Invest2 publishersIndependently confirmed2 min readPublished
Europe lifts Korea's biopharma exports to a record $6.6 billion
South Korea's biopharma exports rose 15.8% to a record $6.6 billion in the first nine months, led by Europe, the drug safety ministry said. With US shipments down 23.7%, Seoul Economic Daily reported, the record rests on European contract manufacturing and biosimilar demand.
The Investor · Invest desk
What happened
- Growth was faster still in Italy, up 59.6%, Belgium, up 209.7%, and France, up 269.1%.
- Recombinant protein drugs made up $5.71 billion, or 86.5% of the total, while vaccine exports fell 21.7% to $180 million.
- A special act giving regulatory support to biopharma contract development and manufacturing companies takes effect in December.
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Why it matters
- decision Holders of Korean contract manufacturers have to decide whether the smaller US share is real diversification or the same customers changing where they take delivery.
- constraint The figures are national totals by country and product class, so they cannot be mapped onto any one listed manufacturer's order book or used alone to re-rate a single stock.
- cost Easing Phase 3 and animal-testing data requirements for biosimilar approvals would cut what a developer spends to get a biosimilar cleared by Korea's regulator.
- exposure With nearly nine-tenths of exports in one product class, a demand or pricing slip in recombinant proteins would reach almost the entire export base.
Work the US figure backward and the loss is about $330 million: $1.07 billion after a 23.7% fall implies roughly $1.40 billion a year earlier [18]. On the growth rates Seoul Economic Daily reported, Switzerland, Hungary and the Netherlands added about $605 million between them [14]. Total exports rose by roughly $900 million [15]. That leaves about $630 million of growth from every other market, Italy, Belgium and France among them [7]. The headline figures are rounded to a tenth of a billion, so the remainder is approximate [16].
A year ago the US took about 24.6% of Korea's biopharma exports [19]. Yonhap puts its share now at 16.3% [4], and Switzerland trails the US by $60 million [20].
The European numbers can be read three ways. The first is the explanation from the Ministry of Food and Drug Safety: more contract manufacturing for drugmakers in Europe, plus biosimilar demand [6]. The second starts from what the ministry counts, which is exports by destination country [5]. Those figures do not show where the finished drug is eventually sold, so part of the US decline could be the same customers taking delivery in Europe. The third is timing. The monthly figures vary widely: July rose 54.3% and August 25.5%, then September fell 14.1%, a drop the ministry put down to fewer working days [8].
I think the growth will hold, and the geography is the part to discount. The third quarter grew 15.6% [2], close to the nine-month 15.8% [1]. July, August and September add up to the quarter's $2.07 billion [17], so the record does not depend on one strong month. The counter-thesis is the second reading. An investor who books the European gain as new end demand and the US drop as lost demand is pricing a split that destination data cannot confirm. Two results would prove this view wrong. A fourth quarter well below the nine-month growth rate would undercut the durability call. US shipments recovering while Swiss and Hungarian shipments keep growing would show the European demand is additional, and that discounting it was a mistake.
The two measures a ministry official described both target the businesses the ministry credits for Europe. "We plan to continue regulatory support, including easing requirements for submitting Phase 3 clinical trial and animal testing data when approving biosimilar products, within the scope that ensures safety," the official said [11]. "Once the special act on regulatory support for biopharmaceutical contract development and manufacturing companies takes effect this December, we also plan to pursue related support such as certification of raw materials," the official added [12].
What to watch
- The December start of the special act for biopharma contract manufacturers, and whether the raw-material certification the ministry mentioned follows.
- Filings from Korean contract manufacturers that break out revenue by where customers sell the drug, the evidence that would settle the rerouting question.
- Full-year totals, to check whether September's 14.1% drop was only the working-day effect the ministry cited.