Korea’s Green Cross Anticipates Growth In Upcoming Flu Season

The upcoming flu season should provide more momentum to Korea’s leading vaccine company, which saw marginal year-on-year growth in the second quarter.

SEOUL – As the flu season approaches, South Korea’s vaccine frontrunner Green Cross Corp. should see more growth in the third quarter after its second quarter sales reached KRW 206.4 billion ($184.95 million), only up 1.6% from the same quarter of 2012.

Still, Green Cross’ net profits reached KRW 16.7 billion ($15 million), up 38.9% from the second quarter of 2012. The company hyped new sales of Hunterase, a biosimilar of Shire PLC's Elaprase (idursulfase) for Hunter syndrome, but in Korea, Green Cross reported Hunterase sales of only KRW 2.5 billion ($2.2 million). The company estimated previously there are only 70 patients in South Korea with Hunter syndrome, so it has it eyes set overseas for the drug, which it claims is a biobetter of Elaprase.

Green Cross received orphan drug designation for Hunterase by U.S. FDA in February, and has said it intends to file for approval in the U.S. in 2013. (Also see "Korea’s Green Cross Receives U.S. FDA Orphan Drug Status For Elaprase Biobetter" - Scrip, 22 Feb, 2013.).

Flu Season On Horizon

Green Cross was Korea’s biggest beneficiary of the A/H1N1 flu pandemic in recent years. The company accounts for more than 50% of Korea’s flu market, followed by GlaxoSmithKline PLC, SK Biopharmaceuticals Co. Ltd. and LG Life Sciences Ltd.

Thanks to the increased demand for its H1N1 vaccine, Green Cross became the second-largest Korea pharmaceutical company in 2009, a position which it has retained in the first half of the fiscal year (Also see "Demand For A/H1N1 Vaccine Catapults Green Cross Into No. 2 Spot In Korea; Company Ramps Up Biosimilar Pipeline" - Scrip, 2 Feb, 2010.).

“Among the Korean pharma, Green Cross is the only one producing bulk vaccine,” Green Cross said, noting that it will be able to retain its leading position in Korea’s vaccine and flu vaccine sector. Hyundai Securities analyst Hyerim Kim estimated Green Cross’ third quarter operating profit will increase 8% to KRW 74.5 billion ($66.6 million) as seasonal flu hits its peak season.

Tongyang analyst Miriam Kim said there is uncertainty for the third quarter due to intensifying domestic competition over flu vaccine.

IVIG In The U.S.A.

Beyond vaccines, Green Cross is expected to soon complete Phase III clinical trials in North America for its immunoglobulin intravenous IVIG-SG. Hyundai analyst Kim expects the trial to be completed by the end of August and approved by November, but Green Cross declined to put a date estimate on the product.

In early 2011, Green Cross claimed it signed a three-year $480 million memorandum of understanding with AmerisourceBergen Corp. subsidiary ASD Specialty Healthcare to export IVIG, and hemophilia type A treatment GreenGene-F to the U.S., but AmerisourceBergen said it only signed a non-binding memorandum of understanding – with no agreement on the deal’s value – if Green Cross was able to get the product approved in the U.S. (Also see "Green Cross Says It Secured Korea's Largest-ever Agreement For Finished Product Export" - Scrip, 10 Jan, 2011.).

Green Cross has sold the high-margin IVIG to Korea and to markets in Latin America since 1982.

As part of its globalization plans, Green Cross signed in January 2013 an agreement with the Thai Red Cross Society to build a $68.5 million plasma derivatives manufacturing plant in Thailand. With the Red Cross stepping in to manage plasma derivative production after the plant is completed, the deal is seen as a way to allow Green Cross to put a greater focus on biosimilar development (Also see "Korea’s Green Cross To Build Plasma Derivative Plant In Thailand For The Red Cross" - Scrip, 8 Jan, 2013.).

Earlier in 2013, Green Cross gave up its bid to take over Plasma Resources UK Ltd. because of “differences in takeover conditions,” Green Cross said. The UK Department of Health (DOH) sold an 80% stake in the blood plasma distributor to private equity firm Bain Capital, which paid £90 million ($137 million) up front and pledged £110 million ($167.44 million) within the next five years.

Green Cross has been trying to expand its business territory in recent years through M&A activity. In 2012, it became the largest shareholder of troubled local anti-cancer immunotherapy company Innocell Corp. Green Cross and its peer Korean pharma Hanmi Pharmaceutical Co. Ltd. are also moving to generate new growth from China (Also see "Green Cross Concludes Takeover Deal Of Innocell; Looks To Overseas Markets For Growth" - Scrip, 6 Sep, 2012.).

Green Cross operates a plasma derivatives plant in China. “The performance of the plasma derivatives from the Chinese plant is growing,” Green Cross said, noting all of the derivatives produced by Green Cross China are sold in China.

Woori analyst Brian Lee said July 30 Green Cross is expected to utilize funding from a new Korean government fund to pursue M&A deals. Lee anticipates a capital increase of KRW 107 billion ($95.7 million) “to play a role in future M&A deals” (Also see "South Korea To Launch Global M&A Fund Based On Israel’s Yozma Model" - Scrip, 20 May, 2013.).