[Click eStock] "Pharmicell, Nucleoside Sales Growth... Performance Improvement in Second Half"

Korea Investment & Securities Report

[Asia Economy Reporter Minji Lee] Korea Investment & Securities explained on the 26th that Pharmicell is expected to improve its performance due to increased sales of nucleosides.

Pharmicell has both a biomedical division and a biochemical division. The biomedical division is engaged in the development of therapeutics and cosmetics using stem cells, as well as the stem cell CDMO business.

The biochemical division is engaged in the synthesis of raw materials such as nucleosides, mPEG (methoxy polyethylene glycol), and advanced materials. Regarding stem cells, Pharmicell launched Harticelgram-AMI, an acute myocardial infarction treatment, in 2011, and is also developing pipelines including treatments for liver cirrhosis, erectile dysfunction, and allogeneic stem cells for chronic kidney disease.

Researcher Euilim Oh of Korea Investment & Securities stated, “The biochemical division is experiencing rapid growth based on increased sales of nucleosides,” and explained, “Nucleosides, which are components of DNA and RNA, are used as raw materials for vaccine and diagnostic kit production.” Nucleoside RNA synthesis requires additional processes compared to DNA synthesis, resulting in longer synthesis time and higher manufacturing difficulty, making the unit price about 3 to 4 times higher.

Additionally, the chemical synthesis business, which produces industrial resins for network equipment, flame retardants, and polymer catalysts, generates about 50% of annual sales, securing a solid cash cow.

In the second quarter, the company’s sales and operating profit were 13.6 billion KRW and 1.8 billion KRW, respectively, down 1.4% and 48.3% year-on-year. The main reason was the focus on producing nucleosides for DNA synthesis, which have relatively low profit margins.

Researcher Oh said, “The nucleoside production performance in the first half of this year was about 9 tons, approximately 82% of last year’s production of 11 tons,” adding, “If production continues at a similar level in the second half, annual nucleoside sales are expected to reach 31.8 billion KRW, and total sales 62 billion KRW, representing growth of 82% and 21% year-on-year, respectively.”

Pharmicell’s synthesis technology is proven by orders from global companies. Pharmicell currently supplies various raw material products to Thermo Fisher, Merck, Nektar, Roche, and others. Researcher Oh analyzed, “Since raw material quality is a very important factor for the yield and purity of final product production, it is highly likely that supply will be maintained and expanded in the future.”

Pharmicell’s synthesis technology is proven by orders from global companies. Pharmicell currently supplies various raw material products to Thermo Fisher, Merck, Nektar, Roche, and others. Factory expansion is also expected accordingly. Currently, the first plant produces multiple types of raw materials in one location, making it difficult to focus solely on nucleoside production.

Researcher Oh forecasted, “Since raw material quality is a very important factor for the yield and purity of final product production, it is highly likely that supply will be maintained and expanded in the future,” and added, “The second plant, completed in February this year, is dedicated to nucleoside production, and increased production efficiency will directly lead to performance improvement.”

This content was produced with the assistance of AI translation services.