S. Korea fines pharma giant Celltrion for unfair business practices

Seoul, Dec 3: South Korea's antitrust regulator on Tuesday said it has fined leading drugmaker Celltrion 435 million won ($309,900) for engaging in unfair business practices.

The biopharmaceutical giant is accused of unfairly benefiting its affiliate, Celltrion Healthcare, by waiving inventory storage fees and granting free use of trademark rights, according to the Fair Trade Commission (FTC), Yonhap news agency reported.

The FTC concluded that such tactics undermined fair competition and resulted in undue financial benefits for Celltrion Healthcare, estimated at 1.2 billion won.

The FTC, however, decided not to refer Celltrion Chairman Seo Jung-jin to prosecutors for further investigation.

"The total benefit provided was less than 5 billion won, and it is unclear whether the chairman directly ordered or was involved in the actions," Kim Dong-myung, an FTC official, said.

Earlier, the FTC announced that among 88 large business groups, including 10 chaebol or family-run conglomerates, subject to annual oversight, Celltrion reported the highest ratio of inter-affiliate transactions in 2023 at 65 per cent.

Meanwhile, the South Korean drugmaker’s third-quarter net income dropped 62 per cent from a year earlier despite posting the highest quarterly sales. It was mainly due to lingering effects from its 2023 merger with its sales and marketing affiliate, Yonhap reported.

Net profit for the July-September period came to 84.1 billion won ($60.6 million), compared with 221.2 billion won a year ago, the company said in a regulatory filing.

Its operating income was down 22.4 per cent on-year to 207.7 billion won, while sales rose 31.2 per cent to hit a record high of 881.9 billion won.

For the first nine months of the year, Celltrion's cumulative revenue amounted to 2.49 trillion won, which has already exceeded the full-year figure from 2023, the report said.