Pharma Research (214450), once the undisputed leader in South Korea's skinbooster market, is seeing its dominance challenged. Intensifying competition from new products including extracellular matrix (ECM) skinboosters led the company to post fourth-quarter results that fell short of market expectations. With new entrants flooding the sector, analysts say the domestic skinbooster market is undergoing a seismic shift.
According to the Financial Supervisory Service's electronic disclosure system on the 9th, Pharma Research recorded revenue of 142.8 billion won and operating profit of 51.8 billion won in the fourth quarter of last year. Revenue rose 39% and operating profit jumped 54% year-over-year. However, revenue missed consensus estimates by 7.7% and operating profit fell 16.3% short, prompting market observers to call it an "earnings shock." The company attributed the shortfall to changes in accounting standards affecting selling and administrative expenses, slowing domestic growth of its flagship skinbooster Rejuran, and deferred shipments to Europe.
Market watchers are particularly focused on the domestic growth slowdown for Rejuran, Pharma Research's signature product. According to company data, domestic sales declined from 88.7 billion won in the second quarter to 84.9 billion won in the third quarter and 83.5 billion won in the fourth quarter. "The shortage of medical providers following the return of resident doctors after the medical conflict affected domestic performance," said Shin Min-soo, an analyst at Kiwoom Securities. "Even if the supply of new doctors increases after the national medical examination in August, we need to reconsider whether domestic market share can continue its rapid growth trajectory given the intensifying competition."
The ECM skinbooster boom has been a decisive factor in the heightened domestic competition. While Rejuran is based on polynucleotide (PN) derived from salmon, ECM skinboosters are based on extracellular matrix derived from human dermal tissue. ECM skinbooster manufacturers focus on directly replenishing key components of human skin structure—including collagen, elastin, and hyaluronic acid—to restore skin structure and function. Unlike polylactic acid (PLA) fillers, which focused on volume improvement and did not directly compete with Rejuran, ECM skinboosters with similar efficacy have emerged as a potential threat.
L&C Bio's (290650) Elavie Rituo is leading the ECM skinbooster growth. The product became so popular that it caused shortages in August and September last year. In response, L&C Bio plans to expand production capacity from the current 24,000 units per month to 100,000 units through three facility expansions from this year through next year. Hans Biomed (042520) also launched its ECM skinbooster Cellrderm in September last year and aims to increase monthly production from 10,000 units to 22,000 units within the first quarter. These ECM skinbooster treatments are reportedly priced at approximately twice the level of Rejuran. Demand is rising sharply as clinics benefit from higher profit margins.
Companies previously focused on human tissue implants are now entering the skinbooster market in succession. CGBio, an affiliate of the Daewoong Group, is a prime example. The company is preparing to launch an ECM skinbooster in the first half of this year. CGBio is expected to handle raw material procurement, manufacturing, and sales, while its subsidiary DN Company will manage marketing. DN Company specializes in cosmetic product sales and marketing and can bundle products with Daewoong Pharmaceutical's (069620) botulinum toxin Nabota and fat-dissolving injection Violet, potentially accelerating CGBio's market penetration.
Securities firms have unanimously lowered their target prices for Pharma Research amid intensifying competition. According to financial data provider FnGuide, the consensus target price for Pharma Research fell from 819,091 won in October to 717,000 won in November and dropped further to 633,083 won following the recent earnings announcement—a 22.8% decline in four months. "Doubts about Pharma Research's market share could grow until the first-quarter earnings announcement," said Park Jong-hyun, an analyst at Daol Investment & Securities. "The company will need to prove it can maintain its market share as the overall skinbooster market expands this year before investors can expect growth in corporate value."
Pharma Research maintains it can sustain solid growth by expanding into more overseas markets. "We maintained stable growth even before European market results were fully reflected in our performance," a company official said. "This year, we will accelerate entry into markets where we lack approval through capital investment for global supply chain stabilization and strengthened R&D, and continue more robust growth over the medium to long term."