Yuhan Yanghang, 2Q Sales Increase but Operating Profit Decreases... "Reclaza Royalty Base Effect"

Yuhan Corporation CI (Photo by Yuhan Corporation)

[Asia Economy Reporter Lee Chun-hee] Yuhan Corporation announced its provisional performance for the second quarter of this year, with sales of 423.8 billion KRW and operating profit of 28.4 billion KRW. Sales grew by 3.7% compared to the same period last year, making it highly likely to maintain the '1 trillion KRW club' this year as well, but operating profit decreased by 29.7% due to the base effect of royalties received from Janssen (a Johnson & Johnson subsidiary) in the same period last year.

Yuhan Corporation disclosed its provisional operating results for the second quarter on the 29th. Sales for the second quarter were 423.823 billion KRW, an increase of 3.7% from 408.588 billion KRW in the same period last year. Operating profit was 28.371 billion KRW, down 29.7% from 40.374 billion KRW in the same period last year, but net profit for the period increased by 6.2% to 25.644 billion KRW from 24.149 billion KRW in the same period last year.

A Yuhan Corporation official stated, "In the second quarter of last year, milestone royalties related to the non-small cell lung cancer treatment 'Leclaza' (generic name: Lazertinib), which is co-developed with Janssen Biotech, were reflected in operating profit." He added, "The decrease in operating profit compared to the same period last year reflects this base effect, but overall sales still grew, and operating profit also achieved considerable results." In the second quarter of last year, Yuhan Corporation received milestone royalties of 35 million USD (approximately 40 billion KRW) from Janssen. These royalties were reflected in sales and operating profit at that time.

By business segment, the pharmaceutical division significantly drove sales growth. Yuhan Corporation's pharmaceutical sales in the second quarter were 314.856 billion KRW, up 11.3% compared to the same period last year. Both over-the-counter (OTC) and prescription (ETC) drug sales showed growth rates of 15.2% and 7.8%, respectively, compared to the same period last year. The animal health care (AHC) business grew by 18.3%, and the special business segment saw sales increase by as much as 387.1%.

Yuhan Corporation's sales for the first half of this year totaled 778.06 billion KRW. Accordingly, maintaining the annual sales '1 trillion KRW club' is virtually secured. Cumulative operating profit for the first half was 40.8 billion KRW, and net profit for the period was 53.578 billion KRW. Compared to the first half of last year, sales increased by 9.3%, but operating profit decreased by 15.8%, and net profit for the period decreased by 64.1%.

A company official explained, "While the base effect of royalties received from Janssen was reflected in operating profit, the net profit for the period also included the base effect of 132.8 billion KRW from the gain on disposal of tangible assets related to the sale of the Gunpo factory site in the first quarter of last year." In fact, Yuhan Corporation's net profit for the second quarter was 25.644 billion KRW, a slight increase of 6.2% compared to 24.149 billion KRW in the second quarter of last year.