Nam Hyun-woo has worked as a staff writer at The Korea Times since 2013, mostly covering business and politics. He currently belongs to the Business Desk where he covers topics such as emerging tech, AI, ICT and Korea's chaebol community. Prior to joining the team, he was the paper's correspondent for the presidential office of Korea during the Yoon Suk Yeol and Moon Jae-in administrations.
Celltrion, Samsung BioLogics earnings defy COVID-19
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By Nam Hyun-woo
By Nam Hyun-woo
Celltrion Chairman Seo Jung-jin
Korea's top two biopharmaceutical companies, Celltrion and Samsung BioLogics, are successfully defying the economic fallout of COVID-19, as each posted or will likely post satisfying numbers in their first-quarter earnings.
According to analysts, Monday, Celltrion is expected to post 354.1 billion won ($288.45 million) in sales for the first quarter, up 59.7 percent from a year earlier. During the same period, its operating profit is anticipated to have expanded 75.9 percent to 136 billion won. Celltrion will announce its first-quarter earnings later this month.
Along with Celltrion, its sales and developing affiliate, Celltrion Healthcare, is expected to generate handsome numbers during the three-month period, with earnings up 66 percent and operating profit, 474 percent, year-on-year.
This is in contrast to the earnings downtrend weighing down for most Korean businesses in the wake of the COVID-19 pandemic.
Analysts said Celltrion's earnings have suffered only a limited impact, as its portfolio is focused on biosimilar drugs treating life-threatening conditions.
“Most Celltrion products are immuno-oncology, anticancer and other drugs that are related to life-threatening diseases, thus the COVID-19 impact on sales will remain at a limited level,” SK Securities analyst Lee Tal-mi said. “Since the company is making efforts to secure inventories through partnerships with overseas contract manufacturing organizations, there seem to be no serious logistics issues on exporting drugs eithert.”
One of the drugs that buoyed Celltrion's first-quarter earnings was Remsima, a biosimilar used for rheumatoid arthritis, ulcerative colitis and a series of other diseases. According to Pfizer, which is selling the drug exclusively in the U.S., the drug's U.S. sales for the first quarter stood at $84 million, up 46 percent from $57 million a year earlier.
Samsung BioLogics CEO Kim Tae-han
Samsung BioLogics, which announced its first-quarter earnings April 20, has also bucked the downtrend.
The contract development and manufacturing company logged 207.2 billion won in sales, up 65.3 percent from a year earlier. It also recorded 62.6 billion won in operating profit, bouncing back from an operating loss last year.
“The operating margin remained at a solid level due to leverage from improved capacity utilization and declining marketing costs stemming from the COVID-19 outbreak,” Hanwha Securities analyst Shin Jae-hoon said. According to Shin, the operating rates of Samsung BioLogics' plants No. 1 and No. 2 hovered at over 80 percent, while that of plant No. 3 stood at 20 percent.
The analysts projected positive outlooks for Celltrion and Samsung BioLogics after the second quarter, saying their strategies in handling the COVID-19 pandemic are providing growth opportunities.
Currently, Celltrion is developing a treatment and vaccine for the coronavirus, with a plan to begin clinical trials in July. For this, the company earmarked 20 billion won and said April 13 that it has selected the antibodies needed for its treatment.
“The coronavirus treatment will provide huge momentum for Celltrion,” SK Securities' Lee said. “Along with the treatment, the debut of remsima SC and herzuma will lead the company's sales throughout this year.”
Remsima SC is a subcutaneous version of remsima and debuted in Europe earlier this year. Herzuma, a biosimilar to the herceptin breast cancer treatment, debuted on the U.S. market in March.
Samsung BioLogics is also capitalizing on its vast production capacity as an opportunity from the COVID-19 outbreak.
“Due to the COVID-19 outbreak, the contract manufacturing of medical drugs scene is changing positively for Samsung BioLogics,” Daishin Securities analyst Hang Ka-hye said. “A growing number of global drug developers are seeking Asian contract manufacturers for the stable production of medical drugs.”
The increasing efforts of the global biotech industry to develop COVID-19 treatments is also favorable news for Samsung BioLogics. On April 9, the Samsung unit signed a 440 billion won letter of intent (LOI) with U.S. Vir Biotechnology on contract manufacturing a COVID-19 treatment candidate. The deal's value accounts for 10 percent of the total orders Samsung BioLogics won last year.
“The LOI with Vir Biotechnology accounts for 65 percent of the order target for Samsung BioLogics' plant No. 3 this year,” Hong said. “Samsung BioLogics is seeing favorable circumstances for expansion in its contract manufacturing and expects to produce more commercialized products.”