Daewoong's subsidiaries are all expected to turn profits

[Interview] Hyun-Jin Park, head of the global business division of Daewoong

7 out of 8 overseas subsidiaries in the first half made a surplus

"The leading R&D company for joint research with local companies"

Daewoong's eight overseas subsidiaries are expected to make a profit this year.

 

In the first half of this year, seven have already made a surplus.

 

It has been about 10 years since the global organization has been in full swing.

 

Daewoong has been the most actively seeking overseas expansion among domestic pharmaceutical companies.

 

Starting with Indonesia in 2012, it established local subsidiaries in major Asian countries such as China, Philippines, Thailand, Japan, and the United States.

 

Overseas subsidiaries, which have been reducing losses through steady investment for 10 years, began to turn to a surplus in the first half of this year.

 

Daewoong Infion, an Indonesian subsidiary, recorded a net profit of ₩1.2 billion in the first half of this year from a net loss of ₩1.3 billion last year.

 

Beijing Daewoong in China also turned to a surplus of ₩200 million in the first half from a loss of ₩500 million last year.

 

Hyun-Jin Park, head of the global business division of Daewoong, said at a meeting with Dailypharm, “Although it has suffered a deficit while building infrastructure such as local research centers and factories, it is expected that most overseas subsidiaries will turn into a surplus this year as investments are completed and local sales continue to rise.” Director Park has been in charge of planning and executing Daewoong's global business strategy for 10 years from the organization of the global headquarters in 2010 to the present.

 

In 2019, she succeeded Jeon Seung-ho as the head of the global business division.

 

Daewoong seeks to enter the market in a way that targets the drug and potential market needed locally.

 

It is focusing on biopharmaceuticals in Indonesia and liquids in China.

 

It is a strategy that goes further from exporting flagship products that are usually sold well in Korea to foreign companies.

 

  There are many difficulties in the early stages, but if the foundation is built and successful, the synergy effect is great.

 

In fact, Daewoong has enjoyed the infrastructure benefits it has accumulated over the years in COVID-19 situation.

 

Due to the limited number of domestic patients, clinical trials were quickly approved through overseas subsidiaries.

 

She said that we are thinking of a R&D corporation in Europe and other places as a plan to expand overseas in the future, and Daewoong's goal is to be among the top 10 pharmaceutical companies.

 

The following is questions & answers of Park.

 

Hyun-Jin Park, head of the global business division of Daewoong

▶This year, overseas subsidiaries are making a surplus.

 

There are 7 local subsidiaries that showed a surplus in the first half of the year, including Daewoong Infion, Daewoong Thailand, Beijing Daewoong, and Daewoong India. In the meantime, it took a lot of cost and time to set up a local research institute, factory, and marketing.

 

Sales grew steadily, but the infrastructure construction cost was forced to record a deficit.

 

Now, most of the investments have been completed and sales are increasing, making a turnaround.

 

All eight are expected to turn to profits by the end of the year.

 

▶Among the countries that entered the market, Indonesia, China, and Vietnam were selected as the core.

 

What is the reason? All three countries are rapidly growing.

 

However, it is only possible to enter the market only if there are local production plants.

 

There are many advantages such as bidding if it is produced locally.

 

  Daewoong Pharmaceutical has already established a manufacturing plant and is implementing a strategy to operate it like a local company, so it was determined that this strategy can be maximized.

 

However, the ways of entering the three countries are slightly different.

 

Indonesia and China formed joint ventures with local companies, while Vietnam chose to invest in equity.

 

While a local company called Trapaco already had a new factory, it was better to share R&D instead of using existing resources with equity investment, rather than investing in new plant resources because of lack of R&D know-how for the products produced.

 

Trapaco's stake may be expanded in the future depending on the company's potential, etc.

 

Each joint venture or equity investment has advantages and disadvantages.

 

We are choosing an appropriate method according to each country's situation.

 

▶Daewoong is choosing and developing its flagship drugs according to local conditions.

 

Indonesia's biopharmaceuticals, China's digestive medicines, and Thailand's aesthetics.

 

In general, why do you go on a difficult path without choosing a method of using drugs that are popular in Korea as your flagship products? This is because the domestic and pharmaceutical environments are often different.

 

For example, complex medications are popular in Korea, but not in Southeast Asia such as Vietnam.

 

There is a way to lead a combination drug in advance, but Daewoong Pharmaceutical's strategy is to analyze and develop drugs needed locally.

 

The Chinese plant analyzes and plans medicines needed for the Chinese market and develops them at the research institute.

 

If locally planned and responded drugs are suitable for the Korean market, reverse export is possible.

 

Planning and research can be done according to each local situation.

 

▶It has been seeking global advancement for 10 years, and it is paying off recently with a turnaround.

 

It seems that building up infrastructure and networking for a long time was not easy.

 

Both China and Indonesia are famous for having difficult licensing.

 

Especially in Indonesia, where it first entered the market, it suffered a lot of trial and error.

 

The important point was to derive a model of cooperation with health authorities while expanding local research cooperation.

 

We have presented the Indonesian government with a vision to foster Indonesia as a bio hub in Asia.

 

In addition, although it is a for-profit company, it is also important to present parts that can win-win with each other.

 

Therefore, it contributed socially by lowering the insurance price of Epodion in Indonesia to 55%.

 

By providing economic support to areas where the medical environment is less favorable than in Korea, many citizens can benefit from medical care.

 

Currently, we are continuing cooperation with UI Universitas Indonesia, the best university in Indonesia, while conducting bio research, and we are providing support for nurturing such as establishing a bio research center and hiring local personnel to provide research opportunities in Korea.

 

Presenting this vision, it was possible to complete the process from the factory to the license within 4-5 years.

 

Not only domestic companies that were preparing to enter Indonesia, but also local companies were surprised that the speed was very fast.

 

▶Was building up local networking a great help in this COVID-19 outbreak?

 

Since the local subsidiary has a network with both health authorities and clinical CRO companies, it was possible to quickly obtain clinical approval for the treatment of COVID-19.

 

'DWRX2003 (Niclosamide)', which is being developed as a treatment for COVID-19, was the first to be approved in India among countries that submitted a clinical approval plan at the same time.

 

This was due to the fact that Daewoong Infion has been building a network so that it can be considered a local company, and has been conducting several clinical trials in India for a long time.

 

It was also able to enter clinical trials quickly in the Philippines.

 

▶Over the past 10 years, it has advanced into the global market with the concept of creating 'another Daewoong'.

 

What are the plans of the global business division for the next 10 years?

 

If the process has been focused on generics locally until now, over the next 10 years, we will develop many new drug items through research cooperation.

 

'Fexuprazan', which is currently undergoing examination for approval of new drugs in Korea, is trying to enter the global market through simultaneous clinical trials in Asia.

 

By accelerating new drug programs in Asian countries, we are trying to create a virtuous cycle in which the sales value of new drugs increases.

 

To this end, we are considering a R&D company as a local corporation to be built in the future.

 

In the local area, I felt that the amount of information shared and the level of collaboration change depending on whether or not there is research cooperation.

 

Although no specific plan came out, I think it would be nice to have a research company in Europe that has not yet entered the market.

 

we are also considering establishing R&D companies in Shanghai, China.

 

Daewoong will try to make it one of the top 10 pharmaceutical companies in major global countries in the next 10 years.