South Korea is confronting a deepening shortage of cephalosporins, a commonly prescribed class of antibiotics used to treat a range of bacterial infections, as pharmaceutical firms discontinue product lines due to unprofitability and growing raw materials costs.

“As the number of local and overseas pharmaceutical companies have recently halted or downsized cephalosporins production here, it has become increasingly difficult to get them,” an industry source from one of the largest pharmaceutical companies said on condition of anonymity.

In Korea, the demand for cephalosporins, particularly for second-generation cephalosporin antibiotic Cefaclor, which is used to treat bronchitis, pneumonia and tonsillitis, has increased due to the recent surge of patients with respiratory diseases after the COVID-19 pandemic.

But the supply of cephalosporins remains insufficient.

“The cost of raw materials for cephalosporins has significantly increased since the fourth quarter last year, and their profitability has also dropped. Some companies that were contract manufacturing cephalosporins decided to stop producing them recently,” the source said. “One of the drug manufacturers even tried to sell its cephalosporins plant last year, although it backfired.”

Among the main producers of cephalosporins, Hanmi Pharmaceutical and Azu Pharm have reportedly downsized their cephalosporin businesses, or have withdrawn from them, according to the source.

In Korea, the antibiotics market used to be a growing one. Around 20 local pharmaceutical companies were producing antibiotics, and the market was worth around 1.4 trillion won ($1 billion) as of 2012, according to the Korea Pharmaceutical and Bio-Pharma Manufacturers Association.

But the market started to slow in 2018, growing just 4 percent on-year, while the overall drug market grew 37 percent to 18.5 trillion won from 13.5 trillion won in the previous year.

By 2020, the value of antibiotics production had decreased and the market for antibiotics had shrunk to around 1.3 trillion won, down 6.3 percent from 2012.

The value of combined cephalosporins prescriptions to outpatients in 2019 came to 260 billion won, but the figure decreased to 194 billion won in 2021, according to local market watcher Ubist.

“Low prices of cephalosporins and growing raw materials costs, as well as the government’s efforts to reduce the country’s use of antibiotics in general, have contributed to an overall decrease of prescriptions for cephalosporins,” according to an official from a local company that produces antibiotics.

The source added that additional companies may exit the market if health authorities do not raise prices in line with the recent increases in raw materials costs.

While others are considering moving away from the market, Daewoong Pharmaceutical is expanding its production of cephalosporins.

Daewoong Pharmaceutical announced last year that the company would scale up its build a new cephalosporin manufacturing facility with 50 billion won of investment.

“Daewoong Pharmaceutical saw that the company could make profits in the cephalosporins market as a number of competitors are exiting the market. The company also hopes to contribute to the stable supply of the antibiotic for the public interest,” an official from the company said.