Samsung’s Medical Device Business: Will Medical Device Unit of Samsung Electronics Marry Samsung Medison? | BusinessKorea

Friday, March 23, 2018

Samsung Electronics’ separation of the Medical Device Division was a measure taken considering the Medical Device Division’s merger with Samsung Medison in the future. (photo courtesy: Samsung Medison)
Samsung Electronics’ separation of the Medical Device Division was a measure taken considering the Medical Device Division’s merger with Samsung Medison in the future. (photo courtesy: Samsung Medison)
Seoul, Korea
24 November 2017 - 10:45am
Choi Mun-hee

Samsung Electronics has separated the Medical Device Department from the Consumer Electronics (CE) Division as a division-level organization. Samsung Electronics clarified its position that it separated the department from the CE Division in consideration of the characteristics of the medical device business, which is business-to-business (B2B) but some experts say that the separation was a measure taken considering the Medical Device Department’s merger with Samsung Medison in the future.

According to the Korean business circles on November 23, Samsung Electronics separated the Medical Device Department from the CE Division as a separate division-level organization in the process of recent reorganization. At that time, Samsung Electronics did not disclose the organizational restructuring of the medical devices business unit. Even though the medical device unit had belonged to the CE Division, the Image Display (VD) and Home Appliance Divisions were actually the main players of medical device business. The CE Division’s proportion of the medical device sales has been meager.

"Home appliances including TVs belong to the B2C (business-to-consumer) business, but medical devices is a typical type of the B2B business," a Samsung Electronics official said. “The measure was taken to eliminate inefficiency that occurred as the disparate business department was in the division."

It is forecast that as the Medical Device Department went independent from the CE Division, the roles of president Jeon Dong-joon, head of department will be expanded. This is because president Jeon was under the control of the head of the CE Division in the past, but now it is expected that president Jeon will be able to focus on management more responsibly with plenary powers over the department as it is a separate organization.

Most of all, a lot of attention is being paid to a possibility of its merger with continously going around. Samsung has steadily invested in putting its medical device business on track since acquiring Medison (now Samsung Medison), a medical device maker, at the end of 2010.

However, in its early stage, its deficits ballooned due to high entry barriers. Last year, Samsung tried to turn the tide by appointing Jeon, CEO of Samsung SDS then, as head of Samsung Medison to find a breakthrough. President Jeon is said to have a strong driving force as one of his strengths. Samsung Medical's cumulative operating profit in the first three quarters of this year is expected to reach a mere 2.6 billion won (US$2.3 million) but the company is expected to produce its first surplus on an annual basis this year.

Inside and outside of Samsung, it is said that either way is possible to take out the Medical Device Department from Samsung Electronics to merge it into Samsung Medison or to integrate Samsung Medison into the Medical Device Department of Samsung Electronics. The difference is whether the merged unit will become part of Samsung Electronics or a separate subsidiary of the Samsung Group like Samsung Medison. On top of that, as vice president Kim Yong-kwan who worked at the Office of Future Strategy was transferred to the Medical Device Department, an analysis has been made that vice president Kim will play a major role in the change of the organization. 


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