Racing Pharmaceutical and Bio Industries... Celebrating Consecutive 'Quarterly Record Highs'

Samba Achieves 'Quarterly 1 Trillion' Milestone... Confident in Annual Sales of 3.6 Trillion
'Merger' Celt and Healthcare Also Show Strong Performance "3.5 Trillion Sales Next Year"

Traditional Pharma Revitalized by R&D
Yuhan, LG, Chongkundang... Securing Growth Engines with New Drugs

The pharmaceutical and bio industries continued their solid performance into the third quarter of this year. As major companies successively announced 'the highest quarterly earnings ever,' preparations to sustain this upward trend, such as research and development (R&D) and production capacity expansion, are steadily being made, raising expectations that this growth momentum will continue for the time being.

Incheon Songdo Samsung Biologics Plant 4 Overview [Photo by Samsung Biologics]

According to the related industry on the 14th, among domestic pharmaceutical and bio companies, Samsung Biologics recorded the highest sales in the third quarter. With sales of 1.034 trillion KRW, it achieved results in this quarter alone that nearly match the total sales of 1.5871 trillion KRW for the first half of the year. Notably, the quarterly sales of 1 trillion KRW is a milestone first achieved by a pure pharmaceutical and bio company, aside from SD Biosensor, which recorded it during the COVID-19 special demand period. Riding this growth, Samsung Biologics is confident of achieving sales of 3.6016 trillion KRW this year, a 20% increase over last year's industry-first annual sales of 3 trillion KRW.

The primary contributor to Samsung Biologics' strong performance is its Plant 4, which began operations last year. With a production capacity of 240,000 liters, it is the largest single plant, and since its full operation started in June, the sales increase effect has become more pronounced. Samsung Biologics is not stopping there; starting with Plant 5 (180,000 liters), scheduled for completion in April 2025, the company plans to secure an overwhelming production capacity of 1,324,000 liters by 2032. On the platform side, it is continuing various expansion strategies, including announcing the start of antibody-drug conjugate (ADC) production next year.

The Celltrion Group, which is preparing for a merger, is also maintaining its growth by achieving record quarterly sales. Celltrion reported sales of 672.3 billion KRW, a 4.1% increase compared to the same period last year, while Celltrion Healthcare's sales rose 30.5% to 647.6 billion KRW. Particularly, since the merger will be conducted by Celltrion absorbing Celltrion Healthcare, the last earnings announcement under 'Celltrion Healthcare' reported cumulative sales of 1.6769 trillion KRW, making it likely to achieve the first-ever annual sales of 2 trillion KRW since its founding. However, unlike Celltrion, whose operating profit increased by 25.2% year-on-year in the third quarter, Celltrion Healthcare's operating profit decreased by 30.3%. The company explained that the profit decline was due to increased expenses from expanding direct sales regions and purchase price adjustments with Celltrion.

The total amount exercised for stock purchase rights until the day before was 6.32992 billion KRW for Celltrion and 1.59963 billion KRW for Celltrion Healthcare, falling short of 8 billion KRW. With the merger imminent, the Celltrion Group plans to raise its annual sales target to 3.5 trillion KRW next year. Considering last year's annual sales of 2.284 trillion KRW, this means increasing sales by more than 50% in two years. Seo Jung-jin, chairman of Celltrion Group, recently stated that with new sales generated by 'Zimpenetra (the U.S. name for Remsima SC),' which received FDA approval, and the vertical integration of corporate governance through the merger expanding corporate capabilities and synergy, "the sales target for next year is set at over 3.5 trillion KRW." Kim Jung-hyun, a researcher at Kyobo Securities, analyzed, "Assuming biosimilar and new drug sales (2.6 trillion KRW), chemical sales (550 billion KRW), and Teva CMO sales (60 billion KRW), the merged Celltrion entity's sales for next year are estimated at 3.43 trillion KRW."

R&D is the Only Way... Sales Are Also Soaring

In the traditional pharmaceutical industry, companies where R&D has become a new growth engine are showing remarkable results. Yuhan Corporation reported sales of 483 billion KRW in the third quarter, with cumulative annual sales of 1.4218 trillion KRW. With the annual sales target of 2 trillion KRW within reach, even if not achieved this year, next year is expected to definitely reach 2 trillion KRW, as the non-small cell lung cancer treatment 'Reclaza' is expected to enter the first-line treatment reimbursement. Park Jae-kyung, a researcher at Hana Securities, said, "Good performance is expected in 2024 due to Reclaza's first-line treatment reimbursement," adding, "Sales exceeding 100 billion KRW can be expected."

LG Chem's Life Sciences Division is also approaching its first annual sales of 1 trillion KRW. The star product, diabetes treatment 'Gemiglo,' is performing well, and with the addition of the U.S. biotech Aveo Pharmaceuticals acquisition earlier this year, cumulative sales through the third quarter reached 886 billion KRW (291 billion KRW in Q3). Particularly, the Aveo acquisition is considered a twofold benefit, as it not only boosts sales but also secures future R&D momentum, given that Aveo is a biotech company holding FDA-approved anticancer drugs.

Jongkundang Headquarters Exterior [Photo by Jongkundang]

Chong Kun Dang recorded strong results with third-quarter sales of 396.2 billion KRW and operating profit of 53.1 billion KRW, with operating profit rising 33.8% year-on-year, driven by the growth of Prolia and K-CAB. Notably, the steady R&D investment of over 12% of sales is expected to support these results. If the upfront payment of 80 million USD (about 106 billion KRW) from the recently signed maximum 1.35 billion USD (about 1.73 trillion KRW) technology export contract with Novartis is received within the year, fourth-quarter results could improve further.

Among major pharmaceutical and bio companies, GC Green Cross was the only one to record negative growth with a 4.4% decrease in third-quarter sales to 439.4 billion KRW compared to the same period last year. It is analyzed that the sales of 'Hunterase,' a rare disease treatment and one of its main products, were temporarily disrupted due to geopolitical issues such as the Russia-Ukraine war and conflicts in the Middle East, negatively impacting performance. GC Green Cross also entered restructuring due to worsening performance, with sales in the first quarter down 16.2% year-on-year.

However, Oh Eui-rim, a researcher at Korea Investment & Securities, analyzed, "Hunterase sales are expected to gradually recover as macro conditions improve," adding, "The launch of the intracerebroventricular (ICV) formulation will also positively contribute to external growth." He also expressed expectations for 'Aliglo (IVIG-SN 10%),' whose FDA approval decision is scheduled for the first quarter of next year, stating, "It is expected to be approved without major issues."