[Edaily Reporter Kim Jinsoo ] Hugel, Inc.(145020)will begin direct sales of its botulinum toxin product “Retivo” in the U.S. starting this July, marking a strategic shift in its U.S. business operations. Hugel, Inc. plans to establish a direct sales system in the U.S. to simultaneously boost both revenue and profitability, with expectations of generating over 70 billion won in sales this year and over 200 billion won in U.S. sales the year after next.

According to Hugel, Inc. on the 25th, the company is now operating a dual sales strategy—combining indirect sales through local distributors, which it has relied on to date to enter the U.S. market, with direct sales, which began in earnest this month.

The U.S. is the largest market, accounting for about half of the global botulinum toxin market. Last year’s market size is estimated at approximately 4 trillion won. It is reported that established premium brands such as Allergan, Galderma, and Merz hold about 80% of the U.S. botulinum toxin market. The remaining 20% or so is shared among latecomers.

Although established premium brands dominate the market, analysis suggests that the situation for latecomers is not unfavorable. This is because the U.S. Food and Drug Administration (FDA) has set high regulatory barriers, resulting in only six products currently being approved.

Retivo is also off to a smooth start. Last year, its first year in the U.S. market, the company began sales through its local distribution partner, Beneve, and recorded a 3% market share. Based on Beneve’s supply price, this represents a sales volume equivalent to 35 billion won. Retivo’s U.S. retail price is about 70% of that of premium toxin brands, and the company plans to secure market share by leveraging its price competitiveness.

What Are the Benefits of Direct Sales in the U.S.?

The biggest difference when switching from indirect to

direct sales

is profitability. The unit price for direct sales

in the U.S.

is approximately twice as high as the supply price for indirect sales to U.S. distributors, and three to four times higher than in other export markets. This means that even when selling the same volume, profitability is significantly greater.

Hugel, Inc. maintains relatively low manufacturing costs because the entire process—from raw materials to the final product—is carried out in-house without outsourcing. As of last year, Hugel, Inc.’s gross profit margin stood at around 70%; for exports excluding the U.S., it exceeded 80%, while for U.S. operations, it reached over 90%. If the share of U.S. sales expands to about 30% by 2028, the gross profit margin is expected to rise from 77% to 82%.

The impact of Hugel, Inc.’s direct sales in the U.S. market is expected to be fully reflected in its financial results starting next year. Estimated revenue from direct sales in the U.S. this year is 34.5 billion won, and this figure is projected to grow to 210 billion won by 2028. During the same period, the selling, general, and administrative (SG&A) expense ratio is estimated to decrease from 116% to 54%.

This year, the first year of direct sales, a net loss with an operating profit margin of -16% is expected due to the burden of fixed costs associated with establishing the sales network. However, in 2027, when the proportion of direct sales exceeds 50%, the company is expected to return to profitability with an operating profit margin of 26%, rising to 46% by 2028.

Hugel, Inc. aims to achieve a 10% market share in its third year of direct sales in the U.S. and expects to reach a combined total of 270 billion won in direct and indirect sales during that period. The securities industry forecasts that as U.S. sales grow rapidly, Hugel, Inc.’s total revenue will rise from 425.1 billion won last year to 525.1 billion won this year, 641.6 billion won next year, and 785.3 billion won in 2028.

Hugel, Inc. is also strengthening its local marketing efforts in the U.S. to maximize the benefits of direct sales. The goal is to build trust among local healthcare professionals and accumulate clinical evidence and real-world treatment data. Starting in the second half of this year, Retivo will launch aggressive direct marketing campaigns, including the collection of extensive clinical and real-world data.

In fact, on the 21st of this month, Hugel, Inc. announced a major expansion of its U.S. operations and launched a dedicated direct sales organization for Retivo along with a field medical affairs team. The company also plans to launch “K-TOX,” a consumer campaign highlighting Korea’s innovations in aesthetics, and increase investment in supporting medical conferences and gathering clinical evidence. Sales are projected to grow rapidly after the company has built trust and accumulated data over the course of about a year.

The company recently appointed CARRY Strom, former Global President at Allergan, as President and Global CEO—a move aimed at increasing market share and sales in the U.S. market.

Relationships with existing distribution channels remain a variable. Hugel, Inc.’s contract with local distributor Benev is reportedly a three-year agreement starting in July 2024, and Hugel, Inc. is expected to gradually increase the proportion of direct sales even during the contract period. Analysts suggest there is a possibility the company will transition to a fully direct-sales model after the contract expires.

A Hugel, Inc. official stated, “No specific decision has yet been made regarding how much the proportion of direct sales will be increased in the future,” adding, “We plan to evaluate factors such as the results achieved through direct sales and whether there are any issues with our partner contracts.”