[Click eStock] "Cell Biotech, Earnings Turnaround with Expanded Sales Channels"

[Asia Economy Reporter Minji Lee] IBK Investment & Securities on the 6th issued a forecast that Cell Biotech's performance is on the rise due to the expansion of sales channels, and the value of new drug development could be spotlighted again.

Cell Biotech was established in 1995 and is engaged in the manufacturing and distribution of probiotic products, research and development of starter cultures, and sales of lactic acid bacteria raw materials (powder). The company possesses core technologies in dual coating and strain formulation. Its own brand 'Duolac' accounts for 61% of sales, OEM and ODM sectors make up 24%, and raw materials account for 16%. The export ratio is 40%, trading with Denmark (ranked 2nd in the pharmacy market), France, and 40 other countries. Domestic channels are divided into hospitals and clinics and pharmacies at 39%, online shopping malls at 41%, and Olive Young, home shopping, etc., at 20%.

Minhee Lee, a researcher at IBK Investment & Securities, said, “The company grew mainly through the pharmacy market in the past, but due to the impact of COVID-19 and intensified competition, sales through pharmacy channels showed a declining trend. However, recently, online malls and mass markets (Costco, E-Mart Traders) have been leading domestic demand recovery.”

Thanks to the growth of mass markets, performance, which had peaked in 2018 and then declined, is now showing an upward trend. Sales in the second quarter turned to growth compared to the previous quarter and the same period last year. Domestic sales increased by 7.2% due to high growth in online and mass market channels. Exports showed a negative growth of 8.8%. However, the export sector turned to growth in June, and it is estimated that July and August recorded double-digit growth. In the second half of the year, profitability improvement is expected to be significant, confirming that the performance bottom has passed.

The company succeeded in manufacturing PP-P8 strain by isolating the P8 protein gene from Lactobacillus rhamnosus and introducing it into the host PP strain. It completed the preclinical research phase and confirmed a significant reduction in tumor size and weight in animal model efficacy evaluations. Researcher Minhee Lee said, “The company applied for a Phase 1 clinical trial plan to the Ministry of Food and Drug Safety last March,” adding, “Although approval has been delayed, it is expected to be possible within this year, which will bring renewed attention to the value of new drug development.”