Dongwha Pharmaceutical faces a steep decrease in sales as GSK Consumer Healthcare Korea decided to finish its contract to sell over-the-counter (OTC) drugs one year earlier than the initial contract period.
Dongwha had reported on Thursday that its OTC marketing deal with GSK would end on Dec. 31 due to the merger of GSK and Pfizer Healthcare. "We decided to terminate the contract due to the establishment as the merger resulted in a new corporation between the two merged companies," a company official said.
The two companies signed sales and supply contract for 10 items in GSK's OTC pipeline in September 2017 and agreed to maintain the agreement until 2020.
The annual sales of GSK’s OTC items reached 60 billion won ($50.3 million) in 2018.
Considering that Dongwha's total sales last year was 306.6 billion won, the revenue from GSK's OTC products accounted for about 20 percent of the Korean company’s annual sales. The sales from products developed by Dongwha stood at 128.6 billion, only 42 percent of the total, indicating the company had made more than half of its earning with products supplied by other drugmakers.
The contract termination comes nine months after GSK and Pfizer agreed to merge their consumer healthcare divisions in December last year.
The joint venture is likely to sell the two firms' popular OTC medicines such as GSK's painkiller Panadol, pain reliever and inflammation drug Voltaren, Pfizer's pain reliever Advil, vitamin supplement Centrum, and heartburn treatment Nexium.
The combined global sales by the consumer healthcare units of the two companies exceeded $12.7 billion last year.