Korean Economy News
S. Korea’s 3 biotech firms eyed closely with growing earnings momentum
2017-06-19


By Moon Il-ho



South Korea's leading biotechnology companies Samsung BioLogics Co., Hanmi Pharmaceutical Co., and Chong Kun Dang Pharmaceutical Corp. are in the limelight on growing expectations for improvement in their earnings this year.

Samsung BioLogics, a biopharmaceutical business arm of Samsung Group, is expected to make a turnaround this year and raise about 10 billion won ($8.82 million) in operating income. Last year, the company posted an operating loss of 30.4 billion won, narrowing from a deficit of 203.6 billion won in 2015.

In the first quarter of this year ended March, the company raised 3.4 billion won in operating profit in the January-March period, its first quarterly profit since inception. It, however, reported a net loss of 33.1 billion won in the cited period after reflecting biosimilar development costs of its subsidiaries Samsung Bioepis and Archigen Biotech Ltd.

Investors, nevertheless, believe there are more reasons to remain optimistic about earnings of Samsung BioLogics as the company has preemptively invested to ramp up output in anticipation for growing demand for bio medicines. As a leading contract manufacturing operator (CMO) of animal cell culture, Samsung BioLogics currently operates two factories - each with an annual capacity of 30,000 liters and 150,000 liters in Songdo, Incheon. Once the construction of the company's third facility with a capacity of 180,000 liters is complete in the end of this year, Samsung BioLogics will be capable of producing 360,000 liters annually in total to become the world's largest CMO.

Market analysts expect that considering the nature of the CMO industry where a small number of players armed with economy of scales dominate, Samsung BioLogics would be able to secure more orders.

On growing expectations for a turnaround this year, Samsung BioLogics shares have skyrocketed more than 50 percent since the first trading day of this year. Its shares ended at 240,000 won on Friday, remaining unchanged from the previous session.

The country's another major drug maker Hanmi Pharmaceutical's shares are also rapidly rebounding after they plummeted last year due to a cancelled 850 billion won worth license-out deal with global pharmaceutical firm Boehringer Ingelheim GmbH in September. Hanmi Pharmaceutical shares have jumped 40.8 percent so far this year, ending Friday session at 400,500 won, down 5.7 percent, or 24,000 won, from the previous session.

Investors recently flocked to pick up its shares on expectations that the company's two clinical tests that have been halted last year would resume this year. The company said in a regulatory filing last week that U.S. pharmaceutical company Janssen will embark on a new set of phase 1 clinical trials for the diabetes and obesity drug JNJ-64565111 developed by Hanmi Pharmaceutical. The Korean drug developer also plans to begin clinical trials for another obesity treatment.

Chong Kun Dang, another leading biotechnology firm in Korea, also made its name in the list of Korean pharmaceutical companies that are expected to report solid earnings this year. Market analysts expect the company, which raised 832 billion won in sales last year, to earn 1 trillion won in sales this year after it successfully obtained local marketing rights for a local blockbuster drug from rival Daewoong Pharmaceutical Co. last year.

An unnamed official from the brokerage industry said the major medicines in which Chong Kun Dang has exclusive selling rights played a critical role in boosting the company's sales significantly in a short period, allowing it to rake in about 200 billion won in sales last year. Its shares ended down 2.9 percent, 3,500 won, at 119,500 won after adding 18.3 percent so far this year.



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