Korea Biomedical Review is publishing a series of articles to analyze the top 10 Korean pharmaceutical and biopharma companies with the largest market capitalizations listed on the main bourse, Kospi, and the tech-heavy Kosdaq. The series aims to reflect key industrial issues and the flow of the capital market in the Korean pharmaceutical and biopharma industry. This is the eighth installment. -- Ed.

GC said it expected record-high earnings for 2022 based on stable sales from Hunterase, its hunter syndrome treatment, and revenues from its subsidiaries.

GC reported preliminary consolidated sales and operating profit of 1.7 trillion won and 81.3 billion won ($1.3 billion and $62.2 million), up 11.3 and 10.3 percent, in 2022, according to the company’s most recent public filing. 

In the fourth quarter alone, the company’s revenue was up only 2.3 percent on-year to 411.5 billion won. It recorded an operating loss of 22.4 billion won in the fourth quarter. 

Despite the operating loss, there were temporary factors -- such as an increase in R&D expenses after starting of the U.S. phase 2b clinical trial of CRV-101, a shingles vaccine developed by Curevo, GC's U.S. offshoot, and increase in selling, general, and administrative (SG&A) expenses -- at the end of the fourth quarter.

Analysts noted that the company's operating profit stayed stable throughout 2022, even though its ordinary research and development expense increased 31 percent compared to 2021 to 191.3 billion won.

They attributed GC's stable growth to the strong sales of its Hunterase and its subsidiaries.

According to GC, the sales of Hunterase grew 34-35 percent last year. This was more than double the previous year's growth rate of 15 percent. Annual sales of Hunterase are estimated to be between 71.2 billion won and 71.8 billion won.

The rapid revenue growth last year stemmed from increased international sales.

As of 2021, international sales accounted for 61 percent of Hunterase's sales, with the proportion of exports steadily expanding each quarter.

Industry watchers expect sales of Hunterase will further grow as the drug is currently undergoing drug pricing negotiations in China and may be launched before the end of this year.

Last year, sales of Hunterase accounted for about 20 percent of GC's total prescription drug sales (377.7 billion won).

GC dominates the Korean hunter syndrome treatment market, accounting for more than 80 percent of the market share with sales reaching 24.4 billion won in 2022, according to data from IQVIA, a drug market research company.

Moreover, the company has the potential to expand exports.

Also, GC’s subsidiaries -- including GC Cell, GC MS, and GC Wellbeing -- will play strong this year, industry officials said. 

GC Cell recorded 236.1 billion won in sales in 2022, up 40.3 percent from 2021, thanks to growth in the specimen testing business and expansion of the biological logistics business.

GC MS and GC Wellbeing also achieved outward growth, with the two companies recording sales of 128 billion and 109.7 billion won, up 10.9 and 20.6 percent from 2021.

GC to face fierce competition in vaccine, blood products

An analyst said GC was able to show good performance last year thanks to its subsidiaries and overseas businesses but this year's situation will not be easy.

"Competition for influenza vaccines will resume this year as SK Bioscience, its competitor, has announced its return to the market, and blood products are already facing fierce competition, so the growth rate is expected to be not significant," said Jung Jae-won, an at Shinhan Investment & Securities.

Jung stressed that the most important event for the GC this year is undoubtedly the entry of blood products into the U.S. market.

"The U.S. Food and Drug Administration's schedule for inspection of GC's blood product plant has already been finalized, and even if there are any shortcomings during the inspection, there is still time, so positive results related to overseas expansion are expected this year," Jung said.

However, Jung also stressed that while entering the U.S. market for blood products is important, it is more important for GC to grow through strategies such as expanding its global business and diversifying sales channels for rare disease products.

"Even if the FDA approves the blood product, GC will have to wait until the second half of 2024 for the actual sales to occur," Jung said. "The company needs to have a plan to maintain growth during this time."

Accordingly, Shinhan Investment & Securities lowered its target price for GC from 155,000 won to 150,000 won, while maintaining a "Buy" opinion for the company.