Korea’s Big Drugmakers Post Strong Q1 Gains, but Face Price-Cut Pressure in H2

South Korea’s leading traditional drugmakers are extending solid growth in the first quarter, with operating profit rising by double digits from a year earlier.

Industry officials said Tuesday that Yuhan Corp., GC Biopharma and Chong Kun Dang Pharmaceutical Corp. each posted double-digit operating-profit growth in the January-March period from a year earlier.

Yuhan reported consolidated first-quarter revenue of 526.8 billion won and operating profit of 8.8 billion won, up 7.2% and 37.3%, respectively. The company missed market expectations because milestone revenue tied to its lung cancer drug, Lazertinib, was not booked in the quarter.

Chong Kun Dang, on a separate basis, posted revenue of 447.7 billion won and operating profit of 17.6 billion won, up 12.2% and 36.9%. The company benefited from steady sales of established prescription drugs such as Godex and Dilatrend, along with a co-marketing boost from the obesity drug Wegovy. Prescriptions for Wegovy have been expanding in the domestic obesity-treatment market, contributing more meaningfully to sales, the report said.

Among the traditional drugmakers, GC Biopharma is drawing the highest expectations. Securities-industry consensus forecasts put its first-quarter revenue at 439.2 billion won, up about 14% from a year earlier, with operating profit expected to jump about 40% to around 12.2 billion won.

A key driver is Aliglo, a blood product that has gained traction in North America. Aliglo is estimated to have generated about $21 million (about 31 billion won) in first-quarter sales, helped by expanding prescriptions in the United States. The company also benefited from strong sales of the obesity drug Mounjaro, distributed through its affiliate GC Wellbeing.

Daewoong Pharmaceutical Co., which has yet to report results, is also expected to post growth. Analysts forecast first-quarter revenue of 388.3 billion won and operating profit of 44.2 billion won, up about 8.9% and 14.2%. They cited rising global sales of the botulinum toxin product Nabota and steady domestic prescriptions for the gastroesophageal reflux disease drug Fexuclu.

The bigger concern is the second half. Companies face continued cost pressure from global supply-chain instability, including the Middle East war, and a government push to cut drug prices.

The Ministry of Health and Welfare plans to issue an administrative notice this month on a revision to its standards for setting and adjusting drug prices. The revision is expected to include changes to generic pricing formulas, tighter criteria for stepwise price cuts, and measures related to policy add-ons and support for so-called exit-prevention drugs. The government is aiming for implementation in August.

“Companies got through the first quarter with new-drug sales and efficient cost control, but government pricing policy and rising global logistics costs are external variables management cannot control,” an industry official said. “In the second half, performance gaps will become clearer between companies with strong new-drug portfolios and those without.” The official added that with profitability likely to shrink as prices fall, failure to expand R&D and overseas sales could lead to a downturn in results.