LG Chem's life sciences business has hit a milestone by exceeding 1 trillion won ($755.8 million) in annual sales for the first time in the company's history. The performance was backed by strong sales from AVEO Oncology, a U.S. subsidiary acquired in April 2023. 

The sales represent a 30.1 percent growth compared to 2022.

Despite the revenue increase, the company's operating profit in this sector experienced a decrease due to the decline in profitability, which was attributed primarily to an increase in research and development (R&D) costs.

In an investor relations (IR) presentation on Friday, LG Chem shared its financial performance for the fourth quarter of 2023, with total revenues reaching 13.1 trillion won and an operating income of 247 billion won.

The life sciences segment contributed 297 billion won to the quarterly revenues, with a slight increase from the preceding quarter. However, its operating income decreased to 60 billion won due to heightened R&D expenses for the progression of clinical trials in key areas such as growth hormones, diabetes treatments, and vaccines.

On a yearly basis, the life sciences division reported sales of 1.2 trillion won in 2023, while its operating profit saw a 61.6 percent reduction from 740 billion won in 2022 to 290 billion won.

The company stressed that it has been focusing on expanding its product range and market penetration, leading to significant sales growth.

This has been supported by revenues from AVEO Oncology, a U.S. subsidiary acquired by LG Chem.

Founded in 2002, AVEO has specialized capabilities in the anti-cancer market, including clinical development, approval, sales, and marketing. It was listed on the NASDAQ in 2010 and received U.S. Food and Drug Administration (FDA) approval for Fotivda, a drug targeting kidney cancer, in 2021. AVEO has annual sales of approximately 200 billion won.

LG Chem's investment in future growth has been evident in its increased spending on R&D and capital expenditures (CAPEX).

In 2023, the company allocated approximately 375 billion won to R&D, marking a significant increase from 276 billion won in the previous year. CAPEX in the life sciences sector also saw a substantial rise to 770 billion won from 118 billion won in 2022.

The company is currently advancing global clinical trials for new drugs aimed at treating kidney cancer, gout, and head and neck cancers.

LG Chem had also entered into a technology transfer agreement with Rhythm Pharmaceuticals, a U.S. biotech firm, for its rare obesity drug LB54640, with the deal potentially valued at up to $3.05 billion, including an upfront payment of $100 million.

"Going forward, we expect continued sales growth by strengthening the position of our market-leading products and expanding overseas sales of biosimilars, fillers, and fertility treatments," an LG Chem official said. "In terms of R&D, we plan to focus on advancing the development of new drugs, including gout drug tagulixostat, kidney cancer drug, head and neck cancer drug, which are in phase 3 clinical trials.