The combined first-half sales of Korea's top five drugmakers came to 4.5 trillion won. Royalties and overseas business made the difference in results. With the government cutting prices of generics, some expect high-margin new drugs to determine profits in the second half.
According to the Financial Supervisory Service's electronic disclosure system on the 4th, the combined first-half sales on a consolidation basis of Yuhan(000100), Chong Kun Dang pharmaceutical(185750), Hanmi Pharmaceutical(128940), GC녹십자, and Daewoong Pharmaceutical(069620) totaled 4.4996 trillion won. Operating profit was 410.6 billion won. Sales rose 8% and operating profit 18% from a year earlier.
◇ Yuhan, Hanmi Pharmaceutical smiled… GC saw profit decline
The No. 1 drugmaker by sales is Yuhan. Yuhan posted first-half consolidation sales of 1.1237 trillion won and operating profit of 70.3 billion won. They increased 10% and 30%, respectively, from a year earlier. Results improved as it received a $30 million (42.9 billion won) milestone (royalty) payment for the lung cancer drug Leclaza from Janssen Biotech, a Johnson & Johnson subsidiary. Yuhan transferred Leclaza to Janssen in 2018, and with commercialization in Europe this time, it received the payment.
Chong Kun Dang pharmaceutical recorded first-half consolidation sales of 923.1 billion won and operating profit of 37.5 billion won. They rose 11% and 7%, respectively, from a year earlier. Sales increased as it co-marketed Wegovy, Novo Nordisk's obesity treatment, and Fexuclue, Daewoong Pharmaceutical's third-generation gastrointestinal drug. Ha Hyun-su, an analyst at Yuanta Securities Korea, said, "While the number of in-licensed items increased and scale grew, profitability is low."
Hanmi Pharmaceutical also improved profitability as it received royalties from Eli Lilly and Company. Hanmi Pharmaceutical logged first-half consolidation sales of 860.2 billion won and operating profit of 184.7 billion won. Sales rose 14% and operating profit 55% from a year earlier. Earlier, Hanmi Pharmaceutical transferred the gastrointestinal disease drug candidate sonepeglutide to Eli Lilly and Company in a deal worth about 2 trillion won. It received 112.9 billion won as an upfront payment this time, which was reflected in results. First-half out-of-hospital prescription sales (prescriptions filled outside hospitals) were 561.6 billion won, ranking No. 1 in Korea since 2018.
Daewoong Pharmaceutical posted first-half consolidation sales of 735.9 billion won and operating profit of 104.6 billion won. Sales increased 8% from a year earlier, while operating profit was flat. Overseas sales of Nabota, its botulinum toxin (Botox), supported revenue. The company plans to expand its Digital Healthcare business.
GC recorded first-half consolidation sales of 856.7 billion won, down 3% from a year earlier. Operating profit fell 62% to 13.5 billion won. In March, GC sold its 22% equity stake in GCGC Wellbeing(234690) to GC (GC Corp.) for 50.5 billion won. Since the second quarter, GC Wellbeing has been excluded from GC's consolidation scope, which appears to have had an impact. However, GC sold vaccine developer Qur'Evac to Eli Lilly and Company and received about 286.8 billion won in upfront payment last month. This portion is expected to be reflected in third-quarter results.
◇ Samsung BioLogics, Celltrion likely to top 10 trillion won in annual sales
Growth at Korea's bio corporations outpaced that of traditional drugmakers. The combined first-half sales on a consolidation basis of Samsung Biologics(207940) and Celltrion(068270) totaled 5.1167 trillion won. Combined operating profit was 1.9409 trillion won. Sales rose 34% and operating profit 49% from a year earlier.
Samsung Biologics posted first-half consolidation sales of 2.578 trillion won and operating profit of 1.1672 trillion won. They increased 28% and 29%, respectively, from a year earlier. This is the first time first-half operating profit has topped 1 trillion won. The company said it maximized operations at Plants 1–4 and kept producing despite the strike. A strong dollar also helped results, as contract development and manufacturing (CDMO) deals are signed with overseas drugmakers and payments are received in dollars.
Since its founding, Samsung Biologics has booked cumulative orders of $21.7 billion (31 trillion won). It has won 115 contracts for contract manufacturing and 176 for contract development. Samsung Biologics plans to open a commercial base office in the Netherlands in the third quarter, following the United States and Japan. The plan is to secure sales bases in the three major biopharmaceutical markets—the United States, Europe, and Asia.
Celltrion recorded first-half consolidation sales of 2.5387 trillion won and operating profit of 773.7 billion won. They increased 41% and 97%, respectively, from a year earlier. Truxima, a blood cancer treatment, took the top market share in the United States. Truxima is a biosimilar of Rituxan, sold by Switzerland's Roche. Remsima SC (subcutaneous injection) achieved a 32% market share in the five major European countries. It is a subcutaneous formulation of Remsima IV (intravenous injection), a biosimilar of Johnson & Johnson's autoimmune disease treatment Remicade.
◇ High-margin new drugs likely to determine second-half profits
As the government moves to cut generic drug prices starting this month, some expect the sales gap in the pharmaceutical industry to widen. The price of generics will be lowered from 53.55% of the original drug price to 45%. Companies focused on new drugs, high-margin products, and overseas business should be fine, but those relying on the domestic market will inevitably be hit, observers said.
Bio corporations are expected to sail smoothly in the second half. According to financial data firm FnGuide, the combined consolidation sales of Samsung Biologics and Celltrion this year are projected to exceed 10 trillion won. Operating profit is also expected to surpass 4 trillion won. Samsung Biologics believes it can achieve its sales target this year through assets such as the 60,000-liter (L) manufacturing plant in Rockville, U.S., acquired earlier.
Celltrion plans to roll out high-margin products in key overseas markets and expand its footprint with a direct sales strategy. The company has established subsidiaries and sales networks in countries including the United States and across Europe. In addition, it aims to secure growth drivers by developing follow-on products. A Celltrion official said, "We are investing cash secured from sales of existing products into developing new drug candidates."