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Celltrion CEO Seo Jin-seok speaks at the company’s 34th annual general meeting held at Songdo Convensia in Incheon on March 25.(Photo courtesy of Celltrion)

[Song Young-doo, Edaily Reporter] Seo Jung-jin Chairman of Celltrion Group, has been reappointed as an inside director of Celltrion. Attention is now on whether Chairman Seo can accelerate Celltrion’s global expansion through strategies addressing Zymfentra’s sluggish performance and mergers & acquisitions(M&A).

At Celltrion’s 34th Annual General Meeting(AGM) held on March 25 at Songdo Convensia in Incheon, all five agenda items were approved △Approval of FY34 financial statements △Approval to reduce capital reserve △Appointment of directors △Approval of director remuneration limit △Revision of retirement benefit regulations for executives. Among them, the most anticipated item, Seo’s reappointment as inside director passed, allowing him to continue leading Celltrion’s growth strategy for the next two years.

The director remuneration cap was reduced to 15 billion this year, down 5 billion from 20 billion last year. The approval to reduce capital reserve, aimed at enhancing shareholder value, will increase retained earnings that can be used for dividends.

Despite all items passing as originally proposed, shareholders expressed dissatisfaction with underwhelming product performance, unmet expectations, and the falling stock price. Many demanded explanations and apologies from the management, including Chairman Seo and CEO Seo Jin-seok. CEO Seo acknowledged the concerns but stressed that the potential of the core products remains intact, pledging to enhance performance and corporate value through the launch of 11 biosimilars and advancement of new drug pipelines.

Zymfentra’s Competitiveness Remains Strong, 50% Shipment Growth Expected This Year

Shareholders voiced concerns over Zymfentra’s underperformance, falling short of the company’s sales projections. “You forecast 500~600 billion in Zymfentra sales last year, but the actual figures were far lower. Why the large gap. Why haven’t shipment figures been disclosed” asked one shareholder.

Zymfentra received FDA approval as a new drug in October 2023 and officially launched in the U.S. market in March 2024. At that time, Celltrion projected 500 billion in Zymfentra sales for 2024, aiming for a 10% prescription share among target patients by 2025 and positioning the drug as a global blockbuster with annual sales exceeding 1 trillion.

However, 2023 Zymfentra sales reached only \36 billion. CEO Seo responded, “There were more preparatory steps needed in the U.S. market than anticipated, which became a learning experience.” He explained that additional procedures were required for PBM(pharmacy benefit manager) registration, along with more paperwork, resulting in delays that affected sales.

He emphasized, “Zymfentra’s value and competitiveness remain unchanged. This year’s shipments are increasing by more than 50%, nearly doubling.” He added, “Despite uncertainties in global markets and changes in key markets like the U.S. and Europe, Celltrion is confident in reaching the projected sales figures, backed by our cost competitiveness.” The company has now set a 2024 sales target of 700 billion for Zymfentra.

Large-Scale M&A Expected This Year

Shareholders also raised concerns about Celltrion’s lack of visible M&A activity, despite promises from Chairman Seo and the company. Seo, upon his return to management two years ago, declared himself an M&A expert and committed to growth through acquisitions. However, no major deals materialized that could significantly impact Celltrion’s corporate value.

CEO Seo explained that instead of large-scale corporate acquisitions, the company focused on investments in drug technologies, platforms, sales, and facilities. “In the biopharma industry, M&A strategies are shifting from traditional company-to-company deals to licensing technologies, acquiring pipelines, and facility investments,” he said. “Celltrion has adapted flexibly to market trends and made substantial investments since Chairman Seo’s return.”

He also hinted at possible large-scale deals beyond the small acquisitions made so far. In fact, during the J.P. Morgan Healthcare Conference this January, Chairman Seo mentioned plans for a major M&A in Q4 2024. CEO Seo added, “We’re actively reviewing several big deals. Once a deal is finalized, we will make an announcement.”

“We Feel the Pressure”…Determined to Achieve 5 Trillion in Sales This Year

Celltrion has set a 2024 sales target of 5 trillion, driven by growth in existing products like Remsima and Zymfentra and the successful launch of new products. The company also aims for a “quantum jump” in profitability by reducing cost of goods sold(COGS) and improving margins.

Following its merger with Celltrion Healthcare, Celltrion’s COGS, which had been in the 50% range, is expected to drop into the 30% range this year. This will be made possible by clearing high-cost inventories, improving yields, and ramping up production at its third plant.

CEO Seo stated, “We feel immense pressure to meet performance goals and are thoroughly preparing to hit the targets we set. While some achievements are not yet reflected in the numbers, I want to emphasize the underlying progress. We will make sure to meet this year’s performance targets.”

Celltrion also announced a simultaneous cash and stock dividend plan. A cash dividend of 750 per common share will be paid out, totaling approximately 153.8 billion. Additionally, the company will issue a stock dividend of 0.05 shares per common share, approximately 10.25 million shares marking the largest dividend in its history.