'Hugel' Breaks Through the Great Wall... Rides the Growth 'Expressway'

'Botulinum toxin', commonly known as Botox among the general public, is a terrifying neurotoxin capable of killing millions of people with just 1 gram. However, recently it has been widely used as a treatment for neurological disorders such as facial spasms and cerebral palsy, as well as a cosmetic agent for wrinkle reduction and facial contouring. By utilizing its effect of temporarily paralyzing muscles in minute quantities, this deadly toxin has been transformed into a useful product. South Korea is considered an advanced powerhouse in the field of botulinum toxin. It is one of five countries worldwide that have developed botulinum toxin. Moreover, more than 10 companies in Korea alone have entered the 'Botox war' to capture market share. The survival game has brought mixed fortunes among companies. Medytox, which first developed botulinum toxin domestically, and Hugel, which targeted the massive Chinese market as the fourth in the world, are representative domestic companies in this field. This article analyzes the management status of these two companies to predict their future growth potential.

[Asia Economy Reporter Hyunseok Yoo] Hugel has taken flight with growth wings. As the first domestic company and the fourth worldwide to enter the Chinese botulinum toxin market, it has gained a new growth engine. As the market leader holding the number one domestic market share, it is expected to make a further leap once substantial sales begin in China.

Founded in 2001, Hugel develops and manufactures bio-pharmaceutical products used for therapeutic or cosmetic purposes, including botulinum toxin, fillers, and lifting products. Its flagship product is the botulinum toxin 'Botulax'. Additionally, it sells hyaluronic acid (HA) filler 'The Chaeum' and bio-cosmetics 'Wellage'.

Hugel sells its products in 24 countries including Japan, Thailand, Vietnam, the Philippines, Mongolia, Taiwan, Brazil, Colombia, and Chile, as well as domestically. As of the first half of this year, about 40% of total sales were generated from exports. By product, botulinum toxin accounts for 49.85% of total sales, followed by fillers (31.16%), medical devices (10.72%), cosmetics (6.78%), and others (1.49%).

Since its initial public offering (IPO) in 2016, Hugel has ranked first domestically in the botulinum toxin segment (by sales). A company official stated, "This year marks the 10th anniversary of Botulax's launch, and Hugel has held the number one position since 2016," adding, "The perception of our products as safe and reliable has increased based on clinical data accumulated over the past decade."

Post-listing, the company’s performance has shown a steep growth trend. Consolidated sales increased from 124.2 billion KRW in 2016 to 182.1 billion KRW in 2017, 182.4 billion KRW in 2018, and 204.6 billion KRW last year. The first half of this year saw a slowdown due to COVID-19, with sales and operating profit at 89.6 billion KRW and 29 billion KRW respectively, down 9.93% and 11.59% compared to the same period last year. The company explained that while overseas sales declined due to COVID-19, domestic sales offset the impact.

This year’s performance is expected to be similar to last year’s. According to FnGuide, securities analysts estimate Hugel will record sales of 53.8 billion KRW and operating profit of 19 billion KRW in the third quarter, representing increases of 5.28% and 4.26% year-on-year respectively. It is anticipated that domestic sales will continue and exports will recover. Furthermore, consolidated sales and operating profit for this year are forecasted at 201.9 billion KRW and 68 billion KRW, down 1.33% and 0.18% from the previous year. On the other hand, the financial structure remains stable, with a debt ratio of 30.9% and a borrowing dependency of only 10.8%.

With the opening of export routes to China, there is an optimistic atmosphere for performance improvement from next year onward. On the 23rd of last month, Hugel received approval from the China National Medical Products Administration (NMPA) for the sale of its botulinum toxin formulation (export name 'Retivo'). It is the only domestic company and the fourth worldwide to enter the Chinese market.

China holds the third-largest market globally after the United States and Europe. The Chinese botulinum toxin market is currently estimated to be worth approximately 500 to 600 billion KRW, with an expected annual growth rate of about 30%. By 2025, the market size is projected to reach around 1.75 trillion KRW. Researcher Jongmin Kim of Samsung Securities said, "Unlike overseas markets, the domestic toxin market is saturated, with a total of 17 domestic companies including those who have completed strain registration or are developing products. In this context, Hugel’s entry into the Chinese market is like a blessing."

Hugel plans to begin actual sales in China from March to April next year. Through this, it aims to capture a 30% market share in the Chinese botulinum toxin market by 2023 and become the number one company. Securities analysts predict Hugel will record sales of 240.2 billion KRW and operating profit of 86.8 billion KRW next year, increases of 18.96% and 27.68% respectively. In 2022, sales and operating profit are expected to rise to 276.2 billion KRW and 104.8 billion KRW, up 15.02% and 20.74%. Hongguk Jin, a researcher at Korea Investment & Securities, said, "Hugel’s sales to China in 2021 are estimated at 4.5 billion KRW, and since competitors’ entry into China is delayed, market share expansion is expected to be smooth for the time being."

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