[Edaily Reporter KIM JI-WAN ] With JETEMA Co.,Ltd.(216080)having completed its application for marketing authorization in China for the botulinum toxin “JTM201,” the timing for revenue recognition from a supply contract worth approximately 550 billion won is now within sight. The company expects the Chinese approval process to take typically between 8 months and 1 year. If the approval proceeds as planned, sales in China are expected to expand gradually, starting with first-year supplies worth around 20 billion won in the second half of next year.

Notably, it has been confirmed that approximately 80% of the 10-year supply contract signed between JETEMA Co.,Ltd. and its Chinese partner consists of guaranteed minimum purchase volumes. Based on a simple calculation using the contract value at the time of signing—approximately 552 billion won—this amounts to around 440 billion won.

According to JETEMA Co.,Ltd. on the 13th, the company recently submitted a marketing authorization application to China’s National Medical Products Administration (NMPA) for “Zetema TheToxin Injection 100 Units (JTM201).” The indicated use is the improvement of moderate to severe glabellar lines.

Chinese Clinical Trial with 506 Participants Completed… Approval Review Expected to Take 8 Months to 1 Year

This marketing authorization application was based on the results of clinical trials conducted in China. The trials involved 506 Chinese participants and compared the efficacy and safety of JTM201 with those of an original botulinum toxin product in reducing glabellar wrinkles. The Phase 3 clinical trial for JTM201 was conducted following approval by the China National Medical Products Administration (NMPA) on November 14, 2023.

JETEMA Co.,Ltd. also shortened the development timeline during the Chinese clinical trial process. Although the company had originally planned to conduct Phase 1 and 2 clinical trials, it proceeded directly to Phase 3 without conducting a separate Phase 2 trial following consultations with Chinese regulatory authorities. Subsequently, through a large-scale clinical trial, the company secured the efficacy and safety data required for the marketing authorization application.

According to the clinical results, the improvement rate based on investigator assessment reached 77.8% four weeks after administration. The effect was also shown to be maintained in more than 60% of patients at the 16-week mark.

JETEMA Co.,Ltd. official stated, “While we estimate the actual review period for Chinese approval to be about eight months, we are conservatively anticipating about one year, taking into account the possibility of requests for additional information.”

JETEMA Co.,Ltd. anticipates that the PPQ (Process Performance Qualification) batch produced for marketing authorization can be converted into commercial inventory and sold following approval. However, it has been confirmed that the PPQ batch cannot be supplied to the market immediately.

JETEMA Co.,Ltd. official noted, “The volume produced through the PPQ batch can be sold after approval,” but added, “Since we need to finalize details such as the final packaging materials, the full-scale launch will take place after product approval.”

80% of 552 billion contract “committed”… First-year supply in the 20 billion range

The significance of the Chinese product approval lies in the fact that JETEMA Co.,Ltd. has already secured a large-scale, long-term supply contract for local sales.

In February 2022, JETEMA Co.,Ltd. signed a 10-year long-term contract with China’s Huadong Medical Aesthetics Biotechnology to supply JTM201 to the China, Hong Kong, and Macau regions. The contract was valued at approximately 552 billion won at the time. Since then, JETEMA Co.,Ltd. has received an initial down payment of $3.5 million (5 billion won) and milestone payments totaling $2 million (2.8 billion won).

Our investigation confirmed that approximately 80% of this amount consists of committed volumes with guaranteed minimum purchase prices. Based on a simple calculation using the contract amount, this equates to around 440 billion won.

JETEMA Co.,Ltd. official stated, “Approximately 80% of the total contract value consists of guaranteed orders.”

However, the structure does not guarantee the same level of annual sales immediately following approval. Initially, volumes are supplied to facilitate market entry, and the supply scale is then gradually increased as sales expand.

The company estimates first-year supply volume to be in the 20 billion won range.

JETEMA Co.,Ltd. official said, “I recall that the first-year volume was in the 20 billion won range,” adding, “The structure involves starting with an initial volume and then increasing it sequentially.”

Accordingly, if the Chinese approval process is finalized within about a year, the first shipment could take place around the second half of next year. Subsequently, as local sales gain momentum, the contribution of Chinese sales is also expected to gradually increase.

While simply dividing the contract value of 552 billion won by 10 years yields an average annual figure of 55.2 billion won, the company explains that the actual supply volume is structured to increase as the contract progresses from the early to the later years.

In particular, given that 80% of the total contract consists of guaranteed volumes, it can be assessed that the medium- to long-term revenue visibility for the China business is relatively high following approval. However, the actual scale and timing of revenue recognition may vary depending on the approval schedule and local sales conditions.

“We Won’t Compete on Price”… Targeting the Chinese Market by Prioritizing Quality

The Chinese botulinum toxin market has maintained high growth in the mid-to-high 20% range annually over the past few years, rapidly expanding into a market worth approximately 2 trillion won.

According to global market research firm Frost & Sullivan, the Chinese botulinum toxin product market grew from 1.9 billion yuan (397.7 billion won) in 2017 to 4.6 billion yuan (963.0 billion won) in 2021, recording an average annual growth rate of 25.6% during that period. Frost & Sullivan estimated the size of China’s botulinum toxin market at 12.6 billion yuan (2.6377 trillion won) last year and projected it to expand to 39 billion yuan (8 trillion won) by 2030.

According to Zhiyan Consulting, a Chinese industry research firm, the size of the Chinese botulinum toxin market expanded from 1.9 billion yuan (397.7 billion won) in 2017 to 9.9 billion yuan (2.0724 trillion won) in 2024. The compound annual growth rate (CAGR) during this period reached 26.6%.

Going forward, attention will focus on how JETEMA Co.,Ltd. positions itself in the highly competitive Chinese botulinum toxin market.

Since both local and global botulinum toxin products are already present in China, a late entrant must demonstrate competitiveness in areas such as price, quality, and local distribution networks to secure market share.

JETEMA Co.,Ltd. plans to prioritize product quality over a low-price strategy that involves entering the market with significantly reduced prices.

JETEMA Co.,Ltd. official stated, “We are confident in our product quality, so we have no plans to sell at low prices in China,” adding, “This applies to our filler business as well; we are not taking an approach that simply involves lowering prices to drive sales.”

The distribution network of Huadong Aesthetics, which will handle local sales, is also seen as a key strength in the process of entering the Chinese market. This is because JETEMA Co.,Ltd. can leverage its local partner’s sales network without the burden of having to build its own sales network from scratch.

Ultimately, whether JETEMA Co.,Ltd. secures product approval in China is expected to be a turning point for its toxin business. Once approval is granted, the company will move beyond the clinical development phase—which has been ongoing for several years—and enter the commercialization phase, where large-scale, long-term supply contracts will be converted into actual revenue.

A company official stated, “Looking at the full 10-year period, 80% of the contract value is secured as guaranteed volumes,” adding, “Barring any major issues, the structure is such that supply under the contract will proceed sequentially.”