[Click eStock] "Celltrion, Catching Both High Growth and High Margin Simultaneously"

[Asia Economy Reporter Ji-hwan Park] Hana Financial Investment maintained its 'Buy' rating and target price of 363,000 KRW on Celltrion on the 1st, stating that the company has captured both high growth and high margins.

Minjung Sun, a researcher at Hana Financial Investment, said, "Celltrion's standalone operating profit in the second quarter was 189.5 billion KRW, representing approximately 141% growth compared to the previous year," and evaluated it as a "surprise performance with an operating margin of 46.9%." In particular, the operating margin increased by 10.4 percentage points compared to the previous quarter, which is analyzed to be due to the normalization of operations and increased utilization rate of the newly expanded Plant 1.

On a standalone basis, Celltrion achieved about a 40% operating profit margin (OPM) from the first to third quarters last year, but it fell nearly 9 percentage points in the fourth quarter, recording a 31% margin. The reason for the profit margin deterioration at that time was analyzed to be that although the newly expanded 50,000-liter Plant 1 began operations, its utilization rate was low, and costs related to tech transfer occurred as Remsima IV started to be contract-manufactured at Lonza's CMO plant.

Researcher Minjung Sun explained, "There are certainly concerns about whether biosimilars can sustain continuous high growth and high margins," adding, "if no new products are launched, biosimilars are structurally bound to experience negative growth at some point every year."

However, Celltrion is working on improving production yield, and through this, it is expected to maintain continuous high margins even for products that have been on the market for a long time, such as Remsima.

Researcher Sun said, "Celltrion started Phase 3 clinical trials for the biosimilar of the asthma treatment drug Xolair in July this year," and "also began Phase 1 clinical trials for the biosimilar of the autoimmune disease treatment drug Stelara in June this year; both products are being developed as the first by a big player." He added, "Expectations for a second Remsima and Truxima suggest that steady high growth can continue in the future."

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