South Korea's pharmaceutical supply chain moves towards AI-driven real-time stock visibility amid persistent shortages

South Korea’s pharmaceutical wholesale market is being pushed towards a digital overhaul as repeated medicine shortages expose deep fragmentation in the country’s supply chain.

Industry figures point to a simple but persistent problem: no single participant has a clear view of stock across production, wholesale and retail. Manufacturers know what they have made, distributors know what they have moved and pharmacies and hospitals know what they have sold, but those data sets...

remain largely disconnected. As a result, medicines can be unavailable at the point of care even when supplies still exist elsewhere in the system.

That lack of visibility has helped drive recurring shortages of paediatric cold remedies, fever reducers and painkillers, particularly during seasonal demand spikes. The problem became more acute when Covid-19 and influenza circulated at the same time, with pharmacists repeatedly reporting they could not dispense medicines because shelves were empty or delivery channels had dried up. A 2023 survey by the Korean Pharmaceutical Association found that 83.6% of respondents had at some point turned patients away because they could not secure the required medicines.

The scale of the distribution network adds to the complexity. According to the Ministry of Food and Drug Safety’s 2025 pharmaceutical statistics yearbook, there were 5,036 drug wholesalers nationwide in 2024, including 1,104 in Seoul alone. The Korean Pharmaceutical Distribution Association says 721 wholesalers are members nationwide, with 232 in the capital. In such a crowded market, the sudden loss of stock or a surge in demand for a single product can quickly ripple through the system.

That has made inventory data integration a priority. Industry executives increasingly argue that if stock levels and supply flows could be monitored in real time across wholesalers, pharmacies and hospitals, shortages could be identified earlier and managed more effectively. Artificial intelligence is being promoted as the next step, using historical purchasing and distribution records to forecast demand by region, season and disease trend, and to guide where products should be pre-positioned.

The broader market is already moving in that direction. Major manufacturers and distributors are expanding digital systems built around barcodes, serial numbers and warehouse management tools, partly to prevent hoarding, leakage and illegal resale. Daewoong Pharmaceutical has become a prominent example, operating an authenticity and distribution management system for its botulinum toxin Nabota and introducing a rule from January to permanently cut off business with medical institutions found to be involved in illegal distribution. In March, it also introduced a block-based hub wholesaler model designed to simplify the multi-layered distribution chain and support real-time stock control using AI demand forecasting and barcode-based tracking.

On the distribution side, Geoyoung has emerged as a leader in digital transformation. The company, the largest in South Korea’s fragmented wholesale sector, posted consolidated sales of 5.3509 trillion won and operating profit of 103.6 billion won last year. It has been running its SmartHub Centre in Incheon since 2024, using automated systems and its own warehouse management platform, Geonet Plus, to track receipts, stock and sales planning. Robots are used to improve speed and accuracy as the company responds to shifting demand from hospitals and other medical institutions.

The push towards more intelligent logistics is also visible in broader industry and policy initiatives. Several AI-focused pharmaceutical supply chain companies are now promoting tools for real-time visibility, traceability and risk detection, while South Korean authorities have also backed projects to secure supplies of essential medicines and products with unstable production or import patterns. In practice, the goal is the same: to move the industry away from reactive stock management and towards a system that can predict shortages before patients feel them.

For an industry where wholesalers account for the bulk of distribution value, the economic stakes are significant. Data from the Health Insurance Review and Assessment Service show that total pharmaceutical distribution value across all channels reached 108 trillion won last year, up 7.4% from the previous year. Wholesaler supply accounted for 59.9 trillion won, or 55.5% of the market, far exceeding manufacturers and importers. As the market continues to expand, the pressure to build a more transparent, coordinated and AI-enabled supply chain is only likely to intensify.

Source: Noah Wire Services