Ilyang Pharmaceutical

Ilyang Pharmaceutical is a KOSPI-listed mid-sized pharmaceutical company spanning prescription drugs (ETC), over-the-counter products (OTC), vaccines, and health functional foods.

Its core pillars are two self-developed new drugs: Noltec (ilaprazole), Korea's 14th approved new drug for peptic ulcer disease, and Supect (radotinib), Korea's 18th approved new drug for chronic myeloid leukemia (CML).

Since Supect's 2012 approval, domestic sales had been co-marketed with Daewoong Pharmaceutical, but underperforming revenue led to termination of that contract in 2022, with Ilyang resuming direct sales itself.

Supect has been licensed out and supplied to emerging markets including Russia, Turkey, and Colombia, and the company has recently expanded out-licensing and distribution agreements to 13 countries including the GCC bloc (UAE, Saudi Arabia, and four others).

In vaccines, the company produces seasonal influenza vaccines and has completed investment in a finished-product packaging line at its Eumseong plant, now stabilizing equipment ahead of GMP certification. The company also holds long-standing OTC brands such as the energy drink Wonbidi and the antacid Norumo.

In the past, financial statements had incorporated the results of two Chinese joint ventures, Tonghua Ilyang and Yangzhou Ilyang, as consolidated subsidiaries, but regulators ruled this an accounting violation in 2025, leading to restatement of 2021-2023 financials on an equity-method basis that substantially reduced reported revenue.

Reported revenue is now centered on domestic manufacturing and sales, while liquidation and contract-termination procedures for the two Chinese joint ventures remain in progress.

2025 consolidated revenue reached KRW 272.4 billion, a modest increase from KRW 268.9 billion in 2024, but operating profit came to only KRW 4.96 billion (a 1.8% operating margin), down sharply from KRW 11.0 billion (4.1%) the prior year.

Margin erosion has been a multi-year trend: operating margin ran at 5.8% in 2022 and 6.1% in 2023 before falling to 4.1% in 2024 and 1.8% in 2025.

Net income attributable to owners swung from KRW 19.39 billion in 2022 to a net loss of KRW 2.03 billion in 2023, recovered to KRW 10.26 billion in 2024, and reached KRW 6.90 billion in 2025—positive but down year over year.

On a quarterly basis, three of the last five quarters (Q3 2025, Q1 2026, and Q2 2026) posted operating losses, with the deficit widening in Q1 2026 (-KRW 7.37 billion) and Q2 2026 (-KRW 6.77 billion).

Market data attributes these operating losses primarily to costs tied to the liquidation of Chinese joint ventures and inventory impairment charges for unsellable vaccine stock.

Net income, meanwhile, swung independently of operating results—reaching KRW 8.44 billion in Q3 2025 and KRW 16.80 billion in Q1 2026, but falling to net losses of KRW 5.65 billion and KRW 2.29 billion in Q4 2025 and Q2 2026, respectively.

Market data attributes the Q1 2026 net income surge largely to non-operating one-off items such as dividend income and recovered damage compensation. Overall, recent results appear to be driven more by non-operating factors tied to the Chinese joint-venture wind-down and litigation than by core operating performance.

In the chronic myeloid leukemia (CML) market where Supect competes, Novartis's first-generation drug Gleevec (imatinib) still holds over half of market share, with Supect competing against second-generation agents such as Novartis's Tasigna and BMS's Sprycel.

Domestically, the proliferation of Gleevec generics has narrowed the relative pricing advantage Supect once emphasized, increasing the strategic importance of overseas emerging markets and China for Supect's growth.

The vaccine segment is a mature market centered on seasonal influenza vaccines where multiple domestic manufacturers compete, with cost reduction from new production lines and export diversification seen as key differentiators.

Across Korea's pharmaceutical and biotech sector broadly, regulatory scrutiny of accounting transparency has intensified.

A number of pharma and biotech firms were placed under listing-eligibility review in 2025-2026, with some ultimately delisted while others, including Ilyang, were granted improvement periods and retained their listings—underscoring elevated governance risk across the sector.

On the R&D front, while competing pharmaceutical companies increasingly pursue open innovation to build out new drug pipelines, Ilyang is viewed as relatively behind in securing a meaningful new pipeline beyond Noltec and Supect.

In its March 2026 corporate value-up plan, Ilyang laid out three goals: expanding the Noltec franchise through the launch of an improved formulation, Noltec Plus Mini Tablet; growing sales in China via marketing approval for Supect; and improving production efficiency, cutting costs, and expanding exports through the vaccine plant's finished-product line.

Supect's China entry has proceeded through Phase 3 trials since the 2013 technology transfer and received Phase 3 approval in 2018, but the marketing-approval filing had been delayed; the company is now targeting China NDA approval within 2026.

The vaccine plant has completed its finished-product line investment and is now in the equipment-stabilization and trial-production stage for influenza vaccines ahead of GMP certification.

On governance, following the accounting-violation case, Vice Chairman Kim Dong-yeon resigned and the company shifted to a sole-CEO structure under President Jung Yoo-seok, while the resignation of Chairman Jung Do-eon and the dissolution and liquidation of a related-party advertising agency, Daebang Planning, are also being pursued as part of the improvement plan.

However, the company has filed an administrative lawsuit and an injunction request contesting the Financial Services Commission's sanctions, including fines and the recommendation to dismiss executives, meaning governance risk and management composition could resurface depending on how the litigation unfolds.