[Edaily Reporter KIM JI-WAN ] Meritz Securities assessed that, despite Hanwha Chemical’s ( Yuhan(000100)) surprise third-quarter earnings, the growth rate of global royalty revenue from the new anticancer drug “Lecraza” (U.S. product name: Razcluz) has fallen short of expectations. However, the firm maintained its “Buy” investment rating, highlighting the expansion of active pharmaceutical ingredient (API) orders and the potential for improved earnings at Hanwha Chemical.

In a report titled “Yuhan Corporation: Adjusting Royalty Expectations, Focusing on Yuhan Chemical’s Growth,” published on the 29th, Meritz Securities lowered Yuhan Corporation’s fair value from 120,000 won to 110,000 won, a downward revision of 8.3%.

Yuhan Corporation’s third-quarter consolidated revenue reached 604.3 billion won, a 6.0% increase year-over-year. Operating profit rose 50.9% to 33.2 billion won, exceeding market expectations. Revenue growth in the pharmaceutical and healthcare businesses—up 4.8% and 32.7%, respectively—drove the improvement in earnings. Meritz Securities projected Yuhan Corporation’s revenue for this year at 2.386 trillion won and operating profit at 137.9 billion won. For next year, it forecast revenue of 2.5667 trillion won and operating profit of 137.9 billion won.

However, royalty revenue from global sales of Lecraza fell short of expectations. Although third-quarter running royalties for Lecraza rose to 7.5 billion won compared to the previous quarter, analysts note this is insufficient to support the company’s high valuation.

Kim Jun-young, an analyst at Meritz Securities, commented, “The pace of growth in Lecraza’s royalties remains slow,” adding, “This is insufficient to justify the high valuation.”

This does not mean that Leqraza’s global growth potential has been curtailed. Analysts project that royalty growth will continue next year, driven by the expansion of prescriptions in the U.S. for the subcutaneous (SC) formulation of Librivant—a co-administered drug—and the increasing number of countries granting global approval.

In particular, the final overall survival (OS) results from the global clinical trial (MARIPOSA), expected to be released in 2027, are a key variable. The assessment is that if the drug’s ability to improve survival is further demonstrated, it could provide a strong boost to the expansion of global prescriptions.

On the other hand, the active pharmaceutical ingredient (API) business, centered on Hanwha Yuhan, was assessed as a new growth driver. Hanwha Yuhan secured API supply contracts totaling 475.8 billion won this year. Accordingly, revenue growth from overseas operations is expected to gain momentum starting in the fourth quarter.

Analyst Kim predicted, “The expansion of Contract Development and Manufacturing Organization (CDMO) revenue driven by Hanwha Chemical’s API orders, along with the increase in global prescriptions for Lecraza, will serve as key drivers of future earnings and corporate value.”