Korea United Pharm, a South Korean mid-sized pharmaceutical company, draws attention from investors on steady and robust earnings growth driven by its focus on modified drugs. Korea United Pharm stocks closed the Tuesday session up 2.15 percent at 21,300 won. Over the past two months from July 26, foreign investors’ net buying of the stock came to 18.8 billion won ($16.5 million). The share price gained 8.3 percent in the same period. Foreign ownership of the stock jumped from 12.81 percent at the beginning of the year to 19.31 percent. For them, it posed as attractive and affordable mid-cap pharma stock with stable sales and growth. The stock closed Wednesday 0.5 percent lower from the previous session at 21,200 won ($18.6).

Korea United Pharm, founded in 1987 by CEO Kang Deok-young, a salesman-turned-business owner, is focusing on modified drugs that come available with reduced side effects and improved dosing convenience.

A modified drug has a shorter time to market launch than a novel drug with less R&D costs. It creates a niche market suitable for small and mid-sized pharmaceutical companies which have limited access to R&D resources. There is also a technology gap that cannot be easily filled by Chinese or Indian competitors. It is more value-added than generics.

The company spent more than 10 percent of revenue on R&D in the recent three years, leading to the launch of six new modified drugs from 2010 to now, including NSAID Cilozan CR Tab., anticoagulant Cilostan CR Tab. and gastrointestinal motility modulating drug Gastin CR Tab. Two of them were launched in the first half of this year. These products are threatening the realm of their originators with fast growth. Korea United Pharm plans to launch a total of 30 modified drugs by 2021.

The company made its first overseas shipment of modified drugs this year through a multinational pharmaceutical company. As of end-June, exports account for about 11 percent of total revenue. Most of its sales come from the domestic market. The company’s short-term goal is to become more active in out-licensing and overseas clinical trials under a partnership with multinational pharmaceutical companies.

Korea United Pharm said it also aims to build a local distribution system where its overseas entities distribute medications from its overseas plants in the future.

The company reached 176.9 billion won in sales and 27.1 billion won in operating profit last year. Analysts say the company may hit a new revenue milestone of 200 billion won this year with an operating profit of 30.5 billion won.

By Chung Woo-sung

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