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Life Sciences & HealthcareCommercial Due Diligence on a Domestic Vaccine Specialist Pharma Company


“The Global Vaccine Market Surged Amid COVID-19”

During the pandemic, names like Pfizer, Merck, and Moderna became household references, raising public awareness of vaccines—a field that previously attracted less attention compared to other pharmaceuticals.

Vaccines are used to prevent infectious diseases or other conditions. Given their direct impact on public health, vaccines benefit from public support and extensive preventive use, ensuring steady growth and a stable market environment.

However, because vaccines typically require only one or a limited number of doses, per-patient demand is lower than that for chronic or severe disease treatments. Additionally, due to their public health nature, it is challenging to set high prices.

Traditionally, these characteristics have made vaccines appear less attractive as a business compared to other drug categories, with vaccines historically accounting for about 7% of the total pharmaceutical market. Yet the global vaccine market skyrocketed from USD 35 billion in 2020 to approximately USD 111 billion in 2022, driven predominantly by COVID-19 vaccines.

While COVID-19-related demand will likely decline, the remaining vaccine market is still projected to grow at about 9% annually over the next five years. Factors include:

  1. Expansion of vaccine applications beyond general infectious diseases to areas such as refractory disease prevention
  2. Increased government and public-sector investment, catalyzed by the pandemic
  3. Rising vaccination rates in developing countries due to economic growth

“Conducting a Commercial Due Diligence on a Domestic Vaccine & Specialty Pharma Company”

Looxent recently conducted a Commercial Due Diligence on a company engaged in manufacturing, selling, and distributing vaccines and specialty pharmaceuticals. Originally focused on vaccines, this company successfully leveraged its hospital and clinic network (established through its vaccine business) to expand into specialty pharmaceuticals.

We assessed market characteristics, growth prospects, competitive dynamics, and the company’s strengths in both its vaccine and specialty pharmaceutical businesses. Using these insights, we estimated the company’s revenue growth potential over the next five years and identified strategic pathways for post-acquisition growth. We also examined key risks and proposed measures to prevent or mitigate them.

“Vaccine Industry: Inherently Stable with Expansion Potential”

The domestic vaccine market can be divided into:

  1. The NIP (National Immunization Program) market, which involves public procurement for free vaccinations
  2. The private/premium market, where individuals pay out-of-pocket for vaccines not covered by NIP or those featuring advanced technologies

NIP ensures stable demand for vaccines included under its umbrella, as the government provides them free of charge to protect vulnerable populations (infants, elderly) and in cases like COVID-19 where high transmission and prevalence rates threaten public health. In this public procurement setting, price sensitivity is high, with both domestic and global players participating.

In contrast, the private/premium market is driven by consumers who pay for vaccines not supported by public programs, often due to advanced technology or targeting non-vulnerable groups. Here, technological differentiation and brand strength are critical, and global companies typically hold an advantage.

The vaccine market’s dual nature—one segment driven by stable public procurement and the other offering higher margins in premium segments—provides inherent stability with the potential for strong profitability. Emerging vaccine technologies also suggest future expansion into preventing and treating intractable diseases, enhancing market upside.

“Growth Potential in the Vaccine Business”

To estimate the target company’s revenue growth potential in vaccines, Looxent focused on three aspects:

  1. Future market growth trajectory
  2. The company’s product mix and each product’s competitive strength
  3. Its product development pipeline

Vaccine demand correlates with population demographics and NIP policy directions. After estimating market sizes for each product segment, we evaluated product-level competitiveness to forecast revenue potential. Given the lengthy development timelines, the company’s development pipeline and product launch plans are critical indicators of future revenue growth.

“Specialty Pharmaceuticals: Responding to Regulatory Changes Is Key”

Specialty pharmaceuticals differ from vaccines. The domestic market is fragmented with numerous competitors, especially in the generics segment, resulting in intense price competition. Securing distribution channels and strong sales capabilities is crucial.

Like vaccines, the specialty pharma market benefited temporarily during the pandemic (e.g., telemedicine allowances, increased prescriptions for antibiotics due to COVID-19 symptoms and aftereffects). As the pandemic recedes, some of this demand may normalize.

To curb excessive competition and the proliferation of generic drugs, the government is tightening regulations. Future competitiveness in specialty pharma thus relies increasingly on regulatory compliance and robust sales execution.

“Growth Potential in Specialty Pharmaceuticals”

Top-down market sizing can be challenging for companies with low market share in a fragmented environment like domestic specialty pharma. Instead, Looxent employed a bottom-up approach to forecast the target’s revenue growth. We projected changes in sales force size and productivity (sales per representative), pricing, and regulatory impacts—factors that matter more for generics, where differentiation is limited and sales execution is paramount.

Conclusion: Long Development Timelines and the Importance of Pipeline Evaluation

Like other pharmaceuticals, vaccines require long development cycles and significant investment, with inherent uncertainty. Hence, pipeline breadth and development plans are critical when assessing a vaccine company.

Considering the high proportion of public procurement, future shifts in public health policy also greatly influence the market. For companies with strong R&D capabilities, it’s essential to assess their technology generation and its potential for future expansion. Any new technology or product line can present significant upside opportunities, making such evaluations a key component of thorough due diligence.



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LOOXENT

A  21F. Parc.1 Tower2, 108, Yeoui-daero, Yeongdeungpo-gu, Seoul, Korea 07335

T  02-546-8222      F  02-546-8226

E  service@looxent.com 

© 2024 LOOXENT. ALL RIGHTS RESERVED.