General Performance - Dong-A, R&D Workforce - Yuhan, R&D Expenditure - Hanmi




MONEY TODAY Rep. Kum, Myung-Ryong




An analysis of R&D status of big 3 pharmaceuticals, Dong-A Pharmaceutical (KRW 104,500 2,500 +2.5%),
Hanmi Pharmaceutical (KRW 132,500 1,000 -0.8%), Yuhan Corporation (KRW 207,500 3,000 +1.5%), has
indicated that Dong-A notched up the best performance.




A report by Goodmorning Shinhan Securities of top 3 leaders of pharmaceuticals industry released on the 23rd
predicted that new drugs independently developed by Dong-A would account for 23% of its pharmaceuticals
sales this year. The same report forecasted that Yuhan would raise 7% of sales from independently developed
new drugs and Hanmi would have no new drug accounting for a portion of pharmaceuticals sales due to
absence of proprietary new drugs.




Analyst Bae, Ki-Dal of Goodmorning Shinhan Securities commented, “Stillen® (gastritis cure) and
Zydena® (erectile dysfunction treatment) of Dong-A have made tremendous commercial success to account
for over 20% of the aggregate enterprise sales,” and added, “Dong-A is running ahead in R&D sector with two
more drugs now in phase II clinical trials.”




Dong-A Pharmaceutical posted KRW 13 billion with Zydena® and KRW 60 billion with Stillen® in sales
last year, with new drugs of independent development accounting for more than 20% of the total harmaceuticals
sales.




Antiulcerant ‘Revanex’ of Yuhan Corporation is gradually on the rise. Goodmorning Shinhan Securities
expected Yuhan to be able to sell Revanex worth over KRW 20 billion in comparison with last year’s 12 billion
and the rising sales of Revanex will push the ratio of new drug to the aggregate pharmaceuticals sales of
Yuhan from 2.4% of last year up to 9% by 2010. In contrast, Hanmi Pharmaceutical did not notch up any new
drug sales since they have yet to develop any new drug.




Dong-A Pharmaceutical overwhelmed two others in terms of new drugs in the pipeline. Dong-A is now
proceeding with clinical tests of prokinetic agent, atopic cure and asthma drug. Hanmi is also conducting
phase I clinical trial for Oraxol and Oratecan, anti-cancer medicines for oral administration while Yuhan is also
proceeding with pre-clinical trials on cures for stomach disorder and diabetes.




All of the three pharmaceuticals manufacturers maintain sizable R&D workforces. As of the end of June, Dong-
A has 260 R&D resources, Yuan 270 and Hanmi 241. As they are increasing the size of R&D workforce, some
indicate that the gap among the 3 may widen even more in the future. Hanmi was found to have stashed the
biggest amount in R&D with KRW 14.5 billion expended in the 1st quarter. Dong-A spent KRW 10.4 billion and
Yuhan KRW 8.3 billion on R&D in the same period of time.




Although Hanmi has invested intensively in R&D, absence of new drug is believed to be attributable to its focus
on improving existing drugs into new products. Early this month, Hanmi developed ‘Esomezol' which is the first
improvement in the world from Astrazeneca’s ‘Nexium’ that has posted the 2nd biggest sales in the world
among prescription drugs (USD 5.2 billion in 2007).