[Click eStock] "Chong Kun Dang Scales Up with Wegovy... Target Price Raised"

"R&D Momentum Lacking This Year"

On April 14, Kiwoom Securities raised its target price for Chong Kun Dang to 110,000 won while maintaining its 'Buy' investment opinion, forecasting that the company's first-quarter results would meet expectations.

Ha Hyemin, a researcher at Kiwoom Securities, projected in a report released on the same day that Chong Kun Dang's standalone sales for the first quarter would reach 446.4 billion won, up 12% year-on-year, and operating profit would total 15.2 billion won, up 18% over the same period. These figures are largely in line with market expectations, which forecast sales at 430.2 billion won and operating profit at 15.6 billion won.

The growth in sales is expected to be led by Wegovy. Ha pointed out, "While Prolia biosimilar’s introduction is likely to result in drug price reductions and increased competition, and the efficacy re-evaluation issue is expected to continue to weigh on Gliatilin, the sales growth of the newly introduced product Wegovy is expected to contribute to overall sales." Since October last year, Chong Kun Dang has been responsible for the domestic sales of Wegovy.

Ha further commented, "In addition, key products such as Godex and Dilatrend are expected to maintain stable growth," adding, "While the proportion of introduced products continues to grow, a rise in the cost-to-sales ratio is inevitable. However, through efficient cost control, operating profit is expected to meet expectations."

However, she noted that there is a lack of clear research and development (R&D) momentum this year. The phase 2 trial for atrial fibrillation of CKD-510, which was out-licensed to Novartis, is scheduled to conclude in September 2027, meaning there will be no data announcements or milestone income this year.

The review of drug efficacy for Gliatilin, which is used for dementia and cognitive function improvement, is expected to take place during the third quarter of this year. Ha stated, "Whether there is a change in the amount of provisions could impact second-half results."

She also advised monitoring whether the company obtains innovative pharmaceutical company certification under the revised drug pricing system. The price of generic drugs by regular companies is being gradually reduced from 53.55% to 45% of the original product price, whereas innovative pharmaceutical companies are granted a higher price of 49% of the original for four years, a difference of 4 percentage points. Ha explained, "As of the first quarter, introduced products are estimated to account for over 45% of total sales, so the impact may not be significant, but it is regrettable that Chong Kun Dang has not yet received the innovative pharmaceutical company certification and is therefore excluded from preferential pricing." She added, "Chong Kun Dang is also preparing to obtain the certification in order to minimize the impact of drug price reductions."

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