Celltrion

Celltrion is pleased to announce the successful closure of a deal with one of the top three leading pharmacy benefit managers(PBMs) in the US for the formulary inclusion of Yuflyma, following our recent successful listing agreement for Zymfentra. 
 

Celltrion wishes to share this news preliminarily via our website and will provide further details following our discussions with the PBM.

•  Celltrion has recently announced the successful closure of the deal with one of the top three PBMs in the US for the formulary inclusion of Zymfentra. Concurrently, we have finalized a listing contract for our adalimumab biosimilar Yuflyma ('Humira' as the reference product) with the same PBM. We appreciate your understanding that, at this stage, we are unable to disclose the name of the PBM. 

   

• This listing of Yuflyma marks our second contract signed with the top three PBMs, following the previous listing in OptumRx’s formulary last year. Yuflyma is estimated to have attained coverage for approximately 50% of the US insurance market (measured by the number of lives covered) solely through these two PBMs.

• Celltrion views the significance of this agreement from three primary perspectives. 

   

1.  First and foremost, it is noteworthy that Celltrion has successfully executed its pivotal strategy of 'double pricing' for the sales of Yuflyma in the US market. Celltrion places profitability as the foremost consideration in negotiations with PBMs in the overly crowded US adalimumab market. Under last year’s agreement with Optum, Celltrion provided high-WAC (Wholesale Acquisition Cost) products to the public insurance market, where the rebate proportion is lower compared to the commercial insurance market. Conversely, as evidenced in the current agreement, we have provided low-WAC products to the commercial insurance market, where the rebate proportion is relatively higher. Through this strategic approach, we have established a pricing structure aimed at optimizing profitability across the varied dynamics of the US market.
   
   This contract reflects Celltrion’s strategic move in anticipation of the Inflation Reduction Act (IRA) implications starting in 2025. The IRA mandates insurance companies to cover 60% of excess costs for medications exceeding $2,000 in annual out-of-pocket prescription costs, heralding a shift towards favoring products characterized by both low rebates and low-WAC. In a proactive move to better navigate the forthcoming regulatory landscape, Celltrion strategically secured a competitive edge by including low-WAC and low-rebate products in industry-leading PBMs' formularies. The advantage of a low WAC extends beyond reduced out-of-pocket costs for patients—it also facilitates more favorable rebate negotiations with insurers, thereby strengthening Celltrion's profitability.

    

2. Another significant aspect of this PBM contract is its facilitation of a strategic bundling of Zymfentra and Yuflyma for U.S. IBD specialists. The inclusion of Yuflyma in commercial plans expands options with an equally safe and effective biosimilar to Humira, complemented by Zymfentra, which presents an innovative approach for IBD treatment as the world's first and only subcutaneous infliximab. The anticipated rollout of the Stelara biosimilar, CT-P43, is expected to further solidify Celltrion's position in the IBD treatment landscape, driving prescription growth across its portfolios through enhanced market preference and cross-selling synergies.

    

3. Furthermore, this agreement lays a robust groundwork for Celltrion to broaden the target market for Yuflyma into rheumatoid arthritis (RA), another significant indication of adalimumab, starting in the year’s second half. This enabled Yuflyma to target the entire Humira’s US market, valued at $18.62 billion (approximately KRW 24.2 trillion, as of 2022).
    

    

• Celltrion remains dedicated to expediting contracts with the remaining major PBM and extending its efforts to medium and small-sized PBMs. By the year's first half, the company is determined to implement all necessary measures to gear itself for a quantum jump this year in the world's largest pharmaceutical market. Under the leadership of Chairman Jungjin Seo, the Celltrion team is fully engaged in ongoing sales endeavors across the U.S. to ensure that not only the company’s flagship product, Zymfentra, but also Yuflyma, Vegzelma, and its entire product portfolio achieve notable sales success.

Celltrion remains committed to maintaining timely communication channels with its shareholders.