Huons

Huons is a pharmaceutical and bio company that was spun off from Huons Global in 2016 and re-listed on KOSDAQ; its prescription drug business, supplying local anesthetics, ophthalmic solutions, and other prescription medicines to domestic hospitals and pharmacies, forms the core of its revenue.

The beauty and wellbeing segment handles manufacturing and sale of wellbeing and obesity treatment drugs, while the contract manufacturing segment provides CDMO services to domestic and overseas pharmaceutical companies.

The company's main production base is the Jecheon plant, equipped with advanced automated facilities, and it added oral-formulation manufacturing capacity through the absorption merger of Huons Life Science, acquired in 2023, and its Osong plant.

In 2024, Huons acquired a stake in bio company Panzen and brought it in as a subsidiary, while its health functional food segment was spun off and later absorbed into Huons N, reflecting an ongoing reorganization of its business structure.

On the competitive front, multinational pharmaceutical companies' entry into Korea and intense competition within the generic drug market are intensifying, making differentiation through advanced facilities and a diversified portfolio a key strategic response.

More recently, the company has been expanding a vaccine distribution business under contract with a global pharmaceutical company through a newly created dedicated unit, cultivating it as a new growth driver.

To strengthen its biologics and new drug pipeline, Huons had pursued an absorption merger with affiliate Huons Lab, but terminated the merger agreement in August 2026, after which alternatives such as securing specific technologies or business rights individually, or in-licensing external pipelines, are being considered.

Huons' annual revenue grew steadily from KRW 492.4 billion in 2022 to KRW 620.8 billion in 2025, while operating margin fluctuated.

In 2023, revenue of KRW 552.0 billion and operating profit of KRW 56.0 billion produced a 10.1% operating margin, the strongest profitability in the past four years, but in 2024, despite revenue rising to KRW 590.2 billion, the operating margin fell to 6.7%.

In 2025, revenue reached KRW 620.8 billion with operating profit of KRW 45.6 billion (7.3% margin), a modest margin recovery from the prior year, and net income attributable to owners jumped to KRW 42.7 billion from KRW 29.5 billion in 2024.

On a quarterly basis, the second quarter of 2025 showed a solid run with revenue of KRW 156.0 billion, operating profit of KRW 13.1 billion, and owners' net income of KRW 11.6 billion, before operating profit slipped to around KRW 9.9 billion and KRW 9.8 billion in the third and fourth quarters of 2025, respectively, as margins softened.

In the first quarter of 2026, revenue fell to KRW 141.9 billion and the company swung to an operating loss of KRW 0.65 billion, largely due to a full KRW 5.3 billion warranty expense tied to a voluntary recall of US-exported products.

In the second quarter of 2026, revenue was KRW 147.0 billion and operating profit returned to KRW 2.9 billion, but rising cost of goods sold from early-stage costs of newly expanded production lines and GMP facility upgrades pulled operating profit far below the KRW 13.0 billion recorded a year earlier, and owners' net income fell back into a small loss of roughly negative KRW 0.1 billion.

Over the most recent four quarters (third quarter 2025 through second quarter 2026), cumulative net income has run well below the first-half 2025 level, with recall costs and transitional new-line expenses cited as the central drivers of the recent earnings slowdown.

Korea's pharmaceutical industry is facing intensifying competition among multi-item generics, and the government is pushing to lower the base pricing rate for generics from 53.55% to 45%, a change that could have a structural impact on industry-wide profitability.

However, a preferential pricing rate of 60% for new generics and 49% for existing generics for up to four years is planned for companies certified as Innovative Pharmaceutical Companies, making certification status a factor likely to differentiate individual companies' future profitability.

Huons has a relatively high exposure to multi-item generic prescription drugs, making it more sensitive to this pricing reform.

Meanwhile, in the botulinum toxin and aesthetics segment, Hugel saw overseas toxin and filler sales account for 64% of total revenue in the first half of 2026, with sales in the Americas region more than doubling year-on-year, reflecting an accelerating global expansion, while Medytox also showed revenue growth from its toxin and filler businesses, underscoring a clear shift of the industry's competitive and growth axis toward overseas aesthetics markets.

Against this backdrop, Huons is pursuing diversification into vaccine distribution, CDMO, and biosimilars to reduce its dependence on generics. In the US market, a recent voluntary recall and customs hold on exported products have highlighted regulatory response capability as an important variable.

Huons expects the results of its vaccine injectable distribution contract with Sanofi to be fully reflected starting in the second half, and plans to raise the utilization rate of the Jecheon Plant 2 injectable vial line, which received GMP approval and began operating in the fourth quarter of 2025, to improve both contract manufacturing revenue and profitability.

Following the withdrawal of the absorption merger with Huons Lab, alternatives under review include securing only the necessary technologies and business rights individually—such as Hydizyme and Hydifuse—through collaboration, or in-licensing external pipeline candidates that have advanced through certain clinical stages.

The company continues follow-on development of in-licensed pipeline candidates including non-small cell lung cancer candidate HUC1-733, dry eye disease treatment HUC1-394 in Phase 2, and obesity treatment HUC2-676 in Phase 1.

On the export side, the company plans to focus on strategic overseas items such as dental anesthetic exports to Japan and a new tender for Fine Injection products in Iraq to expand sales.

Huons also expects the effects of expanded oral-formulation capacity and reduced selling, general and administrative expenses from organizational integration following the absorption merger of Huons Life Science, completed in June, to become more visible in the second half and beyond.

However, a concrete alternative strategy for responding to the pricing system reform, including Innovative Pharmaceutical Company certification, has not yet been finalized, warranting close attention to the company's future announcements.