[Click eStock] "Donggu Bio Pharm, Expectations for Both Prescription Drugs and Contract Manufacturing Sectors"

NH Investment & Securities Report

[Asia Economy Reporter Minji Lee] NH Investment & Securities expressed on the 15th that Dongkoo Bio & Pharma is expected to see stable performance in the ethical drugs (ETC) sector and growth in high value-added contract manufacturing organization (CMO) sales centered on dementia-related cholinergic agents.

Dongkoo Bio & Pharma recorded the number one market share in the domestic dermatology prescription market and rose to fifth place in the domestic urology prescription market. With a portfolio of ethical drugs focused on dermatology and urology related to quality of life improvement, the core business growth is expected to continue despite the COVID-19 situation. From next year, the effect of new plant expansion is anticipated.

This year's annual sales are projected to reach 156.1 billion KRW, with an operating profit of 8.7 billion KRW, representing growth of 12% and 14.4% respectively compared to the same period last year. In September, the company completed domestic new medical technology evaluation certification for ‘Smart X,’ an autologous stromal vascular fraction (SVF) extraction kit, targeting systemic sclerosis digital ulcer indications. Currently, the insurance reimbursement listing review is underway, and the result of whether it will be listed for insurance reimbursement is expected to be announced by mid-next year. Researcher Kwanjun Na of NH Investment & Securities stated, “This year, the completion of follow-up indication clinical trials for breast reconstruction surgery, plastic surgery, diabetic foot ulcers, and knee osteoarthritis, as well as new medical technology registration applications, are anticipated,” adding, “In 2023, ‘Smart X’ new business sales will begin in earnest.”

The domestic generic drug and CMO markets are undergoing structural reorganization due to the stepwise pricing system for generic drugs and the 1+3 regulation on bioequivalence studies. The company possesses various specialized formulation production technologies, including soft capsules. Market dominance in generic drugs through patent circumvention and acquisition of exclusive sales rights, as well as an increase in high value-added CMO sales, are also expected.

About 46% of the company’s CMO business segment is accounted for by cholin alfoscerate (dementia). Researcher Kwanjun Na said, “Despite clinical re-evaluation and reimbursement reduction due to controversies over the efficacy of cholinergic agents, domestic prescription amounts for cholinergic agents continue to show steady growth,” and added, “CMO sales growth centered on cholinergic agents will also continue.”