Pharma firms go all-out in increasing R&D capacities


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South Korean pharmaceutical companies Daewoong and Celltrion Pharm are injecting funds to increase capacity at research and development facilities and production plants, despite some concerns of the hefty investments weighing upon their operation.

Daewoong Pharmaceutical, the latest member to join the club of pharma firms with 1 trillion won ($887 million) in annual profit, said that it would invest 70.5 billion won from May 31 this year to July 31, 2023, to build a connected collaboration and development center in Magok in Gayang-dong, Seoul. The C&D center will be used to develop research and development of potential drugs.

Daewoong Pharmaceutical in Seongnam, Gyeonggi Province (Daewoong Pharmaceutical)

The 8,800-square-meter plot for the center was purchased at 29.2 billion won, meaning that effectively, some 100 billion won is going into the new facility.

Daewoong said that its stem cell treatment research was globally competitive and that it was collaborating with domestic and overseas bodies to develop novel stem cell treatments. The new C&D center is expected to augment Daewoong’s efforts in this area.

Due to the characteristics of pharma industry, where long-term investment is necessary for novel drug development, Daewoong said it will not shy from agressive research to win profitability. The company is injecting over 10 percent of its total sales profit in to R&D to develop novel drugs.

Daewoong’s sales surpassed 1 trillion won for the first time in 2018. On Wednesday, Daewoong announced that it recorded 1.3 trillion won in sales last year, up 7.4 percent from the year before.

Daewoong credited the enhanced sales performance of both ethical drugs and over-the-counter drugs as what propelled the growth. Daewoong’s ETC drug sales, including that of its wrinkle-removing botulinum toxin Nabota, marked a 12.3 percent on-year rise to 674 billion won; OTC drugs rose 10.8 percent to 92.2 billion won thanks to growth of representative products such as liver tonic Ursa and vitamin B supplement Impactamin.

The firm’s operating profits, however, went down 24.6 billion won, down 36.9 percent. Net loss recorded 5.3 billion won.

The fall in operating profits was due to the firm’s Osong and Hyangnam plants’ depreciation and personnel costs, Daewoong said.

Other than Daewoong, Celltrion Pharm, a subsidiary of biosimilar pharma firm Celltrion, is also fueling its R&D capacity.

Celltrion Pharm will inject 58.2 billion won to increase its capacity to produce Remsima SC, Celltrion’s new subcutaneous version of Remsima, at its plant in Ochang, Cheongju in Gyeonggi Province.

Remsima SC is a self-injectable version of Celltrion’s biosimilar copy of Johnson & Johnson’s autoimmune disease treatment Remicade (infliximab). Celltrion touts the drug will become a blockbuster product.

At the start of this year, Celltrion CEO Suh Jung-jin had announced at the 20-year-old company’s first official press conference, that Remsima SC will be directly sold by subsidiary firm Celltrion Healthcare.

To sell a product, it would first have to be made. Industry watchers are closely following how Celltrion Pharm will secure the funds necessary for the plant.

Celltrion Pharm currently has less than 200 million won in cashable assets, with a sizable long-term debt-to-equity ratio that experts view could grow heavier from 2017 report’s 61 percent to 90 percent in the 2018 report, which is yet to be released. The company has 27.5 billion won outstanding debt to pay back to Korea Development Bank and 10.3 billion won to Nonghyup Bank, as of third quarter last year.

Celltrion Pharm is run by Seo Jung-soo, the brother of Celltrion CEO Suh Jung-jin.

By Lim Jeong-yeo (kaylalim@heraldcorp.com)

Source : koreaherald


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