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R&D Spending to Sales of Top 10 Pharmaceutical Firms Posted Double Digits
Pharmaceutical R&D Investment
R&D Spending to Sales of Top 10 Pharmaceutical Firms Posted Double Digits
  • By marie
  • July 4, 2016, 05:45
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“Innovative” has become a trite descriptor, since marketing departments of pharmaceutical companies plaster the word everywhere. So who is actually investing the most in research and development?

Last year, the share of R&D spending against sales revenue among the top 10 pharmaceutical companies posted double digits.

According to the 2015 R&D report submitted by the top 10 pharmaceutical companies by sales in Korea, the average percentage of R&D expenditures against the sales revenue of these companies recorded 10.46 percent.

It turns out that, last year, LG Life Sciences (LGLS) spent the largest share against the company’s sales revenue to finance R&D compared to other Korean-based pharmaceutical companies. LGLS spent 17.3 percent of the sales revenue for R&D expenditures last year, which amounted to 77.723 billion won (US$67.670 million).

LGLS has maintained a 17-18 percent level of R&D expenditures against sales revenue for the past 5 years, and the company plans to keep the levels for some time.

Chong Kun Dang Pharmaceutical Corp. (CKD) claims second place, investing 15.42 percent of its sales into R&D (91.359 billion won). CKD has received 30 approvals for clinical trials cases from Ministry of Food and Drug Safety, the highest in the country. CKD is currently focusing on developing a new generation of targeted cancer drugs, hyperlipidemia treatments and anemia treatments.

Hanmi Pharm, which came out on top in terms of sales revenue among local pharmaceutical companies, spent 14.20 percent of last year's sales (187.159 billion won) on R&D and has emerged as the top R&D investor in the country. Breaking the mark of 1 trillion won (US$868 million) in sales revenue through blockbuster licensing deals with global drug makers last year, the percentage of R&D expenditures against sales dropped but the absolute amount has surged.

Hanmi is followed by Daewoong Pharmaceutical Co. with 12.48 percent and Green Cross Co. with 11.20 percent. Ildong Pharmaceutical Co. (11.10 percent) and Dong-A ST (10.10 percent) are also among the leading investors, posting double-digit shares of R&D investment.

Meanwhile, Shinpoong Pharm (9.85 percent), Ahn-Gook Pharm (7.90 percent), Daewon Pharm (7.85 percent) and Boryung Pharm (7.40 percent) showed single-digit shares of R&D investment.

In terms of the absolute amount spent in R&D, Green Cross Co. is the second-biggest R&D spender following Hanmi Pharm, posting 1.01 trillion won (US$868.85 million).

Daewoong Pharm came next, posting 99.9 billion won (US$86 million), followed by CKD with 91 billion won (US$79 million) and LGLS with 77 billion won (US$67 million).

Among domestic pharmaceutical firms, 12 have annual R&D spending that exceeds 10 billion won (US$9 million), including LG Life Science with 38.4 billion won (US$33 million), Yuhan with 30.4 billion won (US$26 million), Donga ST with 26.9 billion won (US$23 million), Ildong Pharmaceutical with 23.4 billion won (US$20 million), Boryung with 14 billion won (US$12 million), JW Pharmaceutical with 14 billion won (US$12 million), and Korea United Pharm with 10 billion won (US$8 million).

Last year, total sales revenue among the top 10 pharmaceutical companies was 7.5 trillion won (US$6 billion), and the total amount invested in R&D expenses amounted to 774 billion won (US$672 million).

Seven out of the 10 companies broke the 10 percent mark for their share of R&D spending against sales. These companies are Hanmi Pharm, Green Cross, Daewoong Pharm, CKD Pharm, Dong-ah ST, IlDong Pharm and LG Life Sciences.

Meanwhile, Yuhan Co. (6.4 percent), Jeil Pharm (3.4 percent), DongKook Pharm (3.9 percent) and Kwangdong Pharm (1.1 percent) fell short of the 10 percent average. Kwangdong Pharm invested only 6.28 billion won (US$5 million), which marked the lowest among the 20 local pharmaceutical companies.