[Click eStock] "Celltrion, Jimpendra US Sales Expected... Target Price 250,000 Won"

Coverage Initiated with Investment Opinion 'Buy' and Target Price of 250,000 Won

On the 26th, SK Securities initiated coverage on Celltrion with a 'Buy' rating and a target price of 250,000 KRW.

Seonkyung Lee, a researcher at SK Securities, stated, "We expect external growth driven by the full-scale U.S. sales of Jimptetra and new biosimilar products for Xolair, Eylea, and Stelara to be launched in 2025. Despite concerns over profitability deterioration due to biosimilar price discounts, we believe profitability improvement is possible through steady sales growth of new products, operating leverage from the U.S. direct sales system, and cost ratio improvements from mergers," adding, "We anticipate a positive stock price trend."

Incheon Songdo Celltrion Plant 2 exterior./Incheon=Photo by Hyunmin Kim kimhyun81@

The U.S. market entry of Jimptetra is expected to accelerate in the second half of the year. Jimptetra is a subcutaneous (SC) formulation of infliximab independently developed by Celltrion, which received U.S. Food and Drug Administration (FDA) approval in October last year and began sales in March this year. Lee analyzed, "Although competition in the U.S. autoimmune treatment market is intensifying, infliximab has demonstrated higher clinical benefits compared to other mechanisms and competing drugs with the same mechanism in inflammatory bowel disease (IBD) indications. Jimptetra, as the only infliximab SC formulation, offers advantages in patient convenience. Considering its inclusion in the formularies of the three major U.S. pharmacy benefit managers (PBMs) and registration in Costco’s member prescription program, securing various supply chains in the U.S., we believe it can secure a competitive edge in the IBD market." SK Securities forecasts Celltrion’s sales at 3.6505 trillion KRW and operating profit at 683.6 billion KRW this year, reflecting the sales growth of Jimptetra starting in the second half and the reduction of purchase price allocation (PPA) amortization expenses from the third quarter. These figures represent increases of 67.7% and 4.9%, respectively, compared to the same period last year.

Furthermore, the Medicare Part D (specialty drug insurance) reform, scheduled to be implemented from January next year under the Inflation Reduction Act (IRA), is expected to have a positive impact on the biosimilar market. Lee explained, "The reform plan lowers the patient out-of-pocket cap from the existing $8,000 to $2,000 and reduces the government’s cost-sharing above the cap from 80% to 20%, thereby reducing the financial burden on both patients and the government. The reduced costs are directly passed on to insurers, who may prefer relatively lower-priced biosimilar products to secure profitability. This could positively influence Celltrion’s sales growth, as the company focuses on biosimilar production and sales."