For Shin Poong, the sales value of praziquantel products increased over time as a percentage of total company sales, from 6.71 percent in 1991 to 10.37 percent in 1993. A single product that represents one tenth of a company’s total sales is quite significant to the company. The rising importance of praziquantel in Shin Poong’s total sales was greatly assisted by increases in exports, as shown in Table 3.7.

Table 3.7: Percentage of Distocide sales to total company sales

unit: 1 million won

Note: a) Export volume is excluded from calculation.
b) Accounting period is changed for all pharmaceutical firms.
Numbers in parenthesis are values in one thousand US dollars.
Sales value = sales volume * wholesale price.
Source: Shin Poong Pharmaceutical Company.

Tables 3.8 and 3.9 show that Shin Poong’s export volume of praziquantel doubled in 1992, compared to 1991, due to exports to China, which started in 1992. Overall, Shin Poong exports Distocide to many countries, including several European and African countries. China was the largest overseas market for Shin Poong’s praziquantel products in 1993. Sudan was the largest market in 1991. Small amounts of Distocide have also been shipped to Denmark, the Netherlands, Philippines and Switzerland. Table 3.8 shows that Shin Poong has exported praziquantel raw materials to many developed and developing countries. China, again, is emerging as the main importer of Shin Poong’s raw material, while Egypt has been a major market for many years. China was able to import the huge volume of praziquantel (both raw material and tablets) in 1993 through its World Bank loan for schistosomiasis control. The tablets apparently are for use in multiple years and for mass chemotherapy for humans (in which the entire population in an endemic area receives treatment) as well as for mass treatment of cattle. Shin Poong reported to us that the volume of exports (of raw material plus tablets) plus local production (see Table 3.10) could exceed the total volume of raw material production in that year, since exports could include production from the previous year.

Table 3.8: Countries for export trade

Source: Shin Poong Pharmaceutical Company.

Table 3.9 shows that the production volume of praziquantel raw material more than tripled between 1991 and 1993, due to increases in both domestic consumption and overseas exports. Between 1991 and 1993, export volume more than tripled, while the value of exports in 1993 was just three times that in 1991. This indicates that the nominal export price (not just the real price) declined in the export market during this period.

Table 3.9: Production and export of praziquantel raw material

Source: For production value, Korea Pharmaceutical Manufacturers’ Association, Annual Statistics of Production, various years; for export value, internal reports, Shin Poong Pharmaceutical Company.

Note: a) = value of praziquantel raw materials, excluding exports.

As noted earlier, Shin Poong established a joint venture company, GMC, in Sudan, in 1988, and began production of praziquantel in November 1994. In its first six months, GMC produced 1.5 million tablets (600 mg), with plans to sell the product locally to the Sudanese government and in the private market. No actual sales had occurred as of April 1995, because the Sudanese government had not issued the necessary authorization.

Three investors are participating in the joint venture in the Sudan: Shin Poong of Korea, Dae-woo Co. of Korea, and EIPICO of Egypt. Dae-woo became a partner because of its strong sales network in Sudan for the firm’s electronic goods and other consumer products. Dae-woo is considered the only Korean company that enjoys both a good reputation among Sudanese consumers and a sound relationship with the Sudanese government.

Shin Poong established GMC of Sudan for the following reasons. First, Shin Poong expects that it can achieve a lower local price through production by a local manufacturer, due to lower labor costs and reduced transportation costs. The lower price should help expand praziquantel’s sales volume for government procurement and in the private market. Second, in the long run, if a good sales network can be established for praziquantel in the Sudanese market, then other Shin Poong products could be introduced and sold using the same network. Third, again in the long run, Sudan could become the base for exports to other African markets of praziquantel and Shin Poong’s other products.

Shin Poong is currently establishing another joint venture in China, applying a similar logic for expansion in China as the firm used in Sudan.

Shin Poong has also experienced rapid exports of finished products of praziquantel, as shown in Table 3.10 for Distocide exports in 1991, 1992, and 1993. When total production values and export values of Distocide are converted into index numbers, as shown in Table 3.10 and Figure 3.1, one finds that the value of exports expanded faster than the value of production. The increase in the overseas export market thus contributed to the rapid increase in production of Shin Poong’s Distocide-the same as occurred for Shin Poong’s praziquantel raw material.

Table 3.10: Production and export of Distocide tablets

Source: For production value, Korea Pharmaceutical Manufacturers’ Association, Annual Statistics of Production, various years; for export value, internal reports, Shin Poong Pharmaceutical Company.

Note: Numbers in parenthesis are index numbers, with 1991=100. Also, according to Shin Poong, the export volume exceeded the production volume in 1992 and 1993 (for 1000T pack units) because exports included some production from the previous year.

Figure 3.1: Change in production and export

Value is calculated as an Index Number, with 1991 = 100