Korean Pharma Earnings Roundup: Dong-A, Green Cross Retain Leading Positions While Yuhan, LG Life, Hanmi Struggle

SEOUL - Of South Korea's five top pharmaceutical companies, Dong-A and Green Cross did relatively well in 2010, retaining their leading positions while Yuhan, LG Life Sciences and Hanmi failed to witness upward momentum amid a tightened government grip on the local pharmaceutical industry.

Dong-A, which has kept the leading position in Korea since 1967, said its sales rose 5.71 percent from a year ago to KRW 846.82 ($755.08 million) while net profit surged 15.55 percent to KRW 73.1 billion ($65.18 million).

"Despite a weakened industry environment generated by a rebate-related dual punishment system and others, we were, however, able to post growth in sales and net profit because of the brisk sales of our health drink Bacchus, which accounts for nearly 14 percent of our annual sales," Dong-A spokesman Yeom Sang-hyuk told PharmAsia News. "In 2010, sales of Bacchus rose 10 percent to KRW 128.3 billion ($114.4 million), helping Dong-A retain the leading position."

Anti-Rebate Law Makes Industry Participants Nervous

Widely known as the "dual punishment law," Korea's anti-rebate regulation, which took effect Nov. 28, punishes both contributors and receivers of rebates traded between pharmaceutical firms and doctors and hospitals (Also see "South Korea's Health Ministry Unveils Provisions For November's Anti-rebate Law" - Scrip, 5 Oct, 2010.)

Dong-A's erectile dysfunction product Zydena also helped boost sales in Korea in 2010, Yeom said. The product is in Phase III and Phase II clinical trials in the U.S. and in Europe, respectively .

Green Cross Sees 23% Growth Despite Drop In Q4

Although vaccine producer Green Cross saw its sales and net profit falling sharply during the fourth quarter of last year, its 2010 sales reached KRW 791 billion ($709.74 million), up 23 percent from the previous year. Net profit jumped 30 percent to KRW 104.7 billion ($93.94 million) thanks to brisk sales of the company's seasonal flu vaccine and A/H1N1 flu vaccines (Also see "Demand For A/H1N1 Vaccine Catapults Green Cross Into No. 2 Spot In Korea; Company Ramps Up Biosimilar Pipeline" - Scrip, 2 Feb, 2010.).

Yuhan, Hanmi, LG Life Struggle Under Changed Environment

While sales of both Dong-A and Green Cross saw steady growth in 2010, Yuhan's sales rose only 3 percent to KRW 649.3 billion (578.96 million) while Hanmi's sales fell to KRW 590 billion ($526.1 million) from KRW 616.1 billion ($549.35 million) in 2009.

LG Life Sciences saw sales rise only 2.2 percent to KRW 334.3 billion ($298.1 million) while net profit fell 24.1 percent to KRW 16.4 billion ($14.62 million).

Of the three players, Hanmi, which had jumped to the No.2 position at one point, appears to be the biggest victim of the anti-rebate law, which was passed in an effort to weed out companies that were engaged in irregular business activities.

South Korean analysts expect the current harsh environment will continue to push local Korean pharmas to seek out partnerships with multinational companies to survive (Also see "South Korean Pharmas Clamber For Partnerships To Survive Rapidly Changing Environment" - Scrip, 15 Jun, 2010.).

For example, In May 2010, GlaxoSmithKline acquired a 9.9 percent stake in Dong-A in a strategic alliance to co-promote products from both companies in Korea (Also see "GSK Expands In Korea With Purchase Of 9.9 Percent Equity Stake In Dong-A Pharma" - Scrip, 12 May, 2010.).

- Peter Chang ([email protected])