“We will show a dynamic development on the 70th anniversary of our founding. 2024 will be the year of a turnaround in growth.”
Kim Young-jin, the chairman and owner of Handok (CEO Kim Young-jin, Baek Jin-ki), expressed his ambitious vision to various media outlets last year, marking the company’s 70th anniversary. However, the results have been disastrous. Far from achieving the performance turnaround and growth that Kim emphasized, Handok reported its worst performance since 2017. In particular, its operating profit shrank significantly, bringing the company to the brink of a deficit.
According to data from the Financial Supervisory Service's electronic disclosure system on the 25th, Handok's consolidated revenue decreased by approximately 2.9% from 522.7 billion Korean Won (KRW) in 2023 to 507.3 billion KRW in 2024. Operating profit plummeted by nearly 96%, from 12.5 billion KRW in 2023 to only 500 million KRW in 2024. Both revenue and operating profit have declined for two consecutive years, following a drop in 2023.
In 2024, the company’s operating profit margin was a mere 0.1%. This represents the worst performance in seven years, since the operating loss of 1.8 billion KRW in 2017.
The main reason for Handok's poor performance is the sluggish sales of over-the-counter (OTC) medicines. OTC sales dropped by about 20%, from 86.3 billion KRW in the previous year to 69.3 billion KRW last year. The sales of its flagship product, "Ketotop," also significantly dropped, falling from 55.7 billion KRW in 2023 to 39.4 billion KRW in 2024.
The termination of its partnership with the U.S. biotech company Alexion also continued to be a setback for the second year in a row. Since 2009, Handok had partnered with Alexion to sell rare ophthalmic disease treatments, including "Soliris." However, when AstraZeneca acquired Alexion in 2021, the rights to these products were transferred, leading to a revenue gap starting last year. Despite various efforts to compensate for the loss, Handok has been unable to fill the void left by Alexion. The sales of prescription medicines (separate basis) fell from 314.5 billion KRW in 2022 to 300.5 billion KRW in 2023 and remained at 303.2 billion KRW last year.
The medical device sector also struggled, recording sales of 69.3 billion KRW last year, a 10.6% decrease from the previous year. Handok explained that conflicts with medical associations impacted this segment. "The strike by residents last year reduced surgeries and research at major hospitals, which directly hit diagnostic devices and reagents. Additionally, the sales of blood glucose meters, such as 'Barojen,' also faced challenges due to fewer patients," the company said.
The net profit figure paints an even grimmer picture. After reporting a net loss of 28.9 billion KRW in 2023, Handok's deficit expanded to 52.8 billion KRW in 2024, more than doubling by over 80%. The company explained that this was due to the recognition of 36.5 billion KRW in losses from the valuation of its stake in Genexine as an extraordinary non-operating expense.
In fact, Handok has shown signs of struggling since 2023, falling behind its major competitors who have been aggressively advancing.
Handok recorded revenue of 503.6 billion KRW in 2020, surpassing the 5 billion KRW mark for the first time. It grew further to 517.6 billion KRW in 2021 and 543.7 billion KRW in 2022. However, the company’s revenue fell to 522.7 billion KRW in 2023 and 507.4 billion KRW in 2024, showing a downward trend. If this trend continues, there are concerns that its 5 billion KRW revenue milestone might be at risk.
In contrast, competitors that had similar revenue to Handok in 2020, between 400 to 500 billion KRW, have seen rapid growth, leaving Handok far behind. Boryung recorded over 1 trillion KRW in revenue last year, a more than 80% increase from 561.9 billion KRW in 2020. Dongkook Pharmaceutical grew from 559.1 billion KRW in 2020 to an estimated 805.5 billion KRW last year.
Huons, which had approximately 1 billion KRW less in revenue than Handok in 2020 (4.066 trillion KRW), surpassed Handok with 590.2 billion KRW in revenue last year. While most competitors have grown rapidly, Handok has seen a widening gap as it continues to fall behind.
Handok plans to rebound this year by focusing on new products. A company official stated, "We launched the hypertension treatment 'Aprovasc' last year, and this year we will introduce the cholesterol-lowering drug 'Lipidel,' adding new growth drivers in the field of chronic diseases. We expect these products to improve our performance in 2024."
