South Korea's antitrust watchdog has slapped a hefty fine on global pharmaceutical firm AstraZeneca and local generic maker Alvogen on forging a deal to avoid competition.

The Fair Trade Commission(FTC) on Thursday announced a preliminary decision to impose a one-point-one billion won fine on AstraZeneca and one-point-five billion won on Alvogen.

According to the watchdog, the local generic maker Alvogen suspended its plan to release a generic version of Zoladex, a treatment for prostate and breast cancer initially developed by AstraZeneca, in return for gaining exclusive rights to sell three types of AstraZeneca products in the country.

The FTC explained that the collusion prevented prices from falling and also hindered innovation in the pharmaceutical market by reducing incentives for research and development. This added to the burden of medical cost burden for consumers and took away their potential right to choose generic options.

The agency added that AstraZeneca approached Alvogen after learning that the South Korean player has been developing a generic version of Zoladex since 2014, perceiving it as a threat to its business.