Senobamate’s Rapid Growth in the U.S. Drives SK BIOPHARMACEUTICALS to Record-High Earnings SK BIOPHARMACEUTICALSstood out the most this week during the second-quarter earnings season. SK BIOPHARMACEUTICALS reported consolidated revenue of 247.4 billion won and operating profit of 97.1 billion won for the second quarter of this year. Revenue increased by 40.3% year-over-year, while operating profit rose by 56.9%, setting a new record for quarterly earnings.
This earnings growth was driven by expanding U.S. sales of Senobamate (U.S. brand name: Xcopri), a new epilepsy drug developed in-house. As sales volume grows, the company is now seeing the full effect of operating leverage, where fixed costs are offset by increased revenue. Second-quarter U.S. sales of Xcopri reached 224.4 billion won, a 45.6% increase from the same period last year. The number of prescriptions in the U.S. also reached approximately 143,000, an 8.4% increase from the previous quarter.
Senobamate’s sales growth is significant because it demonstrates that SK BIOPHARMACEUTICALS has established a profit-generating structure by directly marketing a new drug—one of the few among domestic biotech companies to have developed it in-house—in the U.S. This is because recurring product sales, rather than reliance on technology transfer upfront payments or milestone payments, are driving earnings growth.
The market is also paying close attention to the possibility that SK BIOPHARMACEUTICALS’ annual revenue this year could approach 1 trillion won.
Kim Seung-min, an analyst at MIRAE ASSET SECURITIES, said, “Key momentum drivers going forward include NDA approval for the Excofry suspension formulation, submission of sNDAs for PGTC and pediatric indications, and approval in Japan,” adding, “We expect U.S. approval of the suspension formulation early next year, and the goal is to submit the sNDAs for PGTC and pediatric indications by the end of this year.”
Controversy Over Generic Drug PriceReduction
from 53.55% to 45%From a regulatory perspective, the price reduction for generic drugs, which took effect this month, has emerged as a major issue. Starting on the 1st of this month, the government implemented a reform of the drug pricing system that lowers the base pricing ratio for generics and off-patent originator drugs from the previous 53.55% to 45%.
This reform marks the first significant adjustment to generic drug prices in 14 years, since 2012. However, rather than lowering the prices of drugs already listed in the National Health Insurance system all at once, adjustments will be made gradually through 2036, taking into account the date of listing and current drug prices. The revised pricing system will apply to new generics.
The tiered price reduction system—which lowers prices further as more drugs with the same active ingredient are launched—will also be strengthened. Previously, when the number of generics with the same active ingredient exceeded 20, the price of newly listed products was reduced by 15% from the previous lowest price; however, this threshold will now apply starting with the 13th product. The policy aims to restructure the system to curb the proliferation of generics and favor companies that invest in research and development (R&D) and ensure a stable supply of medicines.
The pharmaceutical industry is concerned about deteriorating profitability for small and medium-sized pharmaceutical companies, which rely heavily on generic drug sales. Domestic pharmaceutical companies have traditionally relied on a business model where they launch multiple generics to secure a stable cash flow, which is then used to cover the costs of new drug development; however, lower drug prices could reduce the profits they can generate from existing products.
Of course, some analysts suggest that companies with differentiated products may find themselves in a relatively advantageous position. This is because the government plans to grant drug price markups to innovative and semi-innovative pharmaceutical companies that have contributed to R&D achievements and supply stability.
