Obesity drug boom vs. Covid-19 slump: foreign pharma units’ fortunes diverge in Korea

Multinational pharmaceutical companies’ Korean operations experienced markedly divergent earnings results in 2024: some benefited from surging demand for novel therapies, while others grappled with declining post-pandemic sales.

Financial results comparing 2023 and 2024 highlight that obesity and immunology drugs propelled certain firms forward, while those previously boosted by Covid-19 products saw significant declines.

Novo Nordisk Korea led the growth trend, achieving an 84 percent revenue increase to approximately 374.6 billion won ($266.8 million) in 2024. This growth was largely driven by soaring demand for GLP-1-based obesity therapies such as Saxenda (liraglutide) and the recently introduced Wegovy (semaglutide), cementing Novo Nordisk’s dominance in Korea’s expanding obesity treatment market.

AbbVie Korea also saw robust growth, with sales rising around 32 percent year-on-year last year. The company successfully transitioned from the aging Humira (adalimumab) to next-generation immunology drugs Skyrizi (risankizumab) and Rinvoq (upadacitinib). These new biologics gained significant traction in treating psoriasis, arthritis, and dermatitis, aligning with global adoption trends and contributing to a nearly 28 percent increase in operating profit.

Sanofi Korea’s sales grew 18 percent to 592.6 billion won, propelled by its immunology blockbuster Dupixent (dupilumab), addressing unmet needs in severe allergic conditions. Additionally, the merger with Sanofi Pasteur in April 2024, integrating its vaccine business and adding significant sales, contributed positively to the growth.

Amgen Korea saw a solid performance, with revenue increasing around 19 percent, driven by strong market uptake of cardiovascular drug Repatha (evolocumab) and osteoporosis treatment Prolia (denosumab).

In sharp contrast, Covid-19 beneficiaries saw pronounced sales declines. Pfizer Korea’s revenue plunged by over 50 percent as demand dwindled for its mRNA Covid-19 vaccine Comirnaty, and Covid-19 antiviral drug Paxlovid (nirmatrelvir/ritonavir) following the shift from pandemic to endemic status.

Gilead Sciences Korea also struggled, reporting a nearly 17 percent decline in revenue due to reduced demand for Veklury (remdesivir). Similarly, MSD Korea, marketer of Covid-19 therapy Lagevrio (molnupiravir), reported a 12.2 percent revenue drop to 667.8 billion won.

Not all pandemic beneficiaries declined significantly.

AstraZeneca Korea’s sales dipped modestly by 5.7 percent, but profitability improved markedly due to the absence of one-time restructuring costs incurred in 2023 and robust sales of cancer therapies Imfinzi (durvalumab) and Tagrisso (osimertinib).

Roche Korea and Novartis Korea maintained stable or slightly increased revenues but saw varying impacts on profitability.

The divergent financial performances extended to dividend policies, a sensitive issue in Korea. Critics have long expressed concern about multinational firms repatriating profits earned from Korean patients and insurers. AstraZeneca Korea notably tripled its dividend payout to 50 billion won, while Novartis Korea nearly doubled its dividends. Conversely, Pfizer Korea, amid declining profits, slashed its dividends by 40 percent, and Roche Korea halved its dividends in line with profitability concerns.

Some profitable firms have cut donations significantly to Korean community health and patient support programs. Novartis Korea reduced its charitable contributions by 84 percent, while Pfizer Korea’s donations dropped nearly 70 percent. AbbVie Korea, despite strong revenue growth, reduced donations by over a third.

Several prominent companies, including MSD Korea, Sanofi Korea, GSK Korea, and AbbVie Korea, issued no dividends for 2023 or 2024. Observers note concerns about transfer pricing instead of dividends, which is when companies inflate internal costs.

The problem is that such actions can artificially lower local profits and taxable income.

“These allegations have not singled out specific companies publicly, but industry chatter often points to firms with consistently negligible profits and no dividends year after year as potential cases,” an industry watcher told Korea Biomedical Review, asking to remain anonymous. “For example, if a multinational’s Korean arm always barely breaks even despite healthy sales, it invites the question of whether most of the income is being siphoned off via intra-company charges, such as royalties, licensing fees, or expensive transfer of goods.”

However, industry watchers cautioned against automatically equating no-dividend policies with wrongdoing.

“Each company has a different strategy -- some reinvest profits into local clinical trials, new hiring, or building infrastructure, instead of paying dividends,” noted one multinational pharmaceutical executive, requesting anonymity. “As a result, a lack of dividends can indicate expansion plans or a parent company’s long-term outlook, rather than nefarious profit shifting.”

Another official stressed that multinational pharma companies often contend that internal transfer prices reflect the real cost of innovative drug development and global manufacturing.

“High import prices for advanced cancer or biologic drugs, for instance, may simply mirror the hefty R&D and production expenses -- not an attempt to bleed the subsidiary dry,” he said. “The National Tax Service monitors transfer pricing and has the authority to adjust prices if they deviate from arm’s-length norms, so companies have to be careful to comply."

Essentially, while the optics of zero dividends may appear negative in the court of public opinion, it is not always a sign of tax dodging, sources said.

Experts emphasized distinguishing between reasonable reinvestment and profit shifting, urging greater transparency in related-party transactions to build public trust.

“It’s important to distinguish a reasonable reinvestment from abusive profit expatriation,” an industry source said. “Korean authorities, for their part, have encouraged foreign firms to voluntarily contribute more locally -- either through fair tax payments, dividends, or CSR -- to sustain public trust.”