Stock Price Rises 49% This Month
Expecting Benefits from 'Saengmulbosanbeop' with CMO Business Visibility
Sales Expected to Increase 26% and Operating Profit 40% This Year
The stock price of Samil Pharmaceutical has risen sharply this month. Expectations are growing that Samil Pharmaceutical's contract manufacturing organization (CMO) plant in Vietnam will benefit if the United States enforces the 'Biosecurity Act.'
According to the financial investment industry on the 26th, Samil Pharmaceutical's stock price has increased by 49.9% this month. During the same period, the KOSPI fell by 2.8%. The return compared to the market reached 52.7 percentage points (P).
Founded in 1947, Samil Pharmaceutical is a mid-sized pharmaceutical company well known for products such as 'Children's Brufen Syrup,' 'Tearcil Once,' and 'I2O Mini.' It directly produces generic products with expired patents and improved new drugs.
Samil Pharmaceutical is expected to rapidly improve its performance based on its Vietnam ophthalmic CMO plant. Je-yoon Han, a researcher at KB Securities, said, "If the Biosecurity Act passes, American companies will not be able to use Chinese CMO and contract development and manufacturing organization (CDMO) companies," adding, "In a situation where a new production base is needed, we expect a reflective benefit for domestic bio contract manufacturing companies."
Samil Pharmaceutical established a local subsidiary in Vietnam in 2018 and completed the ophthalmic CMO plant in 2022. Verification work for production facilities and various automation systems is in the final stages. On July 15, the Vietnam Drug Administration (DAV) completed an on-site inspection for Good Manufacturing Practice (GMP) certification. It is expected to obtain GMP certification within three months at the earliest after the inspection.
Multinational pharmaceutical companies are reducing their own production ratios and increasing CMO ratios due to cost reduction and other issues. Samil Pharmaceutical is discussing CMO production with overseas pharmaceutical companies. Through a partnership with a European pharmaceutical company, it has been exclusively selling glaucoma treatment eye drops domestically since 2021. It is pursuing a CMO production contract for glaucoma treatment eye drops.
Jae-ho Choi, a researcher at Hana Securities, introduced, "A Taiwanese pharmaceutical company received FDA approval in March for a topical steroid eye drop indicated to relieve pain and inflammation after eye surgery," adding, "They are discussing CMO production and contracts with Samil Pharmaceutical." He continued, "They are exclusively selling Allergan's original product 'Restasis' domestically," and added, "Synergy with the CMO business is also expected in the future."
Samil Pharmaceutical secured the domestic exclusive distribution rights for the knee osteoarthritis treatment 'Loarsibivint' from the U.S. biotech company Biosplice. If the U.S. Food and Drug Administration (FDA) approves the sale of Loarsibivint, the value of the domestic exclusive distribution rights could increase. Sun-jae Heo, a researcher at SK Securities, analyzed, "Conservatively estimated potential performance of Samil Pharmaceutical's Loarsibivint is about 200 billion KRW in sales and 40 billion KRW in operating profit," considering "3 million domestic knee osteoarthritis patients and a 10% selection rate for Loarsibivint."
Hana Securities estimated that Samil Pharmaceutical will achieve sales of 248.2 billion KRW and operating profit of 10.1 billion KRW this year, representing increases of 25.5% and 39.8%, respectively, compared to last year.
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