Celltrion on the Decline, Another 'Crash' Amid Earnings Shock

Operating Profit in 4Q Last Year Fell 27% Short of Consensus
Rekkironaju Results Not Reflected... Growth of Existing Products Like Remsima Also Limited

Seo Jung-jin, Chairman of Celltrion Group, is giving a greeting at the 'COVID-19 Antibody Treatment Production Site Inspection' held on the afternoon of the 8th at Celltrion's second factory in Yeonsu-gu, Incheon. [Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] Celltrion posted results in the fourth quarter of last year that fell far short of expectations. The stock price has struggled to recover amid continued weakness since the beginning of this month.

As of 9:17 a.m. on the 23rd, Celltrion's stock price stood at 303,000 KRW, down 2.10% from the previous day. Since reaching 371,000 KRW on the 1st, it has been steadily declining. Except for the 10th and 19th, the stock closed lower every day this month, dropping more than 18% during this period.

The fourth-quarter earnings announced the day before also dealt a blow. On a consolidated basis, sales were 498.7 billion KRW and operating profit was 164.7 billion KRW. Although these figures represent increases of 30.31% and 44.26% year-over-year respectively, they fell short of consensus estimates by 4.71% and 27.06%, leading to an assessment of an 'earnings shock.'

This appears to be due to the production of the COVID-19 treatment 'Rekkirona-ju.' Typically, products manufactured by Celltrion are delivered to Celltrion Healthcare before being sold on the market, which is then recognized as revenue. However, in the case of Rekkirona-ju, production occurred before sales approval was obtained, resulting in a period where production was done but no revenue was recorded. Additionally, clinical trial costs for Rekkirona-ju were incurred, causing research and development expenses to rise 90.3% year-over-year to 65.1 billion KRW.

Growth of existing products is also slowing. Sales of Remsima in the European market and Truxima in both the U.S. and European markets are expected to decline compared to the previous year. In the U.S. market, Truxima's market share expansion is expected to be limited due to competitors' new products.

Ultimately, the performance of new products is seen as the key factor. Minjung Seon, a researcher at Hana Financial Investment, explained, "Growth is expected from the third quarter when sales of Remsima SC and 'Yuflyma,' a Humira biosimilar that received official marketing approval in Europe last month, begin to expand significantly." Overseas expansion of Rekkirona-ju is also important, as domestic market sales are expected to be limited given that the total number of confirmed cases is below 90,000.

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