|Yuyu Pharma CEO Robert Yu speaks during an interview with The Korea Times at the firm's headquarters in Jung-gu, Seoul, Friday. / Courtesy of Yuyu Pharma|
By Nam Hyun-woo
Yuyu Pharma has been a mid-tier pharmaceutical company for 78 years. As far as being a dynamic and growing entity, its sales have never exceeded 100 billion won.
But with its new CEO Robert Yu taking the helm, the firm is looking for a turning point in its history by introducing new drugs and embracing innovation.
"I usually emphasize to our employees that Yuyu is a 78-year-old startup," Yu said during an interview with The Korea Times. "This is to emphasize that the company has to be open to new technologies from outside so we can reach a turning point toward faster growth."
Yu, 45, is son of the firm's Chairman Yu Seung-pil and grandson of founder Yu Teuk-han. Before inheriting the family business in 2009, he worked for pharmaceutical giant Novartis and then leading investment bank Merrill Lynch.
Yu was appointed as the company's co-CEO with his father on April 2, in what appeared to be a major step toward inheriting ownership.
As the new leader of the drug maker, he is seeking to raise the company's profitability. Despite being a well-known pharmaceutical firm in Korea, thanks to its long history and steady seller Yupan C vitamin supplements, the firm posted 83 billion won in sales and an operating profit of 5.3 billion won, making it No. 53 among Korea's listed pharmaceutical firms.
"I don't believe the company's 78-year history will guarantee a bright future," Yu said. "The history may be a basis, but it does not provide a growth engine for the future. Our future hinges on how we make a turning point from now on."
To boost the company's reputation, Yu is focusing on developing new drugs for treating enlarged prostates and dry eye syndrome, which he said will be "the new cash cows for Yuyu."
Currently, Yuyu Pharma is preparing for phase three clinical trials for YY-201, a drug to treat enlarged prostate glands. The drug contains the components of two widely used prostate drugs, but the tablets have been reduced in size so patients can take them more easily, according to the firm.
The company is pinning high hopes on the drug's success, given the stable growth in the market. According to the Ministry of Health and Welfare, the domestic market for prostate treatments was worth 200 billion won in 2018, and the global market is expected to grow by 8 percent every year to reach $4.5 billion in 2024.
"The drug was approved for phase three clinical trials, with its patent pending overseas," Yu said. "We plan to finish recruiting patients and begin trials this year."
The dry eye drug, YDE, is in a preclinical stage, and the company said it confirmed the new drug does not have side effects such as irritation or diminished sense of taste, while it has improved lubrication and anti-inflammatory properties.
Last month, Yu attended this year's annual meeting of the Association for Research in Vision and Ophthalmology in Canada and announced the new drug's functions and plans for global clinical trials.
"Unlike artificial tears, there are only three dry eye drugs available in the global market," Yu said. "The market is huge and we have high hopes for the success of YDE."
Given its size and growth, the dry eye drug market is also deemed lucrative for the firm. The domestic market was worth 160 billion won in 2016, while globally it is expected to reach $6.1 billion by 2027, growing 6.4 percent annually from $3.1 billion in 2017.
"To accelerate the two projects, we are highlighting open innovation by forging ties and partnerships with startups and outside experts and embracing their innovative ideas," Yu said, adding the firm is investing 5 percent of its revenue into R&D.
As part of this, Yuyu Pharma signed a deal with a biopharmaceutical venture company, IMDPharm, to use its technology in making small tablets for the prostate drug.
"Along with prescription drugs, we will continue expanding our over-the-counter medication and health supplements," Yu said.
Currently, 76 percent of its sales comes from prescription drugs.
"The government is introducing favorable policies for supplements these days, and these are easier for customers to purchase than prescription drugs," he said. "Enhancing the supplement business will help the company have a better balance in sales."
|Yuyu Pharma plant in Jecheon, North Chungcheong Province / Courtesy of Yuyu Pharma|
Applying big data
One of noticeable changes under Yu's leadership is the use of big data in marketing.
In 2003, the company released Venoplus Gel, an ointment for muscle spasms, swelling, insect bites and bruises, for babies. However, its sales stuck at 1 billion won annually for over a decade.
In 2013, Yu, then a managing director, analyzed data on the ointment's market, including customer responses on social media, and found there is a noticeable demand from female customers in their 20s who want to remove bruises.
He changed the marketing strategy, shifting its target from parents to women in their 20s and emphasizing the removal of bruises.
After this, sales doubled, making Venoplus one of Yuyu Pharma's steadiest sellers.
"Companies cannot come up with effective marketing strategies as long as they cling to the conventional supplier-centric idea of targeting doctors and pharmacists," Yu said.
"And I believe social media is the best tool for listening to customers. Conventional market research may provide information on the current status but it tells you nothing about markets yet to exist. On the other hand, proper analysis of social media reveals customers' opinions and demands, which is helpful in seizing an opportunity in a new market."
Dream job for jobseekers
Industry analysts expect the successful launch of the two new drugs undergoing trials will allow Yuyu Pharma to surpass 100 billion won in sales. Yu, however, does not set his goal by numbers.
"Instead of saying how much revenue we will earn or how many new drugs we will develop by when, my goal as CEO is to make the firm a company providing dream jobs to jobseekers."
As part of this, Yuyu Pharma has been giving out performance-based shares in the company since 2016 and free medical services for employees' families since 2017.
Another goal is expanding exports. Currently, Yuyu Pharma is exporting to Mongolia, Malaysia, Cambodia, Myanmar and Chile among other countries, and Yu said a primary focus will be boosting sales in Southeast Asia.
"The Chinese market is already occupied by multinational firms, while Southeast Asia has a supply that does not meet the high demand, which is a lucrative niche for us," Yu said.
"Also, customers have a favorable response to Korean companies and their products. If there are multiple generic drugs, they prefer Korean products."