Biopharmaceutical firm Celltrion said it suffered a 32.9 percent decline in operating profit in the first quarter from a year earlier.
The company posted 77.4 billion won ($65.6 million) operating income in the January-March period. Sales went down 9.5 percent on-year to 221.7 billion won, and net profit slid 28.4 percent to 63 billion won.
|Celltrion headquarters in Incheon|
Celltrion attributed the disappointing results to the overall reduction of output due to a partial shutdown of the first plant. The company suspended the operation of the first plant in October to expand the production facility.
Although the earnings were down in the first quarter, compared to the same period of last year when both the first and the second plant ran fully, profitability rose compared to a quarter earlier when the first plant’s production was suspended entirely, analysts said.
Compared to the preceding three months, the quarterly sales decreased by 8.5 percent, but operating profit margin rose 75.8 percent.
Celltrion’s three biosimilars – Remsima, Truxima, and Herzuma – are driving the sales growth in Europe.
“Biosimilar Truxima for blood cancer treatment, launched in Europe in the second quarter of 2017, and Herzuma for breast cancer/stomach cancer launched in the second quarter of 2018, are expanding their market shares in the European cancer treatment market,” Celltrion said.
According to IQVIA data, Remsima, Truxima, and Herzuma had 57 percent, 36 percent, and 10 percent market share, respectively, in late 2018.
The start of the Remsima SC supply also helped Celltrion improve earnings. The company sought approval of the Europe Medicines Agency for Remsima SC in November. As the final nod is imminent, the company has already started producing the drug to meet the logistics and distribution schedules.
“We will complete the refurbishment and expansion of the first plant and fully operate the first and second plant in early February. The additional 60,000-liter facility, now being expanded, will start production in the second half this year,” the company said, raising hope for earnings improvement shortly.
Celltrion suggested several major momentums that could trigger a market expansion in the second half. They include Europe’s nod for Remsima SC, an entry into the new Chinese market, and an earnest start of the chemical drug business, according to the company.
Remsima SC is a subcutaneous version of Remsima IV, and it is the only “dual formulation” product among TNF-α (tumor necrosis factor alpha) products. The company hopes to win EMA approval within the year to release it in the European market.
Celltrion plans to maximize profitability by increasing the demand with “two-track treatment option” that maintains proper drug concentration in the body, and by directly selling the drug to reduce cost.
Celltrion is also seeking to establish a joint venture in China to proceed with clinical trials and authorization for the three biosimilars. On the back of the Chinese government’s support, Celltrion minimized the market entry barrier.
The company also said it would attract a financial investor to invest in China’s largest biopharmaceutical manufacturing facility. “If this facility is used for Celltrion’s entrusted production, it will create a synergy effect,” Celltrion said.
The company is expanding its business to global chemical medicines. It earned approval from the U.S. Food and Drug Administration to sell HIV-1 treatment Temixys and antibiotic generic Linezolid, last year and this year, respectively.
Celltrion hopes to penetrate the U.S. market by securing multi-type, high value-added chemical drugs portfolio. The company has been actively engaging in developing treatments for HIV, tuberculosis, and cardiovascular disease, as well as seeking abbreviated new drug application (ANDA) for generic drugs to secure sales competitiveness in the U.S.
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