SK Chemicals said it would spin off its vaccine business, establish it as a separate subsidiary, and seek an initial public offering within this year. Pharmaceutical industry watchers are paying attention how the plan will affect the company’s other pharmaceutical business.
Under the drugmaker’s spin-off scenario, SK’s pharma business will be divided into three areas. SK Chemicals’ pharma business unit will engage in chemical drugs, its new subsidiary will deal with vaccines, and the firm’s another unit SK Plasma will handle blood products.
However, some observers said establishing a separate unit for vaccine business might weaken SK Chemicals’ remaining medicine business.
SK Chemicals began its pharmaceutical business in earnest after acquiring Samsin Pharm in 1987. Since then, the company has been expanding its business into two areas -- Green Chemical for chemicals and Life Science for pharmaceuticals. More than half of the company’s revenue comes from the chemical business.
For the pharmaceutical business, the company has put more focus on vaccines and blood products than chemical drugs.
With more than 400 billion won ($372 million) investment in vaccines, the company has developed various vaccines such as shingles vaccine Sky Zoster and quadruple cell culture-based flu vaccine Sky Cellflu.
The company also has robust research pipelines for pneumococcus (approved for adults, in development for children in phase-3 trials), chickenpox (phase 3), pediatric enteritis (phase 1/2), cervical cancer (phase 1/2), and typhoid (phase 1).
In the blood product business, the company recorded annual revenue of more than 60 billion won by selling items such as albumin, immunoglobulin, blood coagulation factor and antithrombin III.
In contrast, SK Chemicals’ chemical drugs are not performing well enough, compared to vaccines and blood products, according to sources from inside and outside of the pharmaceutical industry.
SK Chemicals said its spinoff of the vaccine business is not expected to have a significant impact on earnings, as the company is readying new drugs for irritable bladder syndrome (planning to seek approval), dementia (seeking approval in the U.S., the first generic in Europe), and anti-thrombosis (trials in all phases).
The company backed up its stance by citing relatively good earnings of chemical products in 2017. SK Chemicals’ arthritis treatment Joins sold 28.9 billion won, brain dysfunction treatment Ginexin-F, 18.4 billion won, gout therapy Feburic, 7.8 billion won, and acute/chronic gastritis drug Promac, 8.3 billion won.
“We decided to spin off the vaccine business because it has grown to such a large unit that it can operate on its own. In the future, we will separate it from the pharmaceutical and chemicals business,” an official at SK Chemicals said.
Earlier, SK Chemicals made an equity spinoff into a holding company named SK Discovery which manages subsidiaries, and an operating company of SK Chemicals which engages in chemicals and pharmaceutical business. SK Plasma operates as a subsidiary of SK Discovery.
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