market Share 2010

Market Growth Rate

World Market : $ 258,951 Million

Korean Market :14th largest & 1.4%

Growth Rate: •World Market : 9.06%•Korea Market : 15.4%

Korean Medical Device Market Overview

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2006 2007 2008 2009 2010Avg.

Growth (‘06~’10)

%

Manufac-ture

1,949,159(14.4)

2,216,965 (13.7)

2,525,203 (13.9)

2,764,261(9.5)

2,964,445(7.2)

11.1

Export 781,043(9.1)

959,094(22.8)

1,248,138(30.1)

1,519,039(21.7)

1,681,619(10.7)

21.1

Import 1,719,323(11.2)

2,001,423(16.4)

2,340,883(17.0)

2,398,833(2.5)

2,619,895(9.2)

11.1

Market Size

2,887,438(13.9)

3,259,294(12.9)

3,617,947(11.0)

3,644,054(0.7)

3,902,720(7.1)

7.8

Rate of Depen-

dence on Import

59.5 61.4 64.7 65.8 67.1

Unit: Thousand USD

Ref.: Korea Health Industry Development Inst. (KHIDI)

Korean Medical Device Market Overview

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2009 2010 2011 Growth Rate

Spine 732,000 754,000 779,000 3.06 %

Trauma/ Fix-ation

400,000 424,000 449,000 5.61 %

Joint 1,355,000 1,500,000 1,694,000 10.56 %

Unit: Thousand USD

Ref.: Joint: KFDA Statistical Year Book

Spine: Idata Research Inc Trauma: Korea Health Industry Development Inst. (KHIDI)

▶ Korean Orthopaedic Market Size Overview Per Division

Korean Orthopaedic Market Overview

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Ref.: Korea Health Industry Development Inst. (KHIDI)

Rank Product Name Year 2009

Year 2010

Growth Rate

Total Amount in 2010

% from Total

3 Medical Probe 50,178 68,033 35.6% 1,454,361 4.68%

14 Pedicle Fusion System

12,486 23,996 92.2% 1,454,361 1.65%

Unit: Thousand USD ▶ Export List

▶ Import ListRank Product Name Year

2009Year 2010

Growth Rate

Total Amount in 2010

% from Total

4 Knee System 66,934 71,720 7.1% 2,265,836 3.17%

14 Pedicle Fusion System

27,761 31,241 12.5% 2,265,836 1.38%

Unit: Thousand USD

Korean Orthopaedic Market Overview

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II. Opportunities & Risks In South Korean

Orthopaedic Market

1980 1990 1999 2000 2009 2010 2018 20260

10000

20000

30000

40000

50000

60000

70000

1,456 2,195 3,224 3,395 5,193 5,357 7,075 10,218

38,124 42,86946,617 47,008 48,747 48,875 49,340

49,039

6.9% 7.2% 10.7% 11%14.3%

20.8%

Population Over Age 65 Total Popluation Percentage

5.1%3.8%

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Ref.: National Statistical Office of Korea 2010

Component Ratio of Age over 65 Population

Unit: Thousand

A) One of the fastest growing Ageing Society

Importing Opportunities

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　Year Reached # of Yrs Takes to Reach

7% 14% 20% 7-14% 14-20%

France 1864 1979 2018 115 39

U.K 1929 1975 2028 46 53

U.S.A 1942 2014 2032 72 18

Japan 1970 1994 2005 24 11

Korea 2000 2018 2026 18 8

Ref.: National Statistical Office of Korea 2010

Ageing Society Year Reached Table

A) One of the fastest growing Ageing Society

Importing Opportunities

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Division Total %

Total # of Physician

61,846

Orthopaedic Surgery

4,603 7.44%

Neuro Surgery

2,107 3.41%

Number of Specialist Products in South Korea Market

Spine Product

MIS

Artificial Disc

Dynamic Rod System

Stand-Alone Fusion System

Shape Memory Sytem

Ref.: KFDA 2011 Statistical YearbookAmerican Medical Association

Total Number of Physicians in USA: 954,224OS in USA: 25,462 (2.7%)NS in USA: 8,968 (0.94%)

B) Surgeons desire for new technique and unique products

Importing Opportunities

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Year Total Growth Rate

2009 $ 4,682,831

2010 $ 4,856, 096 3.57%

Govt. Subsidies of Health Insurance

Unit: Thousand USD

▶ 97% of Total Population are eligible for Health Benefit

Ref.: KFDA 2011 Statistical Yearbook

C ) Superior Government Insurance Coverage

Importing Opportunities

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Opportunities when Importing to South Korea

• Fast growing Ageing Society

• Desire for New & Unique Products

• Excellent Insurance Coverage

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Type Price in 2010

Price in 2011

Spine Pedi-cle System

$ 1,684 $ 1,142(-32.0%)

Joint Knee System

$ 2,612 $ 2,512(-4.0%)

Trauma Nail System

$800 $768(-4.0%)

Unit: USD

A) Government Manage and Control Product Price

Medical Product Reimbursement Price

Importing Risks

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Severe Competition among

Associative Companies Registered in South Korea

B) Abundance of Competitors

Importing Risks

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1) Qualification for Korean Device Importers

2) Class Divide into I, II, III, IV

3) Technical Review

4) KFDA Approval (Approx 150 days)

5) Type Test (Reimburse VS. Non-Reimbursed. Approx 3-5months)

6) Marketing Approval

C ) Complex KFDA Regulatory Process

South Korea KFDA Regulatory Process

Importing Risks

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Risks when Importing to Korea

• Controlled Product Cost

• Competitive Market

• Complex Regulatory Process

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Ref.: Idata Research Inc

DomesticForeign

60%40%

High Quality/ Economic Price

Spine

Export Opportunities

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III. Regulatory Process in South Korea

1) Classify Medical Device Class

2) Identify Predicate Devices

3) Determine if any documents apply

4) Prepare and submit the application

5) Review for 90 days

6) Register product on the FDA website

1) Classify Medical Device Class

2) Mechanical Testing

3) Determine if any documents apply

4) Approval of KFDA within 80 days

5) Register your medical device for sale

6) Decision from the HIRA regards

reimbursement

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FDA 501K Procedure KFDA Procedure

Regulatory Process in South Korea

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Reimbursed Product Non-Reimbursed Product

Pedicle Screw System 1 level: $1,187Motion Preservation Product

(Artificial Disc)$2,500

PEEK Cage $353 Catheter $600

Dynamic Rod$95

(was $3,500 in 2011) Bone Substitute 　 $400　

Unit: USD

Reimbursed Product VS. Non-Reimbursed Product

Ex. Spine Product

Regulatory Process in South Korea

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* Maintain Higher Market Growth Rate than that of World’s

* Fast Growing Ageing Society

* Early Adaptation of the Trend

* Excellent Insurance Coverage

* Gov’t Insurance Coverage Control

* Excellent Quality product available with Economic Price

* Reimbursement Product VS. Non-Reimbursed Product System

Summary

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Thank you.

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Initial dossier ar-

rive

Preparing Technical Document

Submission of TD to KFDA

TD reviewed by KFDA

Issue a certificate of importing testing sample by KFDA

Submission of Test report to KFDA

Requesting Addi-tional information

Request testing sample

Importing test-ing sample

Testing in Local Lab

Issue the test report

Product Approval

Request supplemental documents

Sending notice to cus-tomer

KFDARegistration Process

①

②

Preparing required addi-tional documents and submit

to KFDA

Reviewed by KFDA

Exhibit 1