South Korean pharmaceutical companies are winding down non-core manufacturing operations and restructuring their businesses around profitability. The firms are cutting costs by shutting idle production facilities, closing low-margin production lines and redirecting resources to products with growing demand.
JW Shinyak recently decided to close its quasi-drug manufacturing business and is working through the process with the Ministry of Food and Drug Safety, according to industry sources on the 15th. The company sells quasi-drugs such as adhesive bandages but currently produces none of them in-house. "With no products being manufactured on our own, the aim is to reduce costs such as facility upkeep that come with maintaining a quasi-drug manufacturing operation," an official at JW Shinyak said. The move is seen as an effort to clear out manufacturing capacity that is not being used for actual production, while continuing to handle consignment sales of JW Pharmaceutical products.
JW Shinyak is expected to concentrate its resources on its existing drug business and on the sale and development of hair loss treatments. The company has a lineup of finasteride-based products used to treat hair loss, along with hair and scalp care products. In December last year, it signed a joint development agreement with Mujin Medi and is developing AD-303, a treatment for male pattern baldness. AD-303 is a candidate compound that won approval for Phase 1 and 2a clinical trials in August of the same year.
HLB Life Science also resolved in the first half of this year to discontinue its original equipment manufacturing (OEM) division, which produced in-vitro diagnostic kits and plastic products. The decision is seen as an exit from a business whose profitability had eroded amid weakening demand for diagnostics after the COVID-19 pandemic shifted to an endemic phase, along with intensifying competition. At the time of the decision, HLB Life Science CEO Baek Yun-ki said: "Short-term swings in revenue will be unavoidable because of the business restructuring, but this is a necessary step to boldly shed low-margin businesses and fundamentally improve our earnings structure." The company plans to focus on exports of high-value-added medical devices.
Samil Pharmaceutical is likewise reorganizing its manufacturing facilities in line with shifting demand. Earlier this year, the company decided to halt production of ofloxacin eye ointment at its Ansan plant. The plant had been producing its own Ocuflox eye ointment as well as contract manufacturing products for Kukje Pharma and Daewoong Bio, but the company opted to close the relatively low-margin eye ointment line and focus on eye drops, where demand is rising. "We halted eye ointment production in order to expand the eye drop production line, where contract manufacturing demand is growing," an official at Samil Pharmaceutical said.