[Edaily Reporter Kim Seung-kwon ] PharmaResearch(214450) The growth rate of domestic sales of medical devices (including Rejuran and Conjuran) plummeted from 93.5% to 6.2% for the first time in five quarters. The industry views this as confirmation of concerns that had previously been treated as mere speculation regarding a “peak-out” (passing the peak). Although the company’s total revenue for the same period rose 27.1% year-over-year, setting a record high, the primary driver of this growth was not high-margin medical devices centered on Rejuran, but rather the cosmetics division.

The company attributed the decline in growth to a “base effect resulting from the sharp surge in medical tourists visiting Korea in 2025.” For this base effect logic to hold, demand would need to decline in 2026. However, in the first half of this year, the number of visitors to Korea rose by 21.3%, and foreign card spending increased by 50.8%. Demand has not slowed. In contrast, during the same period, sales of “Lituo,” a competing extracellular matrix (ECM) product, grew 3.7-fold, from 6.1 billion won to 22.3 billion won. ECM’s market penetration rate within the skin booster market is also projected to jump from 3.9% to 17.3%. These concerns over slowing growth are being fully reflected in the stock price decline. On the day the earnings were announced, the stock price actually slipped. PharmDaily compared the company’s explanation with actual market data to verify the current situation facing PharmaResearch.

Company: “A base effect due to last year’s increase in tourists visiting Korea”?...Tourist numbers are rising further

Regarding the slowdown in Rejuran’s domestic growth rate, PharmaResearch countered, “This is because we experienced significant growth in 2025, driven by an increase in medical tourists visiting Korea and rising demand for cosmetic medical procedures.” They added, “The recent year-over-year (YoY) decline in growth is not due to a decline in product competitiveness, but rather a normalization process resulting from a high base caused by the previous year’s strong growth and the rapid expansion of sales volume over a short period.” The company argues that the market entry of products made from other materials does not constitute a competitive threat that directly replaces Rejuran or erodes its demand.

In fact, according to Ministry of Health and Welfare statistics, the number of foreign patients visiting Korea in 2025 reached 2.01 million—a 72% increase from the previous year (1.17 million)—marking an unprecedented boom. However, an analysis of key macroeconomic statistics revealed gaps in the company’s explanation. The “base effect” argument only holds if one assumes that “there was a boom last year, and that boom has disappeared this year.” However, medical tourism indicators in the first half of this year did not slow down; on the contrary, they accelerated.

The number of foreign tourists visiting South Korea in the first half of this year reached 10.71 million, a 21.3% increase compared to the same period last year, setting a new record high for a half-year period. In particular, foreign card spending by these tourists in South Korea amounted to a staggering 10.0389 trillion won, a 50.8% surge compared to the same period last year. Although the influx of foreign visitors and their spending—leading indicators that drive demand for cosmetic procedures—have continued to grow at double-digit rates this year, only PharmaResearch’s domestic medical device growth rate has slumped to 6.2%. While the number of tourists visiting Korea cannot be equated with the number of foreign patients, it is an undeniable fact that the trend of foreign tourists undergoing cosmetic procedures remains unabated.

Of course, when viewed on a two-year cumulative basis, the company’s explanation does have some merit. In the second quarter of 2026, absolute domestic medical device sales reached 64.5 billion won, a 10.4% increase from the previous quarter (58.4 billion won), thereby avoiding negative growth. Compared to the second quarter of 2024 (31.4 billion won), this represents 105.5% growth over two years, with an average annual growth rate of 43.4%.

However, what the market is focusing on is the slowdown in the “growth rate,” which goes beyond the sheer scale of revenue. Calculations based on cross-referencing growth rates with finalized figures from the semi-annual report indicate that absolute revenue had already declined from the previous quarter in the third quarter of 2025, signaling an entry into a period of stagnation. Industry observers note that if sales growth of the company’s products cannot keep pace with the rapid influx of visitors to Korea, this could serve as evidence that PharmaResearch is not capturing the full share of the expanding skin booster market, but rather that this growth is being dispersed to external players.

