“Number one in Asia is what we are shooting for”

[Interview] Dongkoo Bio & Pharma CEO Cho Yong-joon

“Generic industry facing crisis and opportunity all at once, only way out is the global market”

“Beyond Korean market, aiming for Asia’s top dermatological treatment company”

“For next 50 years, Dongkoo’s future engine is in bio sector”

“As far as dermatological treatment business goes, I think we have a shot at becoming the number one in Asian market”, Cho Yong-joon, CEO at Dongkoo Bio & Pharma (“Dongkoo”) commented.

 

The CEO said ‘entering global market’ is the next long-term goal for the company while it gets closer to its 50th anniversary next year.

 

CEO Cho was confident that Dongkoo’s two most prominent business sectors, dermatological treatment and contract manufacturing, would both be competitive in the global market.

 

He explained the recent aggressive investment and company expansion have been executed with the global market in mind.

 

Visiting his office on Nov.

 

18 for an interview, it has not even been 24 hours since came back from his business trip to the U.S.

 

Apparently, Cho was already making moves for the global market.

 

-What business took you to the U.S.?

 

“It was to dip our toes in the water of global contract manufacturing organization (CMO) market.

 

I shared some positive talks with a U.S.

 

company especially on our strength, the soft capsule manufacturing.

 

When we ink the deal, we would fully disclose the story.

 

Next year would be Dongkoo’s 50th anniversary.

 

Accordingly we would put forth our global market vision”.

 

- Would it be safe to assume the latest Hwaseong plant expansion was a part of the vision?

 

“We have invested ten billion won.

 

The plant started running from this month.

 

Our production capacity would go up half as much again as before or even double.

 

The company’s CMO sector made 21 percent more last year with 33.1 billion won, compared to 15.3 billion won in 2014.

 

We are expecting to make about 40 billion won this year.

 

To date, the manufacturing factory could not catch up with orders pouring in.

 

“When the manufacturing facility stabilizes from next year, the overall sales and profit would rise.

 

Not only did we enhance production capacity, but also we are focusing on developing new technology on soft capsule.

 

We gained expertise in dermatological treatment through our experience”.

 

-After the valsartan incident, many are concerned of CMO industry “Korean CMO industry is faced with crisis and opportunity all at the same time.

 

As the regulator decided to abolish the joint bioequivalence test system, and revived the gradual drug pricing system, I expect the industry would get the blow soon or later.

 

That is what Dongkoo is preparing for.

 

Specialization and differentiation is the key.

 

The government is also encouraging companies to focus on specialized manufacturing.

 

So far, Dongkoo has been doing well with soft capsule and ointment items.

 

“But the opportunity lies in the global market.

 

Korean CMO industry would be competent enough in the global market.

 

I confirmed that at the CPhI Worldwide 2019.

 

From now on production cost would heat up the already competitive generic market.

 

Now it’s a matter of who sources drug the best.

 

Korean companies could also easily source drug from other countries.

 

We all need to target the global market competition”.

 

-What are your visions on Dongkoo’s specialized sector, dermatological and urological treatments?

 

“Not too different from others, we’re aiming for the global market expansion.

 

First, we would tackle the Asian market.

 

The company is carefully preparing for the leap.

 

To be specific, we are considering opening an office in China.

 

In Korea, our dermatological treatment prescription is ranked at the top with, and urological treatment prescription is at eighth place.

 

Why not then go for the top rank in Asia?

 

This is our goal.

 

We have constantly introduced dermatological treatment.

 

Some are ready to be released next year.

 

For the long-run, we are in process of developing new drug and incrementally modified new drug”.

 

-You’ve shown some notable moves not only on facilities but also on venture investment.

 

“We have signed deals with Novacell Technology, D&D Pharmatech and BioNote.

 

D&D Pharmatech is a bio venture led by a group of professors from the Johns Hopkins University School of Medicine.

 

They are developing treatments for Parkinson’s disease, Alzheimer’s disease and rare fibrosis conditions.

 

Dr.

 

Lee Seulki from Johns Hopkins University School of Medicine is leading the R&D and clinical trials.

 

“We have invested 3.1 billion won on D&D Pharmatech.

 

The U.S.

 

Food and Drug Administration (FDA) granted Orphan Drug Designation (ODD) for the venture company’s rare fibrosis treatment.

 

Recently, the company successfully attracted 140 billion won worth of series B funding.

 

We expect the company to go public next year.

 

“Novacell Technology obtained its U.S.

 

patent on atopic dermatitis peptide this year.

 

And BioNote was the first Korean company to develop African Swine Flu diagnosis kit”.

 

-Investment expansion comes with business profit drop.

 

Seems like Dongkoo’s revenue has been falling for last two years.

 

“It was given that operating profit would go down.

 

We have spent much of capital on facility expansion investment, recruitment, clinical investment and marketing.

 

But the actual sales revenue has constantly gone up.

 

It verifies that the business is growing steadily.

 

The last two years of decreased revenue was about preparing for the future ‘quantum jump’.

 

The return on the investment is expected to show even from next year and on".

 

-Some other business expansion on other sectors like cosmetics and medical device has been noticeable as well.

 

“We’ve jumped into cosmetic market.

 

‘Cell Bloom’ is a brand based on 3D stem cell media skin care products.

 

We are expecting the brand to generate synergy effect with our expertise in dermatological treatment.

 

And we are taking this for a long run.

 

A few home shopping TV channels have offered us a slot, but we turned them down.

 

We could’ve gotten some instant sales hike, but we are planning to build the brand image centering hospitals and duty free shops first.

 

“Besides Cell Bloom, we also have an ongoing development of bio medical device called ‘Smart X’.

 

We are challenging the chronic disease sector with bio technology.

 

There are unmet needs that cannot be resolved with drugs.

 

An example would be diabetic foot (chronic foot condition derived from diabetic mellitus).

 

Not many drugs treat diabetic foot.

 

“Smart X is a convenient stem cell extraction kit.

 

We have observed meaningful effect from extracting stem cell and injecting back into the ulcer on a foot.

 

Clinical trial is in process to receive approval on the new medical technology.

 

It would get approval in first half of next year at earliest, and generate expected sales from the latter half of the year.

 

The approval application reviews are well on their ways in the U.S., China and Russia as well.

 

And it’s already on sale in Spain”.

 

-Celebrating the last 50 years of the business, what’s next for Dongkoo?

 

“Bio sector is where Dongkoo would be investing on for the next 50 years.

 

Cell Bloom and Smart X are on the same track as well.

 

We would not superficially imitate bio technology, but strive for sustainable business with genuine bio technology, as I would reiterate at the company foundation ceremony.

 

"For the goal, Dongkoo aims to transform from pharmaceutical and bio company into a total healthcare company.

 

Dongkoo would generate great synergy effect with dermatological and urological treatments, as well as stem cell-applied healthcare technology, and reborn as a total healthcare company to cover from head to toe with diagnostic, preventive, treatment and maintenance products”.