Celltrion Inc., South Korea’s top biosimilar drug developer, will push ahead with the initial public offering (IPO) of its subsidiary Celltrion Healthcare Co. despite lingering questions about its accounting procedures, the company’s president Kim Hyung-ki recently told reporters.

Celltrion Healthcare is responsible for supplying Celltrion’s biosimilars to global distributors. It had been scheduled to go public in June but the plan hit a snag after local regulators and public accountants raised the need for a precise audit of the company’s entire accounting practices after conflicting treatment of contract deposits.

The company received a total of 10 billion won ($875,000) in contract deposits from global distributors in 2015 and recognized 80 percent of the value as a profit on its financial statements, but the Korean Institute of Certified Public Accountants (KICPA) responsible for pre-IPO auditing said the money should be recognized as a profit at a time when they are returned to owners, causing the company to modify its 2015 net profit report subtracting the deposits. Nevertheless, the Financial Supervisory Services and KICPA want to look into the company’s entire accounting practices.

The stock price of Kosdaq bellwether Celltrion remained stagnant after March 20 when the accounting issue first surfaced. From the beginning of the year, shares were down nearly 18 percent from 108,300 won. At 2:25 p.m. in Seoul trading Monday, shares were down 1.1 percent at 89,100 won.

Kim said Celltrion and Celltrion Healthcare virtually move in sync in business operations and the accounting procedures remain transparent. “Celltrion’s stock price is heavily affected by the delay in IPO as Celltrion Healthcare’s role is not limited to simple marketing and distribution of biosimilars. The two companies worked together in biosimilar development from the beginning and Celltrion Healthcare recently built an overseas marketing plan independently,” Kim said.

Celltrion Healthcare reported sales of 757.7 billion won and an operating profit of 178.6 billion won last year. Its operating margin more than quintupled just in two years.

By Moon Il-ho and Lee Yong-gun

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