SEOUL, Aug. 1 (Korea Bizwire) – The American dollar has regained some strength in the second quarter, and according to industry analysts, companies producing chemicals and raw materials for the pharmaceutical industry were among those who reaped the most benefits from the dollar’s appreciation.
Korea is a heavily export-reliant country with over 50 percent of its GDP derived from exports. Domestic manufacturers of pharmaceutical raw materials, such as ST Pharm and CKD Bio, are also export-dependent, and often sensitive to fluctuating exchange rates.
Last quarter, however, ST Pharm made the most out of the weaker won, boosting operating profits by 548 percent to 31.2 billion ($28 million) compared to Q2 2015. Total sales jumped 129.8 percent to reach 69.8 billion won and the company’s quarterly net profit, 23.7 billion won, was an increase of 621.5 percent year over year.
A subsidiary of Dong-A Socio Holdings, 70 percent of ST Pharm’s revenue comes from sales overseas, with the company exporting base pharmaceutical materials for hepatitis and AIDS medicine to the U.S. and Europe. According to ST Pharm, the favorable exchange rates in the second quarter helped to increase operating profits.
CKD Bio, with antibiotics raw material as its key business, saw Q2 operating profits increase by 355 percent (3.4 billion won) compared to Q2 2015. And while total sales decreased by 2.4 percent, quarterly net profits increased by 263.5 percent to 3.1 billion won. As of the first quarter this year, 80 percent of the company’s business comes from exports.
“The U.S. dollar’s appreciation in the second quarter definitely helped with the increase (in operating profits),” said a CKD Bio official.
By Kevin Lee (email@example.com)