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Management by brothers put to test: Hanmi, Green CrossFocus of industry’s attention is on experiment with few successful cases
  • By Lee Hye-seon
  • Approval 2017.04.14 18:29
  • comments 0

The top managements of Korean pharmaceutical companies are getting younger. The second- and third-generation heirs to the first-generation founders have just jumped into the business. The new CEOs and executives are in their 40s and 50s, and even in their 30s. Korea Biomedical Review is launching a series of articles to think about the meaning of these management shuffles. This is the first installment of the four-part series. – Ed.

As major pharmaceutical companies announced personnel appointments early this year, Hanmi Pharm and Green Cross emerged as the targets of industry’s interests. The reason: the two drugmakers was trying a management system of brothers.

Hanmi한미약품 and Green Cross녹십자 appointed the second and the third generations of their founders as CEOs and internal directors in their regular shareholders’ meeting in March. Coming to the managerial front were brothers Lim Jong-yoon임종윤 and Jong-hoon임종훈 in Hanmi, and Huh Eun-chul허은철 and Yong-jun허영준 in Green Cross. Notably, the brothers at the two companies took the representative posts at their holding companies and core subsidiaries, meaning shareholders recognized their managerial abilities.

Lim Jong-yoon’s first year as CEO

Lim Jong-hoon, executive director of Hanmi Pharm

Lim Jong-yoon and Jong-hoon, sons of Chairman Lim Sung-ki, have received business administration training since they entered their father’s company years ago. Jong-yoon, the first son, has led Hanmi since March last year when he naturally took over its CEO post as his father withdrew from management to an honorary chairmanship. CEO Lim is concurrently serving as a director at Hanmi Pharm, Hanmi IT, and Hanmi Medicare. He also is the CEO of Beijing Hanmi Pharm.

Lim’s first year as CEO was not smooth, though. He was in trouble because of overdue notice of lung cancer therapy Olita, the leakage of undisclosed information, delayed report of deaths during clinical trials, and temporary suspension of clinical tests for antidiabetics therapy Efpeglenatide.

Lim got over the crisis by replacing a senior manager of Hanmi Pharm and strengthening internal disciplines. His crisