Half of Top Pharmaceutical Companies Increased R&D Spending Last Year

Analysis of Top 20 Pharmaceutical Companies by Sales Last Year
Ildong Pharmaceutical, 19.3% R&D to Sales Ratio
Strategy to Secure Multiple Pipelines
Daewoong Pharmaceutical 16.7% · Dong-A ST 13.9%
Pause Amid Prolonged COVID-19 Pandemic

[Asia Economy Reporter Lee Gwan-joo] It has been revealed that half of the major domestic pharmaceutical companies increased their research and development (R&D) expenses last year compared to the previous year. This is interpreted as a result of efforts to secure new pipelines and discover new drug candidates to secure future growth engines. The other half reduced their R&D ratio, adopting a pacing strategy due to the prolonged COVID-19 pandemic.

Il-dong Pharmaceutical ranks first in R&D expenses relative to sales

On the 11th, an analysis of business reports of the top 20 domestic pharmaceutical companies by sales showed that Il-dong Pharmaceutical had the highest ratio of R&D investment relative to sales at 19.3%. This means that one-fifth of last year's sales were invested in R&D. Il-dong Pharmaceutical increased its R&D ratio for three consecutive years: 11.1% in 2019, 14.0% in 2020, and 19.3% last year. Recently, together with Japan's Shionogi Pharmaceutical, it is conducting Phase 3 clinical trials of the COVID-19 treatment candidate ‘S-217622,’ raising expectations for the first oral COVID-19 treatment in Korea.

Il-dong Pharmaceutical's R&D investment aligns with the company's strategy to secure multiple pipelines. A representative from Il-dong Pharmaceutical stated, "New drug development is one of the most important tasks for pharmaceutical companies and should be prioritized for creating future revenue sources and realizing social value. To accelerate development speed and secure competitive advantages, we are simultaneously advancing multiple pipelines and conducting clinical trials using overseas institutions to ensure research quality that meets global pharmaceutical market standards."

Next in line were Daewoong Pharmaceutical (16.7%), Dong-A ST (13.9%), Hanmi Pharmaceutical (13.4%), and Chong Kun Dang (12.2%) in terms of R&D investment ratio relative to sales. Like Il-dong Pharmaceutical, Daewoong Pharmaceutical and Dong-A ST have continuously increased their R&D investment ratios over the past three years. Daewoong Pharmaceutical is expanding open innovation with companies possessing technological capabilities, while Dong-A ST is focusing on global development, including completing Phase 3 clinical trials within this year in the U.S. and nine European countries for the Stelara biosimilar ‘DMB-3115.’

Gwangdong and Handok fall short of 5%

Among the 20 pharmaceutical companies, 10 chose to increase their R&D ratio. Along with Il-dong Pharmaceutical, Daewoong Pharmaceutical, Dong-A ST, and Chong Kun Dang, GC Green Cross (11.2%), Huons (7.1%), Jeil Pharmaceutical (5.6%), Dongkook Pharmaceutical (4.6%), Handok (4.4%), and Gwangdong Pharmaceutical (1.5%) slightly increased their R&D ratios compared to 2020.

On the other hand, the remaining pharmaceutical companies lowered their R&D ratios. Hanmi Pharmaceutical's R&D ratio was 18.8% in 2019 and 21.0% in 2020 but decreased by 7.6 percentage points last year, marking the largest decline. Yuhan Corporation also dropped by 3.0 percentage points compared to 13.6% in 2020, and Ilyang Pharmaceutical decreased by 2.2 percentage points from 10.0% to 7.8% during the same period. Daewon Pharmaceutical increased from 8.4% in 2019 to 10.6% in 2020 but fell back to 9.4% last year, returning to single digits. Additionally, HK Inno.N, JW Pharmaceutical, Boryung (formerly Boryung Pharmaceutical), Celltrion Pharmaceutical, Dong Wha Pharmaceutical, and Samjin Pharmaceutical also saw their R&D ratios decline compared to 2020. HK Inno.N and Boryung experienced decreases for three consecutive years; HK Inno.N dropped from 10.6% in 2019 to 9.9% in 2020 and 8.5% last year, while Boryung declined from 7.2%, 6.3%, to 6.2% over the same period.

There were a total of eight pharmaceutical companies (40%) with R&D ratios exceeding 10%. In contrast, except for Celltrion Pharmaceutical (1.8%), which sells Celltrion's products, Gwangdong Pharmaceutical (1.5%), Handok (4.4%), and Dongkook Pharmaceutical (4.6%) did not reach 5% in R&D expenses relative to sales. An industry insider said, "All domestic pharmaceutical companies recognize the importance of R&D to secure new growth engines. Amid the prolonged COVID-19 crisis, the differences appear to stem from management perspectives, R&D selection and concentration, and strategic approaches."

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