Can Cho-A Pharm Reverse Its Three-Year Sales Slump?

Cho-A Pharm has been expanding into new business areas such as veterinary pharmaceuticals and online sales channels, but the company still appears to lack a clear growth engine capable of reversing weakness in its core business. Having traditionally grown through its over-the-counter (OTC) pharmacy network, the company has now recorded declining sales for three consecutive years.

Cho-A Pharm. / Cho-A Pharm

According to industry sources, Cho-A Pharm posted consolidated revenue of KRW 59.3 billion last year, down 5.4% from KRW 62.7 billion a year earlier. Over the past five years, the company’s sales stood at KRW 57.6 billion in 2021, KRW 68.9 billion in 2022, KRW 63.0 billion in 2023, KRW 62.7 billion in 2024, and KRW 59.3 billion last year. After reaching its peak in 2022, revenue has declined for three straight years.

Profitability also remains in negative territory. The company recorded an operating loss of KRW 6.6 billion last year, an improvement from KRW 9.7 billion the previous year. However, Cho-A Pharm has remained in the red for five consecutive years, with operating losses of KRW 7.0 billion in 2021, KRW 500 million in 2022, KRW 6.8 billion in 2023, KRW 9.7 billion in 2024, and KRW 6.6 billion last year. Although the company succeeded in reducing losses through cost-cutting measures, weakening sales have prevented it from returning to profitability.

Cho-A Pharm is a mid-sized pharmaceutical company with businesses spanning OTC medicines, health supplements, the Medipharm pharmacy franchise network, and overseas exports. According to its business report, the company has focused on pharmacy sales since its founding, producing and supplying over 200 pharmaceutical and health supplement products, including Joba Viton, Hepatos, Galeo, Fematin, and Zalkton. It currently operates 15 sales offices across Korea with more than 100 medical representatives (MRs), while exporting over 150 products to 23 countries.

The core issue lies in declining domestic product sales. Domestic product sales fell to KRW 40.3 billion last year, down 2.7% from KRW 41.4 billion a year earlier. Domestic sales have steadily declined from KRW 46.6 billion in 2022 to KRW 42.9 billion in 2023, KRW 41.4 billion in 2024, and KRW 40.3 billion last year. Given that pharmacy-centered product sales form the backbone of the company’s revenue, this decline has directly impacted overall sales performance.

Exports have also failed to serve as a buffer. Product export sales came in at KRW 5.8 billion last year, down 14.5% from KRW 6.8 billion the previous year. Over the past five years, export sales fluctuated between KRW 4.5 billion in 2021, KRW 6.7 billion in 2022, KRW 4.1 billion in 2023, KRW 6.8 billion in 2024, and KRW 5.8 billion last year. While the company has maintained a certain level of overseas sales, export growth has not been strong enough to offset the decline in domestic sales.

Performance of major products has also been underwhelming. One of Cho-A Pharm’s 대표 products, the children’s nutritional drink Zalkton, generated KRW 3.82 billion in sales last year, accounting for 6.6% of total revenue—down from KRW 4.26 billion the previous year.

Fematin, a hematinic supplement, generated KRW 3.59 billion, representing 6.3% of total sales, while Hepatos, a liver disease treatment, generated KRW 2.07 billion, accounting for 3.6%. The scale of these flagship products remains limited, and declining sales of some core products have further weakened the company’s growth momentum.

To reverse this trend, Cho-A Pharm has been broadening its business portfolio. In 2024, the company amended its articles of incorporation to add veterinary pharmaceuticals, pet food, and companion animal-related businesses to its business objectives. Its business report now states that, in addition to pharmaceuticals, quasi-drugs, health supplements, general food products, and hygiene products, the company also engages in the manufacturing and sale of veterinary medicines, single-ingredient feed, compound feed, and other animal feed products.

Following this move, Cho-A Pharm officially entered the pet healthcare market by launching “Zalkgae,” a companion animal pharmaceutical and supplement brand. Given the rapid growth of the pet market, the strategic direction itself appears logical. The company also expects to leverage its existing pharmacy distribution network alongside veterinary pharmacy channels. In 2024, Cho-A Pharm additionally opened an official store on Naver Smart Store to strengthen its online presence.

The challenge, however, is that these new businesses have yet to translate into meaningful financial results. Although Cho-A Pharm aims to expand revenue through veterinary pharmaceuticals alongside its existing human healthcare products, it is still too early to say the new business is making up for declining legacy sales. In its business report, the wholesale and retail pet supplies business is classified as “not yet in operation,” indicating that its pet business remains in its early stages.

The company’s capacity for research and development also remains limited. Cho-A Pharm spent KRW 1.4 billion on R&D last year, down 22.2% from KRW 1.8 billion the previous year. R&D spending as a percentage of revenue fell to 2.29%, compared with 2.85% in 2024 and 3.81% in 2023. At a time when new products and business initiatives are critical for recovery, declining R&D investment could weigh on the company’s ability to secure long-term growth drivers.

A reduction in selling and administrative expenses appears to have contributed to narrowing operating losses. Selling and administrative expenses fell 7.7% to KRW 28.4 billion last year, from KRW 30.8 billion the previous year. While cost adjustments in its pharmacy-centered sales structure helped reduce short-term losses, they have not yet translated into a recovery in revenue.

Industry experts note that for Cho-A Pharm’s veterinary pharmaceutical business and online sales expansion to drive a genuine turnaround, the company will need more than simply expanding its business objectives or launching new brands. It will need a differentiated product portfolio and an integrated sales strategy spanning pharmacies, veterinary pharmacies, and online channels.

“One of the key challenges for Cho-A Pharm is not simply reducing costs, but proving that it can restore declining domestic product sales through new products and channel strategies,” an industry official said. “Its entry into the veterinary pharmaceutical market is still at the potential stage. Whether Zalkgae becomes a new growth pillar or merely serves as a temporary support measure to slow existing sales declines will likely become clear in the company’s results from this year onward.”