Huons Faces Drug Price Cut Risks After Canceled Merger

Huons Faces 124 Prescription Drugs Targeted for Price Cuts

The Health Insurance Review and Assessment Service in South Korea announced on December 8 that 124 of Huons’ professional pharmaceuticals (ETC) are subject to its first round of drug price re-evaluations. This regulatory review directly threatens the company’s primary revenue engine.

According to financial disclosures reported by Dealsite, product sales within the domestic ETC market make up the vast majority of Huons’ income. Last year, the company generated 3403억원 out of its total 5210억원 revenue—roughly 65%—from this division. That reliance deepened in the first half of this year, with ETC product sales hitting 1687억원, or about 74% of the 2281억원 total.

Among the specific medications flagged in the re-evaluation are flagship products holding top domestic market share positions:

• Lidocaine: A widely used local anesthetic injection.
• Kynex: An artificial tear product utilizing hyaluronic acid.
• Mucoramin: A rebamipide-based treatment.
• Labesto: A rabeprazole-based medication generating annual sales between 50 and 70억원 규모의 매출을 올리는 것으로 분석되고 있는.

Huons stated that it does not publicly disclose individual product revenue figures. However, company representatives confirmed to Dealsite that management is actively reviewing steps to minimize the financial impact of the incoming price reductions.

Innovative Pharmaceutical Certification Becomes a Critical Shield

With generic drug price ceilings slated to drop from 53.55% of the original drug’s price down to 45% by April 2027, qualifying as an "Innovative Pharmaceutical Company" offers a vital buffer. Certified firms can maintain their generic pricing calculation rate at up to 49% for a period of up to four years.

Securing this certification is widely viewed as a necessary defense for Huons’ upcoming balance sheets. To qualify under current guidelines, a company with a three-year average medicine revenue exceeding 1000억원 이상인 기업—such as Huons—must dedicate more than 5% of its revenue to research and development.

Huons has cleared this threshold on paper, posting R&D spending ratios of 6.24% in 2023, 6.4% in 2024, and 7.54% through financial projections. The Ministry of Health and Welfare closed applications for new 2026 certifications on November 18, with final selections scheduled for December following administrative reviews and interviews.

The Aftermath of the Canceled Huons Lab Merger

Management originally structured the merger to combine research pipelines and easily satisfy upcoming regulatory shifts. South Korean health authorities have signaled plans to raise the mandatory R&D spending ratio for innovative certification to 7% of revenue while narrowing qualitative metrics down to 17 quantitative indicators, such as export volumes and clinical trial counts.

However, the merger faced severe backlash and criticism over duplicate listings from corporate shareholders, forcing leadership to scrap the integration entirely. Without the consolidation, Huons lacks its planned structural shortcut to meet the forthcoming 7% R&D requirement.

Company officials maintain that despite the canceled merger, management intends to independently meet the stricter criteria for the innovative corporate designation while building out internal defenses to handle the broader market adjustments.