JW Pharmaceutical Pushes to Cut Energy Costs Through Self-Generation

Discussion on Adding New Business Purposes at Next Month's Regular Shareholders' Meeting
Rising Electricity Cost Burden in Infusion Production Process

JW Pharmaceutical is reviewing the establishment of facilities aimed at reducing the energy cost burden arising from its infusion production process. This is interpreted as a preemptive measure to overhaul its manufacturing cost structure over the mid to long term, taking into account the energy-intensive nature of the process.

According to the pharmaceutical and biotech industry on February 11, JW Pharmaceutical plans to table an agenda item at next month’s regular shareholders’ meeting to add “combined heat and power generation, self-generation and self-consumption, sale and supply of energy (electricity and heat)” to the business purposes in its articles of incorporation. The company stated, “We plan to review business diversification measures over the long term,” adding, “Specific details, including whether we will actually invest in facilities, have not been decided.”

View of the JW Life Science Dangjin Production Complex. JW Life Science

This amendment to the articles of incorporation is seen as a strategic move to build, over the mid to long term, a system that procures electricity and heat in-house through self-generation facilities. It is interpreted as an attempt to secure cost stability in infusion production amid growing volatility in energy prices. The idea is to broaden the scope of the company’s stated business purposes in advance, so it is prepared in case it later moves in earnest to invest in self-generation or other energy facilities.

Within the group, JW Pharmaceutical is the company responsible for contract manufacturing (CMO) of infusion solutions. By their nature, infusion production processes consume large amounts of electricity and heat. In particular, stable power supply is essential for sterilization processes and cleanroom operations, meaning energy costs account for a significant share of manufacturing expenses.

The annual energy consumption of JW Pharmaceutical’s Dangjin plant reached 542 TJ in 2024. Given that the typical annual energy consumption of a pharmaceutical plant is around 200 to 300 TJ, this is a considerable scale for a single site. Recent hikes in industrial electricity rates and increased volatility in energy prices are also weighing on the cost structure of infusion manufacturers. Industrial electricity rates jumped 52.1% in three years, from 119 won in 2022 to 181 won last year.

The infusion business is regarded as the most stable cash cow within the JW Group. JW Pharmaceutical supplies most of its production to JW Pharmaceutical Corporation (JW Jungoe Pharm), while a portion is sold directly to hospitals. Based on JW Pharmaceutical Corporation’s cumulative sales for the third quarter of last year, infusion-related sales, combining nutritional infusions (18.4%) and general infusions (11%), account for nearly 30%. Excluding the “Livaro” family of hyperlipidemia treatments, which is the single product group with the largest share, infusions are effectively the company’s biggest revenue driver.

Meanwhile, JW Pharmaceutical also plans to pass a resolution at the regular shareholders’ meeting to add “investment, management consulting and advisory services” to its business purposes. JW Pharmaceutical Corporation will table the same agenda item at its regular shareholders’ meeting next month. This appears to be aimed at keeping open the possibility of future external advisory or investment-related businesses, leveraging the process and facility operation experience and technological competitiveness accumulated through infusion production.

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