Handok Chairman Kim Young-jin, ETC/OTC decision successful?

[팍스넷뉴스 최홍기 기자] Handok Chairman Kim Young-jin (Photo) pays off. Industry analysts say Handok, which has been growing steadily for several years, is raising expectations for improving profitability by focusing on ETC rather than the health functional food business under Chairman Kim Young-jin.

According to industry sources on the 28th, Handok recorded 9.4 billion won in operating profit on a standalone (provisional) basis in the third quarter, up 11% from the same period last year. During the same period, sales increased 9.8% to KRW 147.1 billion, renewing an all-time high every quarter.

This performance is interpreted as a result of increased sales focusing on the growth of the main prescription and over the counter (OTC) drugs.

First of all, prescription drugs recorded 89.4 billion won in sales in the third quarter, up 7.8% from the previous year. Among them, Tenelia, which is used as a diabetes treatment, recorded sales of KRW 11.3 billion, up 0.4%, and its market share rose from 7.7% to 8.1%. Soliris/Ultomyris sales increased 6.8% to 29 billion won. In the case of defitellio (severe hepatic venous occlusion), it was recorded that 2.2 billion was won, an increase of 41.5%.

OTC drugs also rose 8% to 19.4 billion won in sales. The company explained that the strong sales of the core brands Ketotop (26.5%) and Medical Nutrition (8.8%) are largely affected.

This achievement is the result of the management policy of Chairman Kim Young-jin. This is because the company’s performance has also increased as the competitiveness of its current core business has improved.

In fact, Handok has continued to grow without a standstill. Sales grew to 473 billion won in 2019, 503.6 billion won in 2020, and 517.6 billion won last year, while operating profit showed a steady flow to 27.5 billion won, 28.4 billion won, and 28 billion won. Even the net profit was not spared from falling. Net profit last year was just 3.3 billion won, down 87.8 percent from the previous year. This is the lowest since it recorded a net loss of 7.4 billion won in 2016.

In this situation, Chairman Kim has set a policy to continuously improve competitiveness in its core business, such as prescription drugs, through open innovation. Similarly, when former CEO Jo Jung-yeol, who had previously diversified his portfolio focusing on the health functional food business, resigned in 2020, he made the decision to turn to strengthening the business’ capabilities current pharmacist instead of Ki-sik Geon. Handok’s pharmaceutical business accounts for 60-70% of sales, and the plan was to improve competitiveness by using over-the-counter drugs such as Ketotop and Festal as well as prescription drugs such as Tenelia. Likewise, Chairman Kim joined Sanofi-Aventis Korea to continue expanding the pipeline, including domestic sales of ‘Lenvela’, a hyperphosphatemia treatment, from this year onwards.

In addition, Chairman Kim expressed his plan to expand the innovation platform for new drug development while strengthening research and development capabilities and infrastructure with the completion of the ‘Handok Future Complex’ in May this year.

However, the dry food business, which is growing negatively, is still a task to solve. Handok’s dry food business recorded sales of 15.9 billion won (3.6% of total sales) in 2018, then went downhill to 12.7 billion won in 2019, 8.4 billion won in 2020, and 7.6 billion won last year. In the third quarter of this year alone, it recorded 1.4 billion won, down 13.9% from the previous year, and its accumulated sales remained at 4.4 billion won.

An official from Handok said, “Despite the termination of the contract with Culturerel, we will speed up the process of normalizing the dry food business as the sale of ReadyQ Drink, which is a hangover remedy, is growing by 70%.”

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