[Click eStock] "Amicogen, Expected to Benefit as Demand for Domestic Bio-materials Increases"

[Asia Economy Reporter Oh Ju-yeon] KB Securities analyzed on the 6th that "As the demand for domestically produced active pharmaceutical ingredients (APIs) expands, Amicogen, a special enzyme company based on genetic evolution technology, is expected to fully benefit."

Amicogen was established in 2000 and operates in the bio business (special enzymes for pharmaceuticals), protein purification business (purification resin, antibody culture media), and healthcare (health functional food materials) sectors. Its major subsidiaries include Amicogen China, Skinmed, and Amicogen Pacific, and it has Clinomics, a genome analysis equipment company, as a key affiliate.

KB Securities noted that while the importance of materials, parts, and equipment in various industries has been re-emphasized due to the spread of COVID-19 and trade disputes, the dependence on foreign sources for bio raw materials remains high. According to the Ministry of Food and Drug Safety, the domestic self-sufficiency rate for APIs is estimated to be around 26%. In this environment, if the importance of domestic production of APIs rises, Amicogen is expected to attract attention.

Amicogen was selected for a national project to localize the production of cell culture media for biopharmaceuticals, with an investment of 23.1 billion KRW over three years until 2022. This national project aims to develop and commercialize customized cell culture media used in biopharmaceutical production.

Researcher Lee Byung-hwa explained, "Following the construction of a new factory and R&D center on the Songdo site purchased last May, a full-scale expansion of the media business targeting Celltrion and Samsung Biologics is expected."

Attention is also focused on whether royalties will be generated from DX technology. Researcher Lee stated, "DX technology refers to the direct fermentation production technology of 7-ACA, an intermediate of cephalosporin antibiotics. By directly developing the 7-ACA producing strain, manufacturing costs are reduced to less than half compared to the first-stage enzymatic method, and mass production becomes possible. Currently, a joint venture with a Chinese company K is underway, and the occurrence of royalty income will be closely watched depending on the scale-up results."

When collagen is approved as an individually recognized raw material, whether sales can be expanded through price increases is also a key checkpoint. To respond to the continuously increasing demand for collagen, Amicogen has completed production plants with capacities of 300 tons in Qingdao, China, and 400 tons domestically, and is in the process of signing a joint venture with Nambi Viet Corporation to establish an 800-ton annual capacity plant for gelatin new business and entry into the Vietnamese market.

Researcher Lee said, "When the ongoing clinical approval for individually recognized raw materials is obtained, performance improvement due to price increases is expected."

There are also risk factors. Since Amicogen's protein purification business is in its early stages, it may take time before sales recognition becomes visible.

It takes considerable time to complete the media manufacturing plant on the recently purchased Songdo site in Incheon, and resin sales are currently recognized in small quantities to new drug development companies and research institutes. Whether substantial orders from large biosimilar companies will be secured is also important.

Researcher Lee added, "Attention should be paid to the possibility of contract delays with major Chinese partners due to external conditions such as COVID-19, and the potential decrease in profits of subsidiaries."