A closer look at the detailed financial metrics also reveals clear signs of “cut-throat marketing” aimed at defending sales. PharmaResearch’s operating profit margin for the second quarter of this year was 37.20%, down 2.54 percentage points from 39.74% in the same period last year. This is not a matter of rising costs. During the same period, the gross profit margin actually improved, rising from 76.24% to 76.97%. The selling, general, and administrative (SG&A) expense ratio was the contributing factor. The SG&A ratio jumped by 3.27 percentage points, from 36.50% to 39.77%. Advertising and promotional expenses, which had surged 43.5% year-over-year in the first quarter, rose another 26.5% in the second quarter to 22.77 billion won, dragging down profitability.

Cosmetics filled the gap in growth. To be precise, however, second-quarter cosmetics sales totaled 60.2 billion won (16.6 billion won in domestic sales and 43.6 billion won in exports), representing year-over-year increases of 47% and 124%, respectively. As the revenue structure shifts from medical devices to cosmetics, concerns are emerging regarding potential structural margin erosion.

A PharmaResearch official stated, “Domestic medical device sales in the second quarter of 2026 grew by more than 10% compared to the previous quarter, continuing the upward trend in sales volume,” adding, “We do not view the market entry of products made from other materials as a factor that directly replaces Rejuran or erodes existing demand.”

“Demand Diversification Inevitable Due to ECM Growth”… PharmaResearch’s Unrivaled Position Shaken

While PharmaResearch has drawn a line, insisting that “this is not market erosion,” the securities industry interprets that the skin booster market is already undergoing a period of drastic upheaval. The most threatening product category is the ECM skin booster line, which is based on human tissue and rebuilds skin structure.

The strong performance of L&C BIO’s flagship product, “Rituo,” is clearly demonstrated by the numbers. According to securities industry analysis, Rituo’s annual sales were just 6.1 billion won in 2025, but followed an upward trajectory, reaching 8.1 billion won in the first quarter of 2026 and 14.2 billion won in the second quarter. In the first half of the year alone, cumulative sales exceeded 22.3 billion won, marking a 3.7-fold increase in scale over the course of a year.

The most striking contrast lies in the magnitude of the increase itself. Lituo’s Q2 2026 revenue of 14.2 billion won is 3.8 times the year-over-year increase in domestic medical device sales (3.77 billion won) reported by PharmaResearch for the same quarter. Industry observers interpret this as evidence of the difference in newly generated market demand.

This shift in the market landscape has even turned profitability metrics on their head. L&C BIO successfully improved its financial health, with its operating profit margin on a standalone basis for the first half of the year jumping 20.5 percentage points from 7.1% the previous year to 27.6%. This trend stands in stark contrast to PharmaResearch, whose second-quarter profit margin turned downward.

The securities industry already seems to have accepted “market encroachment” as a fait accompli to some extent. EUGENE INVESTMENT & SECURITIES projected that the ECM penetration rate in the domestic skin booster market will rise from 3.9% in 2025 to 17.3% this year and reach 28% by 2027. Shinhan Investment & Securities projected that the ECM skin booster market size will grow from 9.9 billion won in 2025 to 172.9 billion won in 2027.

Kim Da-hye, an analyst at Hana Securities, stated, “Among skin booster products, autologous dermal ECM injections are growing rapidly due to positive consumer response,” adding, “Since ECM will inevitably分散 domestic demand, it is difficult to once again assign PharmaResearch a multiple (price-to-earnings ratio) based on its previously unrivaled market position.”

The competitive landscape is also evolving rapidly, with signs that supply bottlenecks are being resolved. Hugel, Inc. has acquired HANS BIOMED CORPORATION’s “Cell-D’em” and, after receiving approval from the Ministry of Food and Drug Safety (MFDS) to establish a tissue bank, has begun operating its own distribution network. L&C BIO is also expanding its production capacity, targeting 150,000 units per month by 2026 and 300,000 units per month by 2028. Given that the current ECM market is experiencing shortages due to limited supply rather than high demand, there is speculation that the pace of market penetration could accelerate even further starting in the second half of the year, once the expansion is complete.

Voices from the medical field also support this trend. A specialist with extensive clinical experience in skin regeneration analyzed, “The recently introduced ECM skin boosters offer excellent safety and satisfaction by acting as a scaffold that matches the actual skin structure, leading to a trend where both doctors and patients are switching to these products.”