Pharmaceutical Companies Predict Strong Performance in Q1 Amid 'Stockpiling Long-Term Prescription Drugs'

Outpatient Prescriptions Increase by 3% to 3.7 Trillion KRW... Decrease in Sales and Marketing Expenses
Uncertain Performance in Q2 Due to Increased COVID-19 Vaccine Development Research Costs

[Asia Economy Reporter Choi Dae-yeol] Domestic major pharmaceutical companies are expected to report relatively 'solid' performance results for the first quarter. This is attributed to an increase in long-term prescriptions for some products, presumed due to fewer hospital visits amid the COVID-19 pandemic, as well as reduced expenses in sales and marketing. However, since the impact of COVID-19 remains and is expected to continue for a considerable period, the outlook for the second quarter and beyond remains uncertain.

◆ Strong Performance Despite COVID-19 = According to the outpatient prescription report compiled by pharmaceutical research firm Ubist on the 24th, first-quarter performance reached 3.703 trillion KRW, approximately 3% higher than the same period last year. Although this growth rate is somewhat lower compared to recent years, considering that most of the domestic market has been stagnant since the COVID-19 outbreak earlier this year, the results are commendable. Lee Hye-rin, a researcher at KTB Investment & Securities, stated, "(Due to the prolonged COVID-19 situation) distribution inventories were secured amid concerns over pharmaceutical supply disruptions, and chronic disease patients received long-term prescriptions," adding, "Research and development, advertising, and sales-related expenses decreased, so profitability is expected to be good."

Overall, the performance was solid, but among the top pharmaceutical companies, results varied somewhat. Yuhan Corporation, which relies heavily on general hospitals as major clients, is expected to record sales of 322.9 billion KRW and operating profit of 6.6 billion KRW amid ongoing challenges in sales activities. The operating profit represents a 7.9% increase compared to the same period last year. GC Pharma, the industry's second-largest, is expected to see improved results due to overseas vaccine exports, with estimated sales of 316.1 billion KRW and operating profit of 6.2 billion KRW. Hanmi Pharmaceutical and Daewoong Pharmaceutical are also projected to post sales of 273.8 billion KRW and 241.2 billion KRW, and operating profits of 24.7 billion KRW and 1.4 billion KRW respectively, supported by chronic disease treatment drug performance.

◆ First Steps in COVID-19 Vaccine Development = The key issue lies in the period after the second quarter. Although new COVID-19 cases recently dropped to around 10 per day, there remains a risk of resurgence, making a significant increase in pharmaceutical demand unlikely. Prescriptions began to decline somewhat from March, and recovery in the second quarter is expected to be limited. Yuhan Corporation’s milestone payment of 43 billion KRW in early this month is expected to be reflected in second-quarter results, and Daewoong Pharmaceutical is seeing increased U.S. exports of botulinum toxin, among other positive factors by company. However, market instability caused by COVID-19 shows no signs of easing easily in the second quarter.

As domestic and international COVID-19 cases rise, public research institutions as well as individual pharmaceutical and biotech companies are engaging in research and development, but it is difficult to expect immediate results reflected in performance. Like other treatments and vaccine developments, new drug development is a long-term process that requires enormous costs for research, development, and clinical trials. Whether successful outcomes will be achieved remains uncertain.

Among domestic pharmaceutical companies, Celltrion has just taken its first steps in developing antibody treatments in collaboration with the Korea Disease Control and Prevention Agency (KDCA). SK Bioscience has also begun research after receiving a vaccine candidate material contract from KDCA. Bukwang Pharmaceutical and biotech venture Immuned are conducting clinical trials to test whether their new drugs or candidate substances, originally developed for other treatments, are effective against COVID-19. Samsung Biologics, which posted surprising results in the first quarter, signed a production contract for COVID-19 antibody drugs with a U.S. biotech company. The company expects that if the partner succeeds in development, direct production could begin as early as next year.

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