Expansion of Beijing Hanmi Pharm Production Line... Strengthening Entry into Chinese Pharmaceutical Market

[Asia Economy Beijing=Special Correspondent Jo Young-shin] Beijing Hanmi Pharmaceutical has expanded its syrup production line and launched an attack on the Chinese pharmaceutical market. In addition, it has completed a smart automated logistics warehouse in Beijing, China, establishing a one-stop system from drug production to inventory and distribution.

On the 15th, Beijing Hanmi Pharmaceutical held a completion ceremony for the syrup production line and smart automated logistics warehouse at its factory located in Shunyi District, Beijing. The newly expanded syrup production line, including the existing production line, has an annual capacity of 225 million bottles, which the company describes as the largest scale in China. The expanded syrup production line received GMP (Good Manufacturing Practice) certification from the Chinese government in July.

On the 15th, Beijing Hanmi Pharmaceutical held a completion ceremony for the syrup production line and smart automated logistics warehouse at its factory located in Shunyi District, Beijing.

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Jang Howon, Deputy General Manager of Beijing Hanmi Pharmaceutical, explained, "With the significant increase in sales of our flagship syrup products such as the antitussive and expectorant 'Itanjing (Ambroxol Syrup)', expansion was necessary," adding, "We have been able to increase syrup production more than threefold from 70 million bottles annually to 240 million bottles." Beijing Hanmi expects to also take on the role of CMO (Contract Manufacturing Organization) within China through this expansion.

The smart logistics warehouse is also expected to contribute to Beijing Hanmi's sales. The smart logistics warehouse, with a total area of 6,947㎡ (2,100 pyeong), is equipped with an unmanned Warehouse Management System (WMS). Until now, Beijing Hanmi had been renting and using warehouses. With the completion of this smart logistics warehouse, it will save 20 million yuan (approximately 3.7 billion KRW) annually. Above all, by handling the entire process from drug manufacturing to inventory and distribution in a one-stop manner, quality control has become easier.

Lim Haeryong, General Manager of Beijing Hanmi, stated, "Beijing Hanmi has earned the trust of local Chinese medical professionals and patients through a thorough localization strategy," and added, "We will continue to strive to become a global pharmaceutical company."

◆ Dual-antibody new drug approval targeted for 2025 = Beijing Hanmi operates a separate research and development (R&D) laboratory. It employs 120 researchers, mostly local talents from prestigious universities such as Peking University, Tsinghua University, and Shenyang Pharmaceutical University. Established in 2008, the laboratory was designated as a high-tech enterprise by the Chinese government in 2009.

The Beijing Hanmi laboratory is accelerating new drug development, including publicly disclosing the first clinical trial results of an anticancer drug applying the dual-antibody platform Pentambody at the Chinese Cancer Society. Pentambody is a next-generation dual-antibody platform technology (immuno-oncology drug) that can target two antigens with a single antibody.

Lee Kyungwoo, head of Beijing Hanmi’s R&D laboratory, explained, "Currently, the PD-1/HER2 new drug development project is underway," adding, "Phase 2 clinical trials targeting breast cancer, colorectal cancer, and gastric cancer are being conducted in collaboration with Chinese pharmaceutical companies."

The laboratory has received approval from the Chinese government to directly breed 40 experimental monkeys, all of which are used for new drug development such as immunomodulatory drugs.

◆ Establishing a foothold in China through localization = Beijing Hanmi’s sales target for this year is 1.61 billion yuan (approximately 296.2 billion KRW). Sales declined last year due to the outbreak of COVID-19. As mask-wearing and handwashing became routine, sales of the flagship product Itanjing decreased, resulting in sales of only 1.19 billion yuan last year. This was the first sales decline since 2009.

Lim Haeryong, General Manager of Beijing Hanmi Pharmaceutical

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Since launching the infant probiotic digestive aid 'Myi (Medilac Bebe)' in China in 1994, Beijing Hanmi has achieved double-digit growth annually. In 2004, it launched Itanjing. Both Myi and Itanjing are so popular that 2.1 million boxes and 3.8 million bottles are sold monthly, respectively. Both products hold the number one market share in the Chinese infant medicine market. This year, the company also introduced 'Ianping', a vapor treatment for cough and phlegm.

Regarding the number one market share in the Chinese infant medicine market, Deputy General Manager Jang said that thorough localization was the key to success. He elaborated, "Our sales organization of 670 people, all local Chinese, covers the entire country."

He also added, "While global pharmaceutical companies mainly focus on tertiary hospitals, Beijing Hanmi targeted secondary hospitals," noting that targeting the infant market and niche markets was effective. However, since infant medicine accounts for only 4-5% of the entire Chinese pharmaceutical market, the company plans to focus on developing various new products and new drugs.

Beijing Hanmi Pharmaceutical Syrup Production Line

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◆ Challenges and opportunities in the Chinese pharmaceutical market = The Chinese infant medicine market is not entirely bright.

First, the decline in China’s birth rate is an obstacle to growth. Last year, there were 12 million newborns in China, down 2.65 million from 14.65 million the previous year. China’s birth rate, which was 20.91% in 1981, has sharply declined annually to 11.90% in 2010, 12.37% in 2015, and 10.94% in 2018. A declining birth rate means fewer consumers for Beijing Hanmi’s flagship products Myi and Itanjing.

The Chinese government’s expanded introduction of drug bidding systems is also a considerable burden. Recently, the Chinese government has strengthened the lowest bidding system, allowing companies selected through the lowest bid to dominate the market. This is a measure to reduce the burden on pharmaceutical consumers. However, pharmaceutical companies’ profits inevitably decrease. Although the lowest bidding system is mainly strengthened for long-term prescription drugs, it is analyzed that it could also affect Beijing Hanmi. This is why new drugs and new products are necessary.

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