Sung Daeyoung, CEO of Withus Pharm: "Securing Growth with Differentiated Bioequivalence Products"

[Asia Economy Reporter Jang Hyowon] Withus Pharmaceutical, a generic drug specialist manufacturer, is knocking on the door of the KOSDAQ market. Withus Pharmaceutical plans to secure growth potential based on its own bioequivalence (BE) facilities after listing.

Sung Daeyoung, CEO of Withus Pharm.

On the 16th, Seong Daeyoung, CEO of Withus Pharmaceutical, held a press conference in Yeouido, Seoul, stating, “Among the 150 companies selling all antibiotics, 17 have their own BE testing capabilities, and we are one of them,” adding, “This gives us competitiveness depending on future generic drug pricing policies.”

Founded in 2004, Withus Pharmaceutical has been primarily engaged in the manufacture of generic drugs. It secured profitability through formulation technology specialized in geriatric diseases and continued growth by acquiring high value-added product technologies such as first generics and dedicated facilities for cephalosporin antibiotics.

Withus Pharmaceutical, a corporation with a fiscal year ending in June, recently recorded cumulative sales of 38.2 billion KRW, operating profit of 6.7 billion KRW, and net profit of 5.2 billion KRW for the third quarter (July 2019 to March 2020). Last year, it posted sales of 51.7 billion KRW, operating profit of 10.9 billion KRW, and net profit of 8.6 billion KRW. The operating profit margin last year was 21.1%, which is significantly higher than the average of 7-10% for listed pharmaceutical companies.

In particular, Withus Pharmaceutical holds a large number of BE-completed drugs. Accordingly, it is expected to benefit from the differentiated reimbursement pricing system for generic drugs, which will be implemented from July.

Under the revised pricing system, pharmaceutical companies that conduct their own BE tests and manufacture generics using registered active pharmaceutical ingredients (APIs) will be guaranteed 53.33% of the original drug price. If these two conditions are not met, the price drops to 38.69%. Previously, generic drug prices were recognized even if companies conducted joint BE tests instead of their own.

From its early days, Withus Pharmaceutical recognized the importance of BE testing and continuously focused on BE products. The proportion of BE products in sales reaches 73%. Withus Pharmaceutical plans to expand the sales ratio of BE products to around 90% by July 2023.

Another differentiated strength of Withus Pharmaceutical is the independent establishment of a cephalosporin antibiotic production line. With the implementation of the differentiated reimbursement pricing system, companies that fail to build dedicated production facilities and obtain BE approval by July 2023 will find it difficult to maintain drug prices. Therefore, Withus Pharmaceutical’s market competitiveness, equipped with dedicated facilities and BE products, is expected to be further strengthened.

Starting in the second half of this year, Withus Pharmaceutical plans to actively expand its cephalosporin tablet line and launch four new products this year to build a cephalosporin antibiotic portfolio.

Additionally, the company aims to strengthen its geriatric disease product group through the development of improved new drugs based on fixed-dose combinations and to enter the hair loss treatment market for mid- to long-term growth.

Withus Pharmaceutical plans to raise 22.2 billion KRW based on the lower end of the public offering price. Of this, 8.2 billion KRW comes from existing shares sold by the CEO and venture capitalists (VCs). Among the 14 billion KRW from new shares issued, 10 billion KRW will be used for expansion and equipment investment of cephalosporin antibiotic and general drug production facilities.

Upon completion of the expansion, the company expects its current production capacity (CAPA) of about 100 billion KRW to increase to approximately 150 billion KRW. It also anticipates an increase in Withus Pharmaceutical’s cephalosporin CMO market share, currently around 45%.

The remaining 4 billion KRW will be used for synthetic new drug pipelines and R&D of improved new drugs based on fixed-dose combinations. Fixed-dose combinations are pharmaceuticals containing two or more active ingredients mixed but separated within a single tablet.

CEO Seong said, “Funds raised through the public offering will be used for facility investment and R&D of improved new drugs based on fixed-dose combinations,” adding, “We will achieve facility modernization and strengthen technological capabilities through the KOSDAQ listing and establish ourselves as a leading company in prescription drugs.”

Meanwhile, Withus Pharmaceutical’s public offering consists of 1.6 million shares. The expected price range per share is 13,900 to 15,900 KRW, with the anticipated offering amount between 22.2 billion and 25.4 billion KRW. The pricing will be finalized through demand forecasting on the 18th and 19th, followed by general subscription on the 25th and 26th. The listing is scheduled for July, with NH Investment & Securities and Samsung Securities as the lead underwriters.

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