ST Pharm (237690.KQ) posted higher revenue and operating profit in the third quarter, driven by a rise in commercial orders for oligonucleotides, the key raw material in RNA-based therapeutics. Its operating margin narrowed, however, as lower-margin products such as generic drugs accounted for a larger share of sales, and net profit declined as the won strengthened against the dollar.
ST Pharm said on the 27th that third-quarter revenue reached 97.6 billion won and operating profit 15.7 billion won. Revenue rose 19.1% and operating profit 6.6% from a year earlier. Sales of commercial oligonucleotide products climbed 45.6% to 49.7 billion won from 34.1 billion won a year earlier.
New oligonucleotide orders are also expanding. The company won 12 new orders this year, adding four in the third quarter after eight in the first half. Indications are broadening to include obesity, neurological disorders, metabolic diseases and autoimmune diseases. As of the end of September, the oligonucleotide order backlog stood at about $270 million, with commercial projects accounting for roughly 78% of the total.
Revenue from small-molecule drugs grew sharply to 11.6 billion won from 100 million won a year earlier. "Small-molecule drugs are also growing on higher revenue from commercial projects, and we expect that growth to continue," a company official said, adding that the order backlog stood at about $40 million as of the end of September.
Despite the gains in revenue and operating profit, the operating margin fell to 16.1% from 18% a year earlier. Generic drug sales, which carry relatively low margins, rose to 7.7 billion won in the third quarter from 2.5 billion won a year earlier, and the stronger won also weighed on profitability. Net profit fell 94.8% from a year earlier to 900 million won, as foreign exchange losses and currency translation losses tied to the stronger won cut into earnings.
In messenger RNA, including personalized cancer vaccines, the company secured two new orders and booked about 500 million won in revenue. Revenue from subsidiaries running businesses such as contract research organization services fell 5.6% from a year earlier to 8.8 billion won.