Yuhan Corp. said Monday that it recorded 1.5 trillion won ($1.3 billion) in sales last year, a 3.9 percent increase from 2017, maintaining the top position in the local pharmaceutical industry.

Yuhan's headquarters in Daebang-dong, Seoul.

However, the company's operating profit fell 43.5 percent year-on-year to 50.1 billion won, and its net profit dropped 46.8 percent to 58.3 billion won.

“Non-operating profit also decreased due to changes in accounting standards of major affiliates,” the company said. “Also, Janssen Korea, which holds a 30 percent stake in Yuhan, increased its short-term enforcement costs by adjusting its accounting standards to the International Financial Reporting Standards last year.”

Although there was no change in the company's stake during that time, Yuhan's equity-method gains from Janssen Korea fell 79.8 percent year to year due to a temporary increase in costs reflecting changes in accounting standard. Equity-method gains from affiliates Yuhan-Kimberly and Yuhan Clorox also decreased by 18.9 and 0.7 percent, respectively.

By business, sales of pharmaceuticals increased 6.7 percent to 1.13 trillion won, and the health and welfare business expanded 4 percent to 120.8 billion won, while overseas business fell 9.1 percent to 241.5 billion won.

“Operating profit declined due to lower sales at overseas business divisions, which had strong operating profits and higher R&D expenses,” the company added.

Yuhan invested 110.5 billion won in research and development, up 8.8 percent from 2017. The company plans to strengthen R&D further to secure future growth engines by spending more than 160 billion on R&D this year.

“This year we aim to increase our R&D investment by more than 50 percent over the previous year," a company official said. “We will inject a substantial portion of the increased R&D budget into the U.S. clinical trial for YH25724, a novel drug candidate for the nonalcoholic fatty liver disease.”

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