Regrouping of Bio Businesses: Korea’s Large Businesses Line up for Bio Pharmaceutical Business Battle | BusinessKorea

Wednesday, November 22, 2017

Bio pharmaceutical affiliates of domestic large businesses are drawing a bigger picture while taking different detailed strategies, such as spin-off, merger and listing.
Bio pharmaceutical affiliates of domestic large businesses are drawing a bigger picture while taking different detailed strategies, such as spin-off, merger and listing.
Seoul, Korea
14 November 2017 - 10:30am
Choi Mun-hee

As food-and-entertainment conglomerate CJ Group has decided to sell off its pharmaceutical affiliate CJ Healthcare, bio pharmaceutical affiliates of domestic large businesses are drawing a bigger picture. They have different detailed strategies, such as spin-off, merger and listing, but they have a common goal of strengthening the competitiveness of research and development (R&D) to develop novel drugs and push into the global market. 

According to industry sources on November 13, SK Group will turn SK Chemicals’ corporate structure into a holding company system on December 1 and spin off its chemical and pharmaceutical divisions early next year. Its pharmaceutical division is highly likely to be included in SK Discovery, the new holding company to be launched, after spinning off from SK Chemicals. Currently, SK Chemicals’ life science division is in charge of pharmaceutical business so the company will be spun off immediately after the issue is decided by board of directors. 

SK Chemicals has achieved the best result since its founding this year. The company succeeded in developing SKY Cell Flu Quadrivalent, the world’s first cell culture vaccine that covers four strains of influenza viruses, last year, and the novel drug has been sold out this year again, earning favorable reviews from the market. SK Chemicals also received a permission from the Ministry of Food and Drug Safety to market its independently developed shingles vaccine Sky Zoster, the second vaccine worldwide. Accordingly, the company not only pushed into the shingles vaccine market that has been monopolized by global pharmaceutical company MSD but also boosted the nation’s vaccine self-sufficiency ratio to 50 percent. 

LG Group has also produced tangible results after merging its pharmaceutical affiliate LG Life Sciences into LG Chem earlier this year. The group spun off LG Life Sciences in 2002 before turning its corporate structure into a holding company system and merged it into LG Chem again in 15 years. LG Chem, which has attained the economy of scale through reincorporation, plans to invest more than 500 billion won (US$446.03 million) in R&D and facilities every year to develop novel bio drugs. 

After the merger, LG Chem saw its innovative anti-diabetic drug Zemiglo, which is the nation’s 19th novel drug, hit its new sales milestone. LG Life Sciences developed Zemiglo with the investment of 47 billion won (US$41.93 million) as part of its global novel drug projects but failed to put up a good show so far. However, LG Chem recorded 55.7 billion won (US$49.69 million) of sales last year after joint marketing with Daewoong Pharmaceuticals. The company also expects to post 100 billion won (US$89.21 million) in sales this year. 

Kolon Group, which is considered a late mover on the bio industry among conglomerates, continues to make a radical move. Kolon Life Science received a permission to market Invossa, the world’s first cell-based therapy for osteoarthritis, in July, attracting attention in the industry. Cell-based treatments for autoimmune diseases and cancers have been developed before. However, Invossa treats degenerative arthritis based on genes cultured from an allogenic cell. As a single injection of the drug delivers therapeutic relief for up to two years, Invossa is expected to lead the  global osteoarthritis treatment market worth 45 trillion won (US$40.14 billion) a year. 

In addition, Kolon Group successfully listed TissueGene, the U.S.-based biopharmaceutical subsidiary of Kolon Life Science, on South Korea's secondary KOSDAQ market earlier this month. The group raised 199.4 billion won (US$177.88 million) after pricing the IPO of TissueGene and plans to invest over 150 billion won (US$133.81 million) in the phase 3 clinical trials of Invossa in the US in April next year. The group will complete the clinical trials by 2021 and start selling in the U.S. in 2023. When everything is coming along on schedule, Kolon Group expects to post more than 3 trillion won (US$2.68 billion) a year. 

Samsung Group, which is the latest mover on the bio pharmaceutical market among conglomerates, continues to show a rapid growth through acquisition, establishment and joint venture strategies. The group established Samsung Medison, a medical equipment company, with the acquisition of domestic venture firm Medison and formed Samsung Bioepis, a joint venture with U.S.-based biotechnology firm Biogen. 

Samsung BioLogics, a biopharmaceutical unit of South Korea's Samsung Group, was a late market mover but it has already become the global leader in contract manufacturing organization (CMO) services by converging its world-class levels of semiconductor manufacturing technology. When the company completes its third plant in Songdo, Incheon, next month as scheduled, Samsung BioLogics’ biomedicine production capacity will increased from the current 180,000 liters to 360,000 liters, far surpassing Boehringer Ingelheim with 300,000 liters and Lonza with 280,000 liters.

An official from the biotech industry said, “It is difficult to achieve results in the bio pharmaceutical business in a short period of time to the extent that Hanwha, Lotte and AmorePacific withdrew from the market after much consideration before CJ. Whether how much and steady a group makes an investment regardless of the size of affiliates will determine the competitiveness of biopharmaceutical affiliates of conglomerates.” 

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