Korea United Pharma Bets on Innovation as Pricing Pressure Mounts

This marks the fourth interview between HIT News and Deok-Young Kang, CEO of Korea United Pharmaceutical. Three years ago, Kang declared that “the era of generics is fading,” announcing a strategy to lift the share of incrementally modified drugs to 60% of the company’s portfolio. At the time, skeptics dismissed the move as a short-term pricing tactic. Instead, it became a stabilizing force amid sweeping drug-pricing reforms that reshaped Korea’s pharmaceutical industry.

The company has since exceeded the 60% threshold and is now targeting 70%. More notably, Kang has sharpened his emphasis on truly innovative new drugs as the foundation of long-term competitiveness.

HIT News recently met Kang and senior executives at the United Cultural Foundation to review 2025 outpatient prescription performance and discuss the company’s strategy for 2026. The meeting was held with members of the Korea Pharmaceutical and Bio-Pharma Manufacturers Association’s specialist press corps.

Reflecting on 2025, Kang described a year of modest growth but improved profitability.

“Revenue reached $199.1 million, up about 1% year on year,” he said. “Operating profit is expected at approximately $34.3 million, with net profit around $27.5 million.”

According to pharmaceutical market research firm UBIST, outpatient prescription sales totaled $184.5 million in 2025, a 3.1% increase from $179 million the previous year. Quarterly growth remained limited, with fourth-quarter sales edging up from $46.7 million in 2024 to $47.3 million in 2025.

Despite the flat top line, Korea United Pharmaceutical continued to strengthen its balance sheet. The company is effectively debt-free, holding deposits of $117 million—more than five times its outstanding borrowings. Interest income supported higher net profit, while the debt ratio declined from 17% to 14%. With greater financial flexibility, R&D spending rose to 11.9% of revenue, reinforcing management stability even amid slower sales growth.

New products are gaining traction across key therapeutic areas. Rabemini, a gastroesophageal reflux disease treatment combining rabeprazole and sodium bicarbonate, posted $9.75 million in prescriptions in 2025 and is nearing $960,000 in monthly sales. Its growth stands out as conventional PPI products lose share to P-CAB therapies.

Pitaric (pitavastatin/fenofibric acid), launched in August last year, continues to set new monthly prescription records, while products such as Rosumeg Combi Gel have secured positions within the company’s expanding cardiovascular portfolio.

Generics still account for roughly 40% of revenue, an area where profitability has weakened following drug price cuts implemented last July. Kang, however, views generics as a stabilizing buffer rather than a liability.

“Developing a novel chemical entity takes at least 10 years and requires more than $13.7 million,” he said. “If you focus all resources there, you risk undermining stability. Our model balances higher-margin modified drugs with volume-driven generics. With modified drugs now at 60%, price cuts to generics do not significantly impact the company overall.”

This structure underpins the company’s launch pipeline. Of roughly 30 incrementally modified and improved products under development, at least seven are scheduled for release this year—from Cilo Duo tablets, launched in January, to Seretrol Activair, a fluticasone/salmeterol inhalation therapy.

As drug price reforms threaten the growth of generic-focused companies reliant on CSOs, Korea United Pharmaceutical plans to maintain direct sales while prioritizing operating profit and internal execution.

Kang expressed the strongest confidence in inhalation therapies. Globally, only three countries—including the United Kingdom—are capable of developing both inhaled drugs and the devices that deliver them. Korea United Pharmaceutical is among that small group.

“There are only three countries that can manufacture inhaler devices,” Kang said. “We develop both the device and the drug. In Asia, we are the only company with this capability, and that gives us a clear competitive advantage.”

Seretrol Activair, slated for launch this year, fully reflects this technological edge.

The inhalation platform is also producing new molecular entities. A pulmonary fibrosis candidate, discovered by research teams led by Professor Moo-seok Park of Severance Hospital and Professor Jong-in Yook of MET Life Sciences, has been selected for the Ministry of Science and ICT’s Biomedical Technology Development Program and is moving toward commercialization.

In animal studies, the inhaled formulation demonstrated rapid efficacy with significantly reduced side effects, even at one-fifth to one-tenth of the oral dose.

While prioritizing safety and financial discipline, the company continues to invest in innovation. Through UNS Bio—a biotech venture established with Seoul National University—Korea United Pharmaceutical is advancing programs in high-demand areas, including P-CAB therapies, oral and long-acting injectable GLP-1 treatments, and a once-weekly therapy for hair loss.

One of three leading P-CAB candidates is expected to advance into clinical trials, supported by the National New Drug Development Program. The strategy combines academic innovation with in-house development and government-backed funding to accelerate progress while managing risk.

An oral GLP-1 obesity treatment is currently in design optimization, alongside development of a once-monthly injectable formulation.

“Even at a minimum, new drug development requires more than $20.6 million and a long timeline,” Kang said. “At UNS Bio, we focus on generating core compounds, while we handle clinical development and commercialization.”

Kang framed this strategy as preparation for another round of drug price reform.

“Pricing pressure on Korean companies could ultimately weaken South Korea’s pharmaceutical competitiveness,” he warned, citing the contrasting experiences of the Philippines and India following price reforms.

With a high proportion of incrementally modified drugs, Korea United Pharmaceutical expects to absorb near-term shocks while continuing to invest in innovation—though Kang acknowledged that a more conservative management stance is unavoidable.

For 2026, the company has set a revenue target of $227 million, representing 14% growth, alongside goals of maintaining a 60% modified-drug share and achieving $30 million in exports.

“With the strong dollar trend, we plan to focus more on overseas markets,” Kang said. “You can’t reach $343 million in revenue by relying solely on the South Korean market.”

Investment in the Sejong plant reflects the same strategy. Following approval in January for construction of its main facility, the company plans to introduce automated processes and undergo EU-GMP inspections to support global expansion. Production lines will include anticancer drugs targeting demand in Southeast Asia.

Kang ultimately emphasized financial independence as the company’s defining value.

“Even in difficult times, we must avoid dependence on bank financing,” he said. “A sound financial structure that allows independent operation—that is our platform.”

For Kang, the concept extends beyond drug pipelines. It represents a sustainable, self-sufficient structure that reinvests profits from modified drugs into innovation, spreads risk, and competes globally through smart manufacturing.

Rather than standing still amid tightening price controls, Korea United Pharmaceutical is taking a deliberate step forward—one built on balance, discipline, and long-term ambition.