CJ Bio Shifts Survival Strategy : 'From New Drug-Only Focus to Diversified Revenue Streams'

[Korea Financial Times, Kim Nayoung] CJ BioScience (hereafter CJ Bio), once fully committed to new drug development, is accelerating its strategic shift towards revenue diversification. Supported by annual investments amounting to tens of billions of won from its parent company CJ CheilJedang, CJ Bio has continued research and development (R&D) of microbiome therapeutics but is now seeking alternative paths amid recent revenue declines.

According to industry sources on June 11, CJ Bio launched a customized bioinformatics (BI) consulting service for researchers utilizing microbiome data in April. This one-stop solution covers everything from sample extraction to next-generation sequencing (NGS) and bioinformatics interpretation, based on over a decade of accumulated data and BI expertise. CJ Bio explained that various options such as genome, gene expression, and metagenome analyses enable easy interpretation of complex data.

A CJ Bio representative said, “Many researchers have wanted to utilize microbiome data but lacked the necessary bioinformatics knowledge. We expect this service to provide new insights for diverse research activities”.
Since January, CJ Bio has also entered the B2C (business-to-consumer) market with the healthcare service ‘SMILE GUT,’ which offers personalized health information based on individual gut microbiome data. Users can check their health index (GMI) and personal gut types without visiting a hospital. This service is based on CJ Bio’s accumulated big data of 140,000 microbiome cases.

These new business ventures coincide with the company’s recent worsening profitability indicators. CJ Bio reported consolidated sales of KRW 900 million in Q1, a 9.1% decrease from the same period last year. Operating loss was KRW 6.6 billion, continuing the deficit trend from last year.

Annual performance was also weak. Last year, CJ Bio’s consolidated sales were KRW 3.4 billion, down 37.8% from 2023. Operating loss increased to KRW 35.6 billion from KRW 32.1 billion the previous year.

R&D expenses have steadily increased. Since joining the CJ Group in 2021, the company has raised research spending annually, focusing on microbiome new drug development. CJ Bio’s R&D costs rose from KRW 5.3 billion in the acquisition year to KRW 23 billion last year, amounting to 663.1% of sales.

Despite consecutive losses, CJ CheilJedang has injected capital through paid-in capital increases of KRW 24 billion and KRW 40 billion in 2023 and 2024, respectively. Thanks to group support, CJ Bio’s pre-tax loss ratio improved from 70.3% in 2022 to 32.0% in 2023 but slightly increased to 42.2% last year.
However, CJ Bio plans to actively secure direct sales revenue from new drugs starting this year. The company aims to finalize two technology licensing deals this year, led by the microbiome immuno-oncology drug ‘CJRB-101’ developed since 2023. On May 30, CJ Bio presented interim analysis results of CJRB-101’s Phase 1/2 clinical trial at the American Society of Clinical Oncology (ASCO) in Chicago.

A CJ Bio representative stated, “Our mid- to long-term business model focuses on technology transfer and exports to major domestic and international pharmaceutical or bio companies. Amid this year’s uncertain domestic and global environment, we will seize opportunities to secure a competitive edge and strive to become a global leader in microbiome innovation”.

Kim Nayoung, Korea Finacial Times (steaming@fntimes.com)