Hanmi stands out with own drugs as Korean rivals sell imports

South Korea’s Hanmi Pharmaceutical Co. generated sales of more than 1 trillion won ($812.3 million) from its own medicines last year on strong demand for its blockbuster high blood pressure drug Amosartan and dyslipidemia drug Rosuzet.

The performance stood out as its local competitors have instead expanded by focusing on consignment sales of imported drugs under distribution agreements.

Hanmi reported sales of 1.1 trillion won from its own drugs out of its total revenue of 1.2 trillion won last year, according to its annual report to a local financial regulator. Sales of imported medicines and others excluding its own drugs accounted for 8%, down from 13.9% five years ago.

The company was the only one among the country’s top five pharmaceutical makers by revenue whose consignment sales of imported drugs made up less than 10%.

WHOLESALERS OF GLOBAL DRUGMAKERS

South Korean drugmakers have two main revenue sources – selling their own or generic drugs and consignment sales of foreign medicines under distribution agreements. Local pharmaceutical companies are often called wholesalers of global drugmakers due to their high reliance on imported medicines amid a lack of their own.

“About 10 years ago, imported drugs accounted for 60% of the domestic ethical drug market, but they make up 80% now,” said a South Korean pharmaceutical industry source.



Yuhan Corp., South Korea’s No. 1 drugmaker, generated 58.4% of its total revenue of 1.7 trillion won from consignment sales of foreign medicines such as German Boehringer Ingelheim’s Trajenta. Yuhan sold 122 billion won worth of the antidiabetic drug in South Korea last year.

The No. 2 player Green Cross Corp. relied on consignment sales for 34.5% of its total revenue, while Chong Kun Dang Pharmaceutical Corp. generated sales of 46% from imported medicines.

Daewoong Pharmaceutical said it earned 44% of its sales from foreign drugs with the company’s revenue topping 1 trillion won last year.

Meanwhile, such dependence on foreign medicines has sometimes provided South Korean companies with opportunities for technology exports. Yuhan utilized business relationships with global major drugmakers to earn 51.9 billion won and 155.6 billion won in 2020 and 2021, respectively, through license sales, for example.

MORE R&D SPENDING

Multinational pharmaceutical companies have benefitted from the rising consignment sales of South Korean drugmakers. Global players could earn more by only using South Korean companies’ sales networks instead of hiring staff and establishing their own systems in the country.

Domestic drugmakers, however, suffered from falling margins amid the cut-throat competition within the industry. Jeil Pharmaceutical Co. reported its first loss last year since its listing in 1988 as it generated revenue of 79.9% from consignment sales, the highest in the sector, while investing in research and development to diversify its sales structure.

Other drugmakers also raised R&D spending to cut their dependence on imported medications.

“The domestic pharmaceutical sector is significantly increasing R&D expenditures, so they are likely to rely less on imported medicines in the mid-to-long term,” said an industry source.

Write to Ji-Hyun Lee at bluesky@hankyung.com
Jongwoo Cheon edited this article.