Seo Jungjin: "Zympentra's U.S. Market Entry Delayed, 350 Billion Won Target Achievable This Year"

"PBM and Insurer Double Rebate Structure Hinders Progress"
"SC Conversion Slowed by IV Revenue Model"
Sales Rebound in Q1...Growth Trajectory Expected

Seo Jungjin, Chairman of Celltrion, expressed confidence that the company will easily achieve this year's sales target of around 350 billion won for Zympentra, the subcutaneous (SC) formulation of the autoimmune disease treatment infliximab. Addressing the reasons why sales have so far fallen short of initial expectations, he explained, "The unique distribution structure and healthcare environment of the U.S. market appear to have been the main factors slowing the initial uptake."

Seo Jungjin, Chairman of Celltrion, is speaking at the regular shareholders' meeting held on the 24th at Songdo Convensia in Yeonsu-gu, Incheon. Celltrion

During a Q&A session following Celltrion's regular shareholders' meeting held on March 24 at Songdo Convensia in Yeonsu-gu, Incheon, Chairman Seo responded to a shareholder's observation that Zympentra's performance had not met the targets previously set by the company.

The shareholder noted that the company had lowered its sales target from 1 trillion won to 700 billion won, and then again to 350 billion won, yet actual sales last year were only slightly above 100 billion won. The shareholder questioned whether the company would be able to achieve this year's target.

Chairman Seo identified the prescription benefit manager (PBM) system as the biggest variable in the U.S. market entry process. He explained, "In Europe, under hospital-centered public healthcare systems, the SC formulation conversion rate exceeds 30%, and we expected similar results in the U.S., but the actual market was different." In the U.S., PBMs demanded high rebates during drug listing negotiations, and one major PBM in particular required more than 50% of the drug price, which prevented a contract from being finalized.

According to him, Celltrion has since signed contracts with some PBMs. However, insurance companies under these PBMs demanded additional negotiations, and to this day, the company has been unable to secure a contract with a certain major insurer.

The structure of the U.S. healthcare system also presented another challenge. Unlike in Europe, physicians in the U.S. typically operate as independent practitioners, meaning that revenue from intravenous (IV) treatments is significant. In general hospitals, IV administration yields profits of around 2 million won per treatment, while private clinics see profits of between 700,000 and 1 million won. In contrast, switching to the SC formulation reduces such profits, so there is little incentive for healthcare providers to change their prescribing patterns.

Chairman Seo explained that the combination of the PBM rebate structure, issues with insurance coverage, and the profit structure for healthcare providers all contributed to the delayed initial market entry. He added, "Lowering the price can make market entry easier, but once the price is reduced, it is difficult to raise it again." He also noted that maintaining a higher price point for Zympentra in the U.S. compared to existing Remsima SC affected the speed of uptake.

Nevertheless, he emphasized that recent trends are showing improvement. Chairman Seo stated, "This year, we are seeing an upward sales trajectory," and added, "Since growth has been evident from the first quarter, achieving the annual target of around 350 billion won is well within reach."

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