1 out of 2 multinational firms saw SG&A expenses ratio↓

SG&A expenses from 30 major multinational pharmaceutical companies’ Korean subsidiaries have been reported

SG&A expenses dropped in 13 out of 30 companies…16 companies had reduced sales to SG&A expenses ratio

Kyowa Kirin Korea's severance payment totaled KRW 26 billion…ERP at Janssen·AZ impacted the increase in SG&A expenses

It was reported that multinational companies reduced their selling, general, and administrative (SG&A) expenses (hereafter referred to as SG&A expenses).

 

Analysis suggests that the recent medical dispute in South Korea impacted the sales and R&D activities.

 

In contrast, pharmaceutical companies with increased SG&A expenses saw a surge in severance payment ratio due to early retirement plans (ERP).

 

According to the Financial Supervisory Service (FSS) on April 24, SG&A expenses for 30 major multinational pharmaceutical companies’ Korean subsidiaries totaled KRW 1.8373 trillion last year, a 0.8% increase from the year before.

 

Among those 30 companies, 17 increased their SG&A expenses, while 16 saw their expense-to-revenue ratios decline.

 

Selling, general, and administrative (SG&A) expenses of major multinational companies in KOR (unit: KRW 1 million)

Lilly Korea’s SG&A expenses amounted to KRW 37.2 billion, down 2% year-on-year (YoY), and its expense to sales ratio declined by 6%.

 

R&D expenses, which include academic research and ongoing trial costs, dropped 25%, from KRW 6.4 billion in 2023 to KRW 4.7 billion last year.

 

As Lilly supplies new drugs for oncology and biologics to tertiary hospitals, medical-government disputes significantly affected Lilly's R&D expenses.

 

MSD Korea cut its SG&A expenses by 11%, from KRW 104.9 billion in 2023 to KRW 93.6 billion.

 

The company had a significant reduction in R&D spending.

 

MSD Korea's research expenses dropped 48% from KRW 9.2 billion to KRW 4.8 billion.

 

Both lower research budgets and workforce reduction likely affected this shift.

 

GSK Korea also reduced its current research expenses by 72%, from KRW 8.9 billion to KRW 2.5 billion, and Novartis Korea, which had the highest SG&A expenses last year, saw a reduction in SG&A expenses from KRW 29.6 billion to KRW 28.0 billion, a 5% decrease.

 

Salaries spending impacted changes in SG&A expenses Changes in salaries, severance payments, and retirement benefits, also affected expense changes in several companies.

 

AstraZeneca Korea's SG&A expenses fell 26% to KRW 107.5 billion.

 

Its expense ratio dropped 5% from that of 2023.

 

The company's base salaries, retirement benefits, severance, and welfare outlays all decreased.

 

AstraZeneca conducted an ERP following the withdrawal of Forxiga from South Korea in 2023.

 

The severance costs amounted to KRW 25.7 billion in 2023 but declined to KRW 0.081 billion last year.

 

The total payroll dropped 14% from KRW 37.1 billion to KRW 31.8 billion.

 

In contrast, Kyowa Kirin Korea's ERP drove SG&A expenses higher.

 

The company recorded a total payroll of KRW 8.2 billion, and severance payouts amounted to KRW 26.1 billion.

 

The payroll declined by 15%, but severance payouts surged by 1,410%.

 

Kyowa Kirin Korea conducted an ERP last year.

 

The company sold its Asia-Pacific unit last year, China operations to Hong Kong's Winhealth Pharma, and regional promotional and distribution arms to DKSH last month.

 

Janssen Korea's SG&A expenses increased due to increased payroll and retirement benefits.

 

The company saw a 13% rise in SG&A expenses from the previous year to KRW 88.0 billion.

 

Its total payroll rose 9% to KRW 27.4 billion, and retirement benefits increased 24%.

 

As the company's KRW 3.8 billion severance cost from 2023 was reflected on the audit report, the SG&A cost surged.