(Health Korea News / Soon-Ho Lee) Hugel renewed its exclusive sales contract with China’s Sihuan Pharmaceutical for the botulinum toxin preparation ‘Retivo’ (domestic product name: Botulax). The company has been considering direct local sales since last year, but it is interpreted that it has decided that it is still more advantageous to maintain partnerships with local companies.
According to reports from local Chinese media such as Sohu News and Sina News, Hugel and Sahuan Pharmaceuticals renewed their contract to extend the exclusive sales contract for ‘Retivo’ until the end of 2030. Sahwaan Pharmaceutical plans to further strengthen strategic cooperation with Hugel in China through this contract renewal.
Hugel originally signed a contract with Sahuan Pharmaceutical granting exclusive sales rights to ‘Retivo’ in China for five years from January 2021 to January 2026. After the contract expired, the contract could be renewed for a period of 4 years, but in reality, the contract was renewed by extending the exclusive sales rights for about 5 more years.
This contract renewal was carried out unanimously without any objections from within both companies. It is assessed that the steady increase in market share and sales of ‘Retivo’ in the local market with many variables has had a positive effect.
‘Retivo’s market share in China has already exceeded 10%. Although the exact sales figures have not been disclosed, sales of ‘Retivo’ in China in the first half of this year are known to have increased by more than 50% compared to the same period last year.
In particular, Hugel has been promoting direct sales of ‘Retivo’ in China, and the renewal of the contract with Saehwan Pharmaceutical is interpreted as meaning that Sabhan Pharmaceutical’s local influence is that much greater.
According to the industry, Hugel last year commissioned a large domestic consulting firm to conduct a cost and profit analysis on direct sales of botulinum toxin products to China. As a strategy to strengthen profitability by reducing the distribution stage, Hugel is said to have discussed internally the idea of establishing a joint venture (JV) with Sahwaan Pharmaceutical in relation to direct sales in China.
This direct sales push received even more attention as it was carried out after Hugel Chairman Cha Seok-yong visited the Chinese business site. While working at LG Household & Health Care, Chairman Cha expanded the Chinese business and grew sales from 1 trillion won in 2005 to 8 trillion won in 2021.
However, China is a country with the world’s largest population and area, and establishing a direct sales system requires securing a vast sales and distribution network. It is a mid- to long-term market strategy that is difficult to solve in a short period of time as it requires a lot of time and money.
It seems somewhat unreasonable for Hugel, which has just begun to look into the possibility of direct sales of ‘Retivo’ in China, to immediately begin direct sales by establishing a JV with Sahwaan Pharmaceutical. The analysis is that this is why the company entrusted the sale of ‘Retivo’ to Sahwaan Pharmaceutical again for about 5 years, longer than originally expected.
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