Kim Jinsoo Alteogen Inc.(196170) Huons Global Co., Ltd.(084110), , and Huons Co., Ltd. Celltrion is actively utilizing SC formulation conversion technology, including by developing SC-formulated drugs in-house and marketing them in the United States. CHONGKUNDANG(185750)

However, as the U.S. government has decided to apply drug price reductions to subcutaneous (SC) formulations as well, domestic pharmaceutical and biotech companies possessing K-subcutaneous injection technology are closely monitoring the potential impact this may have on them.

According to the pharmaceutical and biotech industry on the 10th, the U.S. Centers for Medicare & Medicaid Services (CMS) announced on the 5th that it would include certain combination formulations—which alter the route of administration by combining hyaluronidase or similar substances with existing drugs—in price negotiations on the same basis as the original drugs.

The U.S. government enacted the Inflation Reduction Act (IRA) in 2022, enabling it to negotiate drug prices directly with pharmaceutical companies for high-cost drugs that had been sold exclusively for a certain period. In 2023, it selected the first 10 drugs subject to negotiation and began applying the reduced prices this year.

Until now, pharmaceutical and biotech companies could delay the timing of price negotiations by successfully developing subcutaneous (SC) formulations—such as by adding hyaluronidase to intravenous (IV) medications—as these were classified as separate drugs. However, the U.S. Centers for Medicare & Medicaid Services (CMS) began reviewing revisions to the relevant regulations in May of last year; following the release of a proposed rule in June of this year, it finalized the regulations for SC-formulated drugs on the 5th.

Under the new regulations, IV and SC drugs that meet certain criteria—such as having the same marketing authorization holder—will be grouped together as a single entity for price negotiations. The new standards will apply starting with the selection of drugs for negotiations in 2027, and the actual reduced drug prices will take effect in 2029. Consequently, it is analyzed that drugs incorporating SC formulation conversion technologies developed by domestic pharmaceutical and biotech companies will be affected.

Alteogen Inc. Directly Affected… “SC Formulation Conversion Technology Remains Competitive”

Alteogen Inc. is expected to be the company most directly

affected

. MSD’s “Keytruda Qurex,” which utilizes Alteogen Inc.’s SC

conversion technology

, HYBE, is already on the market in the United States. Sales for the third quarter of this year reached $830 million.

MSD anticipates that the existing Keytruda will be selected for price negotiations in 2027 and will be subject to a price reduction starting in 2029. Analysts suggest that under these regulations, Keytruda Qurex is also likely to be affected by the price reduction at the same time.

In particular, since Alteogen Inc. has a revenue structure based on sales-linked royalties, it is expected to be affected by the price reduction. Additionally, while Alteogen Inc. can secure additional milestone payments upon meeting certain sales volume targets, if the growth rate of Keytruda Qurex sales slows due to the price reduction, the timing of achieving these milestones could be delayed.

However, Alteogen Inc. maintains that the benefits of patient convenience resulting from the switch to subcutaneous (SC) administration and the product’s differentiation based on its patents remain valid. The company believes that if actual sales volume and the SC conversion rate increase, this could partially offset the impact of the price reduction.

An Alteogen Inc. official stated, “Although the official discount rates for drugs subject to price cuts this year range from 38% to 79%, when rebates and other factors are taken into account, the actual impact on sales is expected to be generally within 20%,” adding “Keytruda SC also recorded sales of $830 million in the third quarter of this year, and MSD maintains its goal of expanding the share of SC administration in the U.S. to 30–40% by the end of 2027,” the official explained.

In particular, he noted, “The SC formulation enhances dosing convenience and product competitiveness, and can also contribute to extending market exclusivity through patents,” adding, “As demand from global pharmaceutical companies to switch to SC formulations is expected to continue despite stricter drug price reduction regulations, we plan to expand technology exports and commercialization.”

It Remains to Be Seen Whether Celltrion’s ‘Zimpentra’ Will Be Included

Unlike Alteogen Inc., Celltrion secures revenue by directly selling SC medications. A representative SC formulation currently sold by Celltrion in the U.S. is ‘Zimpentra.’ However, whether Zimpentra will be directly subject to these regulations will likely only be confirmed once more specific guidelines are issued.

Zimpentra is a subcutaneous (SC) formulation with the same active ingredient as Johnson & Johnson’s “Remicade.” According to the latest CMS regulations, it is understood that when an IV product and an SC product share the same marketing authorization holder, they are subject to the price reduction rules. Consequently, Zimpentra may not be subject to these price reduction regulations.

However, since “Inflectra”—for which Celltrion is the marketing authorization holder—and Zimpentra share the same active ingredient and marketing authorization holder, a more precise analysis of the impact will likely require the release of clearer regulations in the future.

Additionally, Celltrion has applied for European approval of “Herzuma SC,” which utilizes its proprietary hyaluronidase technology; if the company enters the U.S. market in the future, it may be subject to the new price negotiation regulations depending on the approval structure.

A Celltrion official stated, “Since the specific scope of application and conditions have not yet been finalized and announced, it seems premature to comment on specific responses. We need to examine the specific application criteria in the future,” adding, “We are constantly monitoring changes in healthcare policies and market conditions in each country worldwide, including the U.S., and implementing sales strategies that align with them; we plan to continue these sales strategies going forward.”

Huons Lab, CHONGKUNDANG, and Samsung Bioepis: Potential for Partial Adjustment in Technology Valuation

Domestic companies currently developing platforms for switching to subcutaneous (SC) formulations are also expected to be indirectly affected. Although this has no immediate impact on their financial performance, the value of their technology may decline because global pharmaceutical companies will find it harder to maintain exclusive pricing by circumventing drug price negotiations when adopting SC formulation conversion technology in the future.

Huons Co., Ltd. has secured its “Hi-Diffuse” technology based on recombinant human hyaluronidase and has registered patents for subcutaneous formulations of 11 antibody drugs. CHONGKUNDANG entered the development of related technologies in February of this year by filing a patent application for a variant that improves the activity and thermal stability of hyaluronidase. Samsung Bioepis has also secured its proprietary PH20-based subcutaneous conversion technology and production process.

Since these companies have not yet exported the technology or achieved commercialization through these platforms, this will not immediately lead to a decline in revenue. However, under the new regulations, when exporting technology, contracting parties may conservatively estimate the expected drug price and the exclusive sales period. In such cases, the value of the technology could decrease, or the companies could find themselves at a disadvantage in contract negotiations.

An industry official stated, “It is still too early to discuss the impact of a decline in the value of platform technology,” adding, “For now, we will focus more on proving our technological capabilities and commercializing the technology, and we will make strategic decisions based on future regulations.”