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(Seoul=NSP NEWS) = Bukwang Pharmaceutical reported a sharp decline in first-quarter operating profit, as higher manufacturing costs stemming from expanded outsourcing weighed on earnings.

Sales were little changed from a year earlier, while the company returned to net profit.

In a regulatory filing on April 21, Bukwang Pharmaceutical said its consolidated operating profit for the first quarter fell 62.6% year on year to 1.128 billion won. Revenue slipped 0.1% to 47.776 billion won. Net profit came to 1.18 billion won, compared with a net loss a year earlier.

The company said the in operating profit was partly driven by increased outsourcing. In an effort to prevent renewed shortages of key prescription drugs, Bukwang Pharmaceutical expanded outsourced production of some products, including over-the-counter medicines and toothpaste. The resulting increase in production costs hurt profitability.

R&D spending and a high base from the previous year also contributed to the decline in earnings. The company said it booked expenses this year for the Phase 2 clinical trial of CP-012. It also noted that last year’s results were boosted by the effect of an agreement involving Contera Pharma and Lundbeck, making the year-on-year decline appear steeper.

Bukwang Pharmaceutical said, “To prevent recurring shortages of key prescription drugs, we increased outsourced production of certain products, including over-the-counter medicines and toothpaste,” adding, “Higher manufacturing costs as a result weighed on operating profit.”

By Eun-young Huh(eunyoung114@nspna.com) and Songyi Jeong(qu225577@nspna.com)

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