More Korean companies are entering the pharmaceutical market either by equity investment or acquisition.
Recently, companies from a variety of industries such as Izien Holdings, Kukdong, Feelux, HLB, and Iscobee entered the pharmaceutical industry by investing in shares of a drugmaker or taking over a drug firm.
The trend is a separate move from those of several conglomerates -- such as LG, Samsung, CJ, and Hanwha – that announced they would expand their businesses into medicines.
Izien Holdings said it would acquire Haeduk Power Way, a KOSDAQ-listed vessel parts maker. Izien Holdings had intended to acquire Kyung Nam Pharm early this year but gave up on the attempt later. Izien Holdings is led by Lee Jong-hee, Medical CEO of Izien Plastic Surgery.
Izien Holdings aimed to acquire Haeduk Power Way as the first step into a biopharmaceutical business.
Established in 1967, Kukdong has been focusing on the wholesale of men’s and women’s outerwear and shirts. However, the company has taken a serious step in the drug business via its subsidiary.
Bio Value, a subsidiary of Kukdong, said it would develop and sell cultivated wild ginseng-containing medicines and health foods through a partnership with Austin Pharm.
Feelux, a manufacturer of lighting fixtures, decided to buy out a stake in a U.S. new drug developer, Viral Gene. The U.S. firm is developing vaccines and therapeutic agents for colon cancer and metastatic cancer.
HLB, the manufacturer of lifeboats, has emerged as a biotech firm.
After acquiring Life Code International in 2008, HLB got to own targeted anticancer therapy Rivoceranib. Its subsidiary HLB Life Science holds 97 percent stake in Life Liver, a biopharmaceutical developer. Life Liver is working on an artificial liver, along with Samsung Medical Center,
Incosbee, the seller of budget phones, expanded its business into the biotech sector. The company decided to purchase 436,500 shares of a medical device and biosimilar manufacturer Cellu Med for 16 billion won ($14.4 million) in the second quarter. Its non-listed affiliate company Api Meds plans to enter the U.S. market with new biopharmaceutical drug Apitox.
Non-pharmaceutical firms seek drug business through acquisition or equity investment because such methods not only reduce costs but secure a stable expansion of pipelines, industry watchers said.
To enter the pharmaceutical industry, companies have to build production facilities that meet the government’s regulations and clinical trials which involve a long time and costly expenses. New drug developers, in particular, should wait for at least 10 years to go through phase 1 to 3 trials to finally commercialize a drug. There is no guarantee that the development will succeed.
Due to such risks, non-pharmaceutical companies try to focus more on equity investment and acquisition than on establishing a pharmaceutical unit.
“It is obvious that the pharmaceutical industry is a high-value-added one. This is why non-pharmaceutical firms are entering the market,” said an official at a pharmaceutical company. “Small- and medium-sized companies that sell their stakes welcome the move because they have to cover the development cost.”
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