Hugel (145020) is expected to shift sales of its Letybo botulinum toxin in the United States to a fully direct model starting in the second half of 2027. The company plans to use local distributor Benev as a contract sales organization (CSO) through the first half of next year before taking over final customer sales and revenue recognition itself. The move is aimed at strengthening pricing control in the U.S. market and securing local customer data directly.
Hugel disclosed the plan to restructure its U.S. toxin sales at an investor day held on the 18th, according to DB Securities (016610) on the 21st. Previously, the company supplied products to Benev and booked revenue at that point. Under the new arrangement, Hugel will recognize revenue on volumes actually sold to end customers and pay Benev a sales commission.
The existing supply contract with Benev ran for three years from July 2024 and had been set to expire in July 2027. Hugel is expected to end the distribution deal about a year early, operate under the CSO structure through the first half of 2027, and move to a fully direct model in the second half of that year.
Under a direct model, Hugel can recognize final selling prices itself, which should improve its average selling price (ASP). The company will also gain access to customer data held by Benev. During the transition, however, Hugel must pay sales commissions to Benev, and the cost of acquiring the customer data will be booked as an intangible asset, creating amortization expenses going forward.
Near-term earnings are expected to take a hit. DB Securities said Hugel will likely buy back Benev's distribution inventory during the third quarter to prepare for the CSO transition, and estimated third-quarter revenue at 101.6 billion won, down 26.3% from the previous quarter and 4.1% from a year earlier. Operating profit is projected at 36 billion won, a 24.1% decline from a year earlier. Export revenue is seen falling 29.1% year-on-year to 32.3 billion won.
Top-line growth is expected to resume after the transition, however. DB Securities forecast Hugel's annual revenue to rise from 503 billion won this year to 614 billion won in 2027 and 704 billion won in 2028. Operating profit is estimated to grow from 195 billion won to 239 billion won and then 307 billion won over the same period.
