After concluding a mega licensing deal with global pharma giant Sanofi, leading South Korean drugmaker Hanmi Pharmaceutical is emerging as a rising star in the local stock market.

Hanmi shares soared by around 30 percent Friday to reach 711,000 won ($624.3), lifted by a 4.9 trillion won licensing deal with Sanofi.

Some stock market analysts raised the drugmaker’s target stock price to 1 million won, based on the rosy outlook for growth in profits.


Hanmi set a milestone in the local pharma industry Thursday by sealing a major licensing agreement with Sanofi on a set of experimental, long-acting diabetes drugs.

Under the agreement, Hanmi will receive an upfront payment of 400 million euros ($435 million) and is eligible for up to 3.5 billion euros in development, registration and sales milestones, as well as double-digit royalties on net sales.

In return, Sanofi will obtain an exclusive worldwide license to develop and commercialize Hanmi’s so-called GLP-1 diabetes treatments -- developed with the company’s exclusive biologics technology based on long acting proteins and peptide.

Meanwhile, Hanmi will retain an exclusive option to co-commercialize the products in Korea and China.

“The 5-trillion-won deal marks the biggest local drug licensing agreement to date. Seeing the scale of the agreement as well as its specifications, we can speculate that Hanmi had the upper hand during the negotiations,” said Hyundai Securities in its report.

“Around 70 percent of profits stemming from the licensing deal with Sanofi, among the top three leaders in the global insulin market, are expected to bounce back to Hanmi over the coming years upon the drug’s commercialization,” said Yuanta Securities analyst Kim Mi-hyun.

The deal marks not only a sizeable investment by Sanofi on a new technology to revive its main diabetes business, which has been struggling from increased competition, but also spotlights the growing power of Korea’s pharmaceutical research and development capabilities worldwide.

“We are pleased that Sanofi, with its long heritage and as a proven leader with a solid track record in diabetes, has recognized the value of Hanmi’s Quantum Project (the company’s diabetes treatments under development),” said Hanmi Pharmaceutical CEO and president Lee Gwan-sun.

Hanmi has stood out as an industry leader in making bold investments into researching and developing new drugs. Starting from 2009, the firm shifted its focus from manufacturing generic copies of existing drugs to developing new drugs through intensive R&D.

The company has reportedly invested a total of 900 billion won in R&D over the past 15 years. Last year, it channeled around 20 percent of its total profits, roughly 152.5 billion won, into R&D.

Such efforts have translated into tangible results, including winning recognition from global pharma firms seeking to bolster R&D and business partnerships with new drug developers to establish new pipelines for growth.

In addition to the recent deal with Sanofi, Hanmi managed to conclude two similar agreements with global pharma giants this year. It signed a $730 million licensing deal on a new lung cancer drug with Germany’s Boehringer Ingelheim in August and a $690 million deal on an autoimmune disease treatment with U.S.-based Eli Lilly in March.

The company declined to disclose or comment on other potential licensing deals under discussion or specific areas of focus in new drug development, citing corporate compliance rule.

By Sohn Ji-young (jys@heraldcorp.com)