Keytruda in South Korea: Navigating Regulatory Momentum and Market Challenges for Long-Term Growth

Merck & Co.'s Keytruda has solidified its position as a cornerstone of South Korea's immuno-oncology landscape, with regulatory approvals expanding to 34 indications across 18 cancer types by February 2025‘Keytruda’s 10-year milestones show its core value’^[2]. This growth, however, comes amid skepticism about sustainability, driven by patent expiry in 2028, rising competition, and reimbursement hurdles. For investors, the question is whether Keytruda's entrenched clinical value and strategic innovations can offset these risks.

Regulatory Expansion and Clinical Breadth

Keytruda's journey in South Korea began in 2015 with approval for inoperable or metastatic melanomaKeytruda passes evaluation for expanded health coverage in South Korea^[1], followed by rapid expansion into lung, gastric, and other cancers. By March 2024, it became the first immuno-oncology drug approved for all HER2-positive and negative metastatic gastric cancer, a milestone that underscored its versatilityApproval Alert: MSD’s Keytruda® (pembrolizumab)^[3]. The drug's regulatory success is tied to its role in combination therapies, such as its pairing with chemotherapy for gastric cancer, which has broadened its applicability‘Keytruda’s 10-year milestones show its core value’^[2].

The Korean Ministry of Food and Drug Safety's approval process has been complemented by reimbursement evaluations. In February 2025, the Cancer Disease Deliberation Committee set reimbursement criteria for 11 of Keytruda's indications‘Keytruda’s 10-year milestones show its core value’^[2], a critical step in ensuring patient access. This alignment of regulatory and reimbursement progress has been rare in recent years, as seen in the delayed approval of Keytruda-Padcev combination therapy for urothelial carcinoma‘Keytruda’s 10-year milestones show its core value’^[2], highlighting the government's cautious approach to cost containment.

Market Growth and Competitive Dynamics

The South Korean Keytruda market is projected to grow from $620 million in 2024 to $1.23 billion by 2035, with a compound annual growth rate (CAGR) of 5.8%South Korea Keytruda Market Size, Share, Demand^[4]. This expansion is fueled by rising cancer incidence—particularly lung and gastric cancers—and the adoption of personalized immunotherapyKeytruda passes evaluation for expanded health coverage in South Korea^[1]. Analysts at Market Research Future attribute 40% of this growth to Keytruda's role in combination regimens, which extend treatment duration and improve outcomesKeytruda passes evaluation for expanded health coverage in South Korea^[1].

However, competition is intensifying. PD-1/PD-L1 inhibitors like Bristol-Myers Squibb's Opdivo and Roche's Tecentriq are vying for market share in overlapping indicationsKeytruda Market to Reach $26.6 Billion by 2030 Amid Patent Expiry and Biosimilar Challenges^[5]. Despite this, Keytruda retains a dominant position in non-small cell lung cancer (NSCLC) and melanoma, thanks to its early market entry and robust clinical trial dataKeytruda Market to Reach $26.6 Billion by 2030 Amid Patent Expiry and Biosimilar Challenges^[5]. Merck's introduction of a subcutaneous formulation—proven to match intravenous efficacy in Phase 3 trials—adds a layer of convenience that could delay biosimilar encroachmentKeytruda Market to Reach $26.6 Billion by 2030 Amid Patent Expiry and Biosimilar Challenges^[5].

Reimbursement Challenges and Strategic Mitigation

South Korea's healthcare system remains a double-edged sword for Keytruda. While expanded health coverage in February 2025 reduced patient out-of-pocket costsKeytruda passes evaluation for expanded health coverage in South Korea^[1], reimbursement delays persist. For instance, the Keytruda-Padcev combination for urothelial carcinoma was never submitted for review, raising concerns about budgetary constraints influencing decisions‘Keytruda’s 10-year milestones show its core value’^[2].

To address these challenges, the government is exploring risk-sharing agreements (RSAs), including performance-based refunds and fixed-cost initial treatment refunds‘Keytruda’s 10-year milestones show its core value’^[2]. Such mechanisms could provide Merck with pricing flexibility while aligning drug access with treatment outcomes. Meanwhile, Merck's focus on neoadjuvant/adjuvant indications—where Keytruda is approved for earlier-stage cancers—extends treatment duration and patient eligibilityKeytruda Market to Reach $26.6 Billion by 2030 Amid Patent Expiry and Biosimilar Challenges^[5], countering the threat of biosimilars.

Long-Term Viability: Balancing Innovation and Market Forces

Keytruda's future in South Korea hinges on Merck's ability to innovate beyond its current portfolio. The subcutaneous formulation, which reduces infusion costs and clinic visits, is a strategic move to maintain market share post-2028 patent expiryKeytruda Market to Reach $26.6 Billion by 2030 Amid Patent Expiry and Biosimilar Challenges^[5]. Additionally, the drug's integration into first-line therapies—such as its March 2024 gastric cancer approval—ensures earlier patient exposure, fostering long-term brand loyaltyApproval Alert: MSD’s Keytruda® (pembrolizumab)^[3].

Yet, the emergence of biosimilars and price pressures cannot be ignored. South Korea's pharmaceutical pricing reforms, including stricter cost-effectiveness evaluations, may compress Keytruda's margins‘Keytruda’s 10-year milestones show its core value’^[2]. Investors should monitor Merck's R&D pipeline for next-generation immuno-oncology agents that could offset these risks.

Conclusion

Keytruda's regulatory and clinical momentum in South Korea positions it as a market leader, but its long-term success will depend on navigating reimbursement complexities and competitive pressures. For now, the drug's broad indication portfolio, combination therapy potential, and Merck's innovation pipeline justify optimism. However, investors must remain vigilant about pricing reforms and biosimilar timelines. As South Korea's aging population drives demand for oncology therapies, Keytruda's ability to adapt will define its commercial legacy.