Two Korean pharmaceutical firms -- Il-yang Pharmaceutical and Hanmi Pharmaceutical -- are enjoying rapid sales growth in China after establishing local units there more than two decades ago.
Il-yang’s Chinese offshoot has shown the fastest revenue expansion among Korean pharmaceutical units in China. Established in 1998 as a joint venture with Gaoyou City in Yangzhou, Yangzhou Il-yang Pharm recorded 93.7 billion won ($82.8 million) in sales last year, up 27.8 percent from a year earlier.
Compared with 2015 revenue of 39 billion won, the figure went up more than two folds.
Il-yang’s other unit Tonghua Il-yang Health Products is also steadily growing. The company’s revenue reached 32 billion won in 2018, up 15.5 percent compared to a year earlier. Its restorative tonic Wonbi-D has sold more than 300 million bottles in China to date.
Revenues from Il-yang’s two Chinese units significantly contributed to the total sales of Il-yang. The combined sales of the two units stood at 125.7 billion won in 2018, accounting for 41.9 percent of Il-yang’s total turnover. Almost half of the Korean drugmaker’s revenue came from Chinese units last year.
The two Chinese units offer higher profitability as well. The operating profit margin of Yangzhou Il-yang and Tonghua Il-yang was 9.07 percent and 35.73 percent, respectively, last year, while that of Il-yang was 5.56 percent.
To meet the surging Chinese demand for gastric ulcer treatment Aldrin (ingredient: almagate), Il-yang recently started building an 8,400 square meter plant. The new plant, scheduled for completion in the first half, can produce up to 1.2 million pouches of Aldrin suspension a day. If combined with the capacity of the old plant producing 720,000 pouches per day, Il-yang can produce up to 1.92 million pouches of Aldrin per day.
Il-yang is taking steps to release Supect, the 18th Korean novel drug for
chronic myelogenous leukemia, in China. The company licensed out the treatment to Yangzhou Il-yang in 2013.
The China Food and Drug Administration (CFDA) approved a phase-3 trial on Supect in January. Yangzhou Il-yang said its production lines are already prepared to operate so that it can release the drug immediately after obtaining the marketing license.
Beijing Hanmi Pharmaceutical, established by Hanmi in 1996, posted 228.2 billion won sales last year, after surpassing 100 billion won sales in 2012. The solid sales growth is attributable to the company’s focus on cold remedies and intestinal drugs for children.
Beijing Hanmi’s revenue accounted for 22.46 percent of Hanmi’s total revenue last year. After launching a research center in 2008, Beijing Hanmi has built a network with Hanmi for research cooperation. Hanmi’s Chinese unit not only sells products but conducts R&D. Beijing Hanmi developed “Pentambody,” a new platform technology allowing an antibody to simultaneously bind to different targets for both immune-oncology treatment and targeted therapy.
The unit is preparing to conduct a global trial on Pentambody amid growing anticipation for the promising drug candidate.
With the two Korean drugmakers’ successful cases, other Korean pharmaceutical companies are pinning hope on Chinese market entry. Another positive sign is that Beijing is gradually easing approval procedures, which used to be demanding.
Botulinum toxin makers such as Daewoong Pharmaceutical, Medytox, and Hugel are knocking on the Chinese door. Biosimilar manufacturers Celltrion and Samsung Bioepis are also gearing up for Chinese business. Celltrion is seeking a joint venture, and Samsung Bioepis is building a partnership with a local firm.
“The (two) companies are showing stable growth in China because they have long been making localization efforts and continuous investments,” a pharmaceutical source said. “But it will take at least five years to see other successful cases as other companies are at an early stage in Chinese market entry.”