SK Bioscience expected to log 70% drop in profit as COVID vaccine demand dwindles

Korean biopharmaceutical firm SK Bioscience is expected to log a sharp decline in its sales and operating profit for 2022, as demand wanes for COVID-19 vaccines, its key source of revenue, according to a report from a local securities firm on Friday.

The company’s annual sales for last year are expected to drop 49 percent on-year to 474.2 billion won ($385.7 million), while its operating profit is also expected to plunge 70.3 percent to 141 billion won, the report released by Meritz Securities estimated.

With the three-year pandemic seemingly nearing its end, weakening demand for COVID-19 vaccines has taken a toll on SK Bioscience. The firm manufactures US biotech firm Novavax's COVID-19 vaccine targeting omicron variants as well as its its own COVID-19 vaccine SKYCovione.

"The expected decreases in earnings are largely due to reduced sales from contract manufacturing orders from Novavax and loss from inventory valuation of its SKYCovione stock," analyst Park Song-yi said in the report.

The market researcher, however, hinted that there are chances that SKYCovione sales could increase in the future on price competitiveness over Moderna’s COVID-19 vaccine, the cost of which could potentially be raised to between $110 and $130 per dose in the US.

The analyst also said SK Bioscience will be able to make up its losses if the company obtains successful results from its phase 3 clinical trial of GBP410, a pneumococcal vaccine candidate the company is co-developing with Sanofi vaccines division Sanofi Pasteur. Successful development of GBP410 could help fuel long-term revenue growth, the researcher added.

The pneumococcal vaccine market is expected to post an annual growth rate of 7.9 percent through 2026 and expand to $9 billion, a Meritz Securities’ report said.

SK Bioscience could strike new contract manufacturing orders in the mRNA and cell and gene therapy areas, the report expected.