[Edaily Reporter KIM SUNG-JIN ] Changes in the pharmacy distribution market are emerging as new business opportunities for Original Design Manufacturer (ODM) companies. This is because pharmacy distribution platforms are expanding their business scope by developing private label (PB) products and engaging in direct sales. As companies with distribution networks focus on product planning and sales while outsourcing formulation development and production, ODM companies are gaining attention.

RPbio Inc. is expanding the formulation technology it has accumulated through the pharmaceutical manufacturing process to health functional foods, while simultaneously increasing the supply of new products to its existing pharmaceutical company clients. As the utilization rate of its production facilities rises, interest is growing in the growth potential of its technology-based ODM business.

Pharmacy Platforms: Beyond Distribution to Private Brands… The Growing Importance of Formulation Technology

According to the pharmaceutical and biotech industry on the 23rd, domestic and international pharmaceutical distributors are diversifying their businesses based on their pharmacy sales networks. In South Korea, the moves by Baropharm, a pharmacy integration platform company, are drawing attention. Baropharm operates an ordering platform used by more than 90% of pharmacies nationwide. Moving beyond its role as a pharmaceutical order intermediary, the company is expanding into direct purchasing and its own brand business, thereby pursuing a diversified revenue model that leverages its distribution network.

Baropharm operates the health functional food brand “Ourpharm” and, through its subsidiary CHD Pharmaceuticals, has also launched “Levicle,” a cosmetics brand exclusively for pharmacies. In May, it acquired the pharmaceutical manufacturer CHD Pharmaceuticals, establishing a business structure that integrates product development, production, and distribution.

Celltrion, a major domestic biosimilar company, also plans to expand product sales by utilizing the distribution network of the French healthcare company Gifre, with which it recently completed a merger. Celltrion intends to leverage Gifre’s sales network of approximately 9,000 pharmacies and its hospital supply chain. Through the acquisition of Gifre, Celltrion has secured over 140 types of over-the-counter (OTC) drugs, pharmacy-exclusive (DM) drugs, and dietary supplements as new revenue streams.

As pharmaceutical distributors expand their scope beyond simple intermediation to directly plan and sell products, the role of manufacturers is also expected to change. This is because companies with their own distribution networks need not only stable production capacity but also the capability to develop new dosage forms that meet market demand in order to expand their product portfolios.

In particular, for over-the-counter drugs and dietary supplements, product stability, ease of use, and shelf life are key factors determining competitiveness. According to the ODM industry, even when using the same ingredients, a product’s size, dissolution characteristics, and storage stability can vary depending on the manufacturing method and dosage form.

27 Patents, 97% of OTC Sales from Soft Capsules… Capacity Utilization Also Rising

RPbio Inc. is a company that demonstrates the competitiveness of this technology-driven ODM business. Founded in 1983 as a joint venture with the U.S.-based RP Scherer, RPbio Inc. has accumulated over 40 years of expertise in soft capsule manufacturing. The company currently holds 27 registered patents and has 29 patent applications pending.

A representative technology is “New Neosol,” which improves the dissolution characteristics of poorly soluble drugs. RPbio Inc. explained that using this technology can increase the drug release rate by up to 2.9 times compared to existing formulations and reduce capsule size by up to 30%.

The company has also secured actual commercialization cases. RPbio Inc. developed a soft capsule formulation by applying its proprietary solubilization technology to the antihistamine fexofenadine. The company supplies this formulation to three major pharmaceutical companies: SKCHEMICALS’ “Nose-Al Soft Capsules,” GC Biopharma Corp.’s “Allerjet Soft Capsules,” and CHONGKUNDANG’s “Cool Nose F Soft Capsules.”

This structure allows the company to produce products under different pharmaceutical brands using a single formulation technology. According to the company, cumulative production of this product line exceeded 28 million units within the first six months of its launch in 2024. Recently, the company completed a 24-month long-term stability test for 30-capsule bottle packaging of fexofenadine soft capsules and has begun expanding its packaging options.

This technology-driven manufacturing capability is also reflected in production performance. RPbio Inc.’s utilization rate for its over-the-counter (OTC) drug production facilities was 60% last year but rose by 21 percentage points (p) to 81% in the first half of this year. Considering that the utilization rate was 51% in 2024, this indicates a trend toward higher utilization of production facilities.

Production volume has also increased. In the first half of this year, over-the-counter drug production totaled approximately 452.48 million capsules, reaching 67.6% of last year’s annual production volume of approximately 669.14 million capsules in just one half-year.

Of the 32.9 billion won in over-the-counter drug sales in the first half of this year, soft capsule sales totaled 32.0 billion won, accounting for approximately 97% of the total. This indicates that RPbio Inc.’s pharmaceutical business is focused on soft capsules. In the health functional food business as well, the production facility utilization rate reached 93%. Sales of health functional foods in the first half of this year totaled 41.9 billion won, surpassing over-the-counter drug sales.

RPbio Inc. is expanding the formulation technologies it has secured in the pharmaceutical market into the health functional foods sector. A prime example of this is “New Neogel.” This technology utilizes a special plasticizer to prevent leakage from soft capsule coatings and can extend the shelf life of products to up to 36 months, depending on the product. This significantly reduces the burden of inventory management, product returns, and disposal.

RPbio Inc. official stated, “Having accumulated the experience required for technical reviews and securing production processes when developing new formulations, we will leverage our existing development and manufacturing platforms to meet our clients’ product development needs.”