The cost of goods sold (COGS) ratio and selling, general, and administrative (SG&A) expense ratio of Korean top pharmaceutical companies are showing contradictory trends.
According to Newsmp’s tally of the COGS and SG&A expense ratio of eight pharmaceutical companies (Yuhan corporation, GC Pharma, Chong Kun Dang Pharmaceutical, Hanmi Pharmaceutical, Daewoong Pharmaceutical, Boryung Pharmaceutical, Dong-A ST, and Ildong Pharmaceutical), the average COGS ratio decreased while the SG&A expense ratio rose slightly.
The average COGS ratio of eight companies fell marginally in the odd quarters to below the 60% mark, while it rose in the even quarters to above the 60% mark. The average annual COGS ratio was 60.0%, down 0.6%p from 2020.
On the other hand, the quarterly average SG&A expense ratio dropped in the second and third quarters after rising sharply in the first quarter but increased in the fourth quarter and rose 0.3%p annually from 2020 to 34.7%.
By company, most of the COGS ratio and SG&A expense ratio showed different trends. Companies with a reduced cost ratio indicated an increase in the SG&A expense ratio, and companies with a reduced SG&A expense ratio showed an increase in the COGS ratio.
Yuhan Corporation, which had the largest sales last year, saw its COGS ratio soar 3.4%p from 2020, but its SG&A expense ratio shrank 1.1%.
Hanmi Pharmaceutical, the only company among the eight companies with a COGS ratio below 50%, also had the same trend. Last year, the COGS ratio rose 1.5%, approaching the 50% level, while the SG&A expense ratio plunged 7.5%, decreasing to the early 40 mark, lower than the COGS ratio.
On the contrary, GC Pharma’s COGS ratio, which was above 70%, dropped 4.5%p sharply to the 60% mark, but the SG&A expense ratio surged 3.1%p to 29.1%, approaching the 30% mark.
Boryung Pharmaceutical also saw its COGS ratio fall 2.6%, but the SG&A ratio rose 1.7%, while Dong-A ST’s COGS ratio fell 1.2%p and gained 4.3%p in the SG&A expense ratio.
In contrast, Chong Kun Dang Pharmaceutical, Daewoong Pharmaceutical, and Ildong Pharmaceutical performed the same flow in the COGS and SG&A ratios.
Particularly, Daewoong Pharmaceutical saw a significant increase in operating profit last year, as the COGS ratio and the SG&A expense ratios decreased by 4.8%p and 2.8%p.
Ildong Pharmaceutical recorded large operating losses with the COGS ratio soaring 3.3%p and the SG&A expense ratio 7.4%, while Chong Kun Dang Pharmaceutical’s COGS ratio also increased 0.7%p and the SG&A expense ratio 7.8%.