Multinational companies show significant gap in performance

26 Korean branches generated operating profit of KRW 161.1 billion last year, 3% less than the year before

Boosted by Pfizer’s split-off, Novartis tops the rank after 7 years since 2012

Performance contrasted depending on how new line-ups took over off-patent drugs’ place

Multinational pharmaceutical companies in Korea showed drastically polarized performance last year.

 

Their revenue fluctuated depending on how well the emerging driving forces took over the position of now-off-patent blockbuster drugs.

 

Most of the companies had a drop in operating profit, but companies like Alcon, AbbVie and Sanofi-Aventis have successfully killed two birds with one stone expanding business and improving profit growth by changing up their top selling product line-ups.

 

Analyzing last year’s performance of 28 multinational pharmaceutical companies in Korea on Apr.

 

14, the last year’s gross operating profit reached 165.4 billion won, which was 7.0 percent less than the year before at 178.0 billion won.

 

And the last year’s gross revenue at 5.27 trillion won was 6.3 percent more than the year before.

 

Meanwhile, the operating margin was decreased by 0.5 percent from 3.6 percent to 3.1 percent.

 

The summary is based on 26 audit reports submitted to the Financial Supervisory Service (FSS) until Apr.

 

13 by Korean branches that settled the accounts in December.

 

Although Servier Korea settled the account in September, their data was included.

 

Despite Pfizer Korea and Pfizer Upjohn Korea settled the account in November, their data was dropped from the analysis due their split affecting the data.

 

Apparently, the performances between companies varied significantly.

 

13 out of 26 companies had over 10 percent jump in revenue.

 

Alcon Korea’s revenue last year skyrocketed by over 60 percent and showed the biggest increase rate among the companies.

 

The company’s record high sales performance was possible due to the revised eye drop pricing system surging the prescription volume in sodium hyaluronate-based Kainix eye drop.

 

Their operation profit finally turned around and generated surplus after three years in the red.

 

Both sales revenue and operating profit in AbbVie Korea showed 43 percent surge.

 

The hepatitis C virus (HCV) treatment Mavyret, released in the fourth quarter of 2018, outdid other competitors and took up 80 percent of the total HCV prescription market.

 

The treatment has expanded the business for AbbVie and improved profitability in the market.

 

The revenue growths in Novo Nordisk (24.5 percent), Sanofi-Aventis Korea (17.7 percent), Janssen Korea (17.5 percent), Lundbeck Korea (15.9 percent), Teva-Handok (15.5 percent), Roche Korea (15.5 percent) and AstraZeneca Korea (14.6 percent) were recorded relatively high.

 

Due to the effect of Pfizer Korea’s split-off, Novartis Korea has topped the multinational pharmaceutical sales revenue rank after seven years since 2012.

 

Marked at 493.4 billion won, Novartis Korea’s revenue last year was 4.1 percent more than the year before.

 

For the first time in Korea, Novartis has generated almost 500 billion won with new line-ups like chronic heart failure treatment Entresto and antipsoriatic Cosentyx firmly taking roots in their respective markets, while the company’s major line-ups line macular degeneration treatment Lucentis, ARB-based hypertension treatment Exforge and leukemia treatment Glivec maintained their growth in revenue.

 

Also maintaining two-digit revenue growth for another consecutive year, AstraZeneca Korea’s annual revenue last year has generated over 400 billion won for the first time in Korea.

 

Top profit-making multinational pharmaceutical companies in Korea based on last year’s revenue (Unit: KRW 100 million) Source: Financial Supervisory Service

On the other hand, most of the companies without other means of revenue source besides their off-patent drugs have experienced a steep fall in operating profit.

 

The operating profits of 15 out of 28 companies either fell or maintained the deficit, which means one out of two multinational pharmaceutical companies in Korea is struggling to make profit.

 

Janssen Vaccines that used generate over 300 billion won annually, manufacturing and selling vaccines, has made no profit in Korea last year.

 

Marking operating loss at 31.6 billion won last year, the company has recorded four consecutive years of deficit.

 

The company’s main source of revenue has been cut as the demands on hepatitis B virus vaccine Hepavax-Gene and pentavalent vaccine Quinvaxem took a drastic fall.

 

Although excluded from the analysis, Pfizer Korea’s sales volume has halved as it underwent a split-off with Pfizer Upjohn Korea.

 

Spinning off an off-patent drug business sector, Pfizer Korea has generated 395.7 billion won last year with 7.2 percent increase from the year before, leveling neck and neck with Bayer Korea (374.1 billion won).

 

Pfizer Korea’s performance contrasted with Pfizer Upjohn Korea that recorded operating loss of 1.1 billion won and operating profit of 5.4 billion won in the first year of the split.

 

In last year, Kowa Korea Company has made 18.2 percent less than the year before.

 

Ruling out Janssen Vaccine making no profit at all, Kowa Korea Company has made the least amount of sales volume.

 

Their operating loss was at 1.8 billion won, turning back into the red after a year in the black.

 

GlaxoSmithKline Consumer Healthcare Korea has stagnated as its revenue and operating profit respectively have dropped by 11.6 percent and 9.7 percent drop, compared to the year before.

 

Against the year before, last year’s operating profits were dropped by over 20 percent in Novartis Korea (85.8%), Bayer Korea (40.9%), Boehringer Ingelheim (24.7%), Novo Nordisk (33.7%), Kyowa Kirin Korea (35.%) and Sandoz Korea (84.7%).

 

Both Roche Korea and Merck were turned into the red, whereas Menarini Korea continued to stay in the red.