South Korean pharmaceutical and biotech companies are increasingly entering the U.S. market through direct sales, bypassing local partners. This shift aims to take control over pricing policies, insurance listings, and sales and marketing strategies, thereby transforming their revenue structures. However, there are still few examples of companies successfully establishing local subsidiaries and building sales and distribution infrastructure for direct sales.
According to a report by the Korea Pharmaceutical and Bio-Pharma Manufacturers Association on August 8, the likelihood of success in direct sales in the U.S. is relatively higher for specialized drugs targeting specific patient groups or those with high technical difficulty. This is due to limited competition and the ability to secure stable revenue based on product competitiveness.
A notable example is SK Biopharm, which received approval from the U.S. Food and Drug Administration (FDA) in 2019 for its epilepsy treatment, cenobamate (marketed in the U.S. as Xcopri). The company began direct sales in the U.S. in 2020 through its subsidiary, SK Life Science.
From its inception in New Jersey, SK Life Science recruited experts in central nervous system (CNS) sales and marketing from major global pharmaceutical companies to establish a local distribution network and medical professional connections. Cenobamate demonstrated a significantly higher complete seizure freedom rate in clinical trials for treatment-resistant adult partial-onset seizures, earning trust in the prescribing community and facilitating the early establishment of the direct sales system.
Sales of cenobamate have steadily increased in the U.S., generating 630.3 billion won (approximately $530 million) last year, a 44% increase from the previous year. In line with expanding sales, supply has also increased. Last month, the company signed a $55.36 million (about 79.3 billion won) supply contract with SK Life Science, marking the fifth contract this year and bringing the cumulative total to 281.8 billion won.
Celltrion has been steadily building its direct sales system since Chairman Seo Jung-jin proposed a plan to establish an overseas direct sales network in 2019. The company transitioned to direct sales in Europe in 2020 and began direct sales in the U.S. in 2023. The number of products sold directly has increased from one in 2023 to six currently.
This expansion in direct sales has translated into financial results. Thanks to increased sales of Jimpenda (ingredient: infliximab) and Uplima (ingredient: adalimumab), the company's North American direct sales revenue surpassed 200 billion won (approximately $160 million) for the first time in the second quarter of this year. Notably, Jimpenda was included in the major insurance formularies of the three largest pharmacy benefit managers (PBMs) in the U.S. just seven months after receiving FDA approval.
Celltrion has applied the experience and distribution network accumulated during this process to subsequent products. Omniclone (ingredient: omalizumab) has demonstrated direct sales competitiveness in Italy, achieving a 16% market share in Europe in the first quarter of this year.
The U.S. pharmaceutical market is complex, involving manufacturers, wholesalers, insurers, PBMs, and purchasing consortia. The structure is such that insurance listings, price negotiations, and securing prescription networks are critical for market establishment. Therefore, while direct sales, where local subsidiaries handle everything from product approval to pricing, insurance listings, sales, marketing, and revenue recognition, can expect high profitability, they require substantial funding and a robust local network.
Lee Seung-kyu, vice president of the Korea Bio Association, explained that SK Biopharm built its local network through self-developed new drugs and global clinical trials, while Celltrion established a foundation for direct sales by enhancing its negotiation power and marketing capabilities with insurers and PBMs through its biosimilar business. He emphasized that success in this business model is not determined by a single product but requires long-term accumulation of global clinical and local sales capabilities.
Lee stated, "Direct sales is a strategy that requires a combination of global experience, local networks, and financial resources. A deep understanding of the market and strong marketing capabilities are essential to enhance the likelihood of success."
* This article has been translated by AI.
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