Green Cross And MNC-Linked Daewoong Stand Out In Korea's Sluggish 3rd Quarter

SEOUL - South Korea's top five pharma companies - excluding Green Cross and Daewoong Pharmaceutical - posted sluggish sales in the third quarter, most of them still finding ways to cope with the government's tightening grip on their business practices.

Korea's long-time leading player Dong-A Pharmaceutical regained the top sales position from Green Cross. However, Dong-A's third quarter sales rose only 1.8 percent from a year ago to KRW 212.1 billion ($185.32 million) as its sales to hospitals and clinics fell 5.2 percent and 2.4 percent, respectively, amid fears of how new regulations on company-doctor rebates will play out.

Known as the "dual punishment" law, the new anti-rebate regulation takes effect Nov. 28, and will allow courts to impose punitive damages on both contributors and receivers of rebates in an attempt to curb the practice (Also see "South Korea's Health Ministry Unveils Provisions For November's Anti-rebate Law" - Scrip, 5 Oct, 2010.).

While Dong-A did not discuss the impact of the new regulation, industry observers in Korea assume Dong-A's decreased sales growth can be attributed to the company stepping back from a more aggressive sales campaign, along with a hesitance from doctors and hospitals to deal directly with pharma companies for fear of being punished.

Analysts expect Dong-A will see an Avandia (rosiglitazone) sales bump in the coming months - despite the drug's restricted access in the U.S. and EU - as the company starts to sell some drugs for GlaxoSmithKline in South Korea. Dong-A will sell Avandia, hepatitis B treatments Hepsera (adefovir) and Zeffix (lamivudine), and benign prostatic hyperplasia therapy Avodart (dutasteride) (Also see "GSK Korea Moving Ahead To Sell Avandia With Korea's Dong-A Despite U.S. FDA Safety Study" - Scrip, 21 Jul, 2010.).

Dong-A's top competitor Green Cross posted a sharp 20.7 percent year-on-year increase to KRW 192 billion ($167.76 million) in third quarter sales, thanks to the brisk sales of its chickenpox vaccine abroad and seasonal flu vaccines to Korean hospitals.

"We expect this year's sales to reach KRW 790 billion ($690.26 million) from last year's KRW 643.2 billion as we are not that vulnerable to government's restrictions like other local Korean pharmas," Green Cross spokeswoman Han Jung-A told PharmAsia News. "In other words, our main products such as vaccines and plasma derivatives don't have competitors here in Korea."

For the first time in 40 years, Green Cross emerged as Korea's sales leader in the first quarter, attributed to stronger than expected flu vaccine orders. Although the chance for recurrence of last year's flu epidemic is seen as low for the next few years, Green Cross officials expect the firm to maintain its sales position in the top two, helped by its pipeline of biosimilars.

Green Cross said it will try to differentiate from biosimilar competitors Daewoong Pharmaceutical, Yuhan Corp., Hanhwa, Samsung and LG Life Sciences by investing heavily in biobetters (Also see "Green Cross To Focus On Biobetters As Korean Biosimilar Space Gets Crowded: Bio Korea Conference" - Scrip, 2 Sep, 2010.).

MNC-linked Daewoong's Sales Up

Third quarter sales of Daewoong Pharmaceutical, which sells a number of products from multinational companies in South Korea, rose 10.8 percent to KRW 166.7 billion ($145.65 million) during the third quarter.

"We are currently selling Pfizer's pneumococcal vaccine Prevenar, Boehringer Ingelheim's constipation product Dulcolax (docusate), and Italfarmaco's Gliatilin (choline alfoscerate), and strong performance of the products obviously added momentum to us in the third quarter," a Daewoong official told PharmAsia News.

Using its pharmaceutical and OTC sales networks, Daewoong has signed on to numerous in-licensing and co-promotion agreements in recent years, teaming with Merck, Johnson & Johnson, AstraZeneca and others (Also see "Daewoong To Sell Medivir 's Xerclear in Korea As Swedish Firm Looks For More Partners" - Scrip, 26 Aug, 2010.).

Trailing Dong-A, Green Cross and Daewoong in third quarter sales were Yuhan Corp. and Hanmi.

MNC-Korean Alliances To Continue

Some analysts expect the Korean government's tightened marketing regulations will have an impact on marketing and in-licensing deals in the country. Korean firms may seek out more cooperation with MNCs.

"It's obvious that local Korean pharmas are extremely nervous about a string of government measures against them," noted Chung Bo-Ra, a healthcare analyst at Daishin Securities, adding that this "negative environment" could prompt local companies to generate more forms of cooperation with MNCs to add global brands to their sales rosters (Also see "South Korean Pharmas Clamber For Partnerships To Survive Rapidly Changing Environment" - Scrip, 15 Jun, 2010.).

- Peter Chang ([email protected])