By Kim Da-ye
Dong-A Pharmaceutical has boasted the highest annual revenue in Korea’s competitive pharmaceutical market for the last 40 years. But this year, the company’s market leadership is being challenged by rival Green Cross whose net profit jumped 267 percent in the first half of 2010 from the same period last year.
Green Cross, which ranked second in terms of revenue last year, announced last month that its first half revenue jumped 72.9 percent to 447.5 billion won while it earned an operating profit of 109.9 billion won ― 231.8 percent up from a year earlier. The net profit for this year’s first half was a record 81.4 billion won.
Compared to Green Cross’s highly positive earnings, Dong-A Pharmaceutical generated revenues of 422 billion won during the same period, a mere 8.1 percent increase from last year’s figures. Its operating profit was 51.9 billion won ― a good 31.7 percent increase but only a portion of Green Cross’.
Yuhan, the largest pharmaceutical firm in terms of market capitalization, chalked up 331.5 billion won of revenue in the first half of 2010. It reported an operating profit of 49 billion won ― a 22.2 percent increase from a year earlier.
Another pharmaceutical giant, Hanmi Pharma, whose annual revenue was the fourth highest in 2009, earned 300 trillion won in revenue ― a 2 percent decline from the previous year. Its operating profit also dropped by 80.6 percent to 4.9 billion won.
The surge in Green Cross’ income was largely attributed to sales of swine flu vaccines. “We have had a stable double-digit growth in exports, blood-related products and flu vaccines,” said the drug company in a statement.
“Turning to the foreign market bore fruit. Around $6 million worth of seasonal flu vaccines that we developed on our own was exported to Latin America through the World Health Organization’s subsidiary, helping our exports increase by 20 percent from last year.”
The seasonal flu vaccines developed by Green Cross will be distributed to the domestic market in the second half, which the company says, will help it achieve annual revenues of 790 billion won this year.
Industry sources say the performance of Korean pharmaceutical companies have been and will be affected by the government’s policy to abandon “rebates” ― a kind of kickback given by drug companies to pharmacies, clinics and hospitals for buying their products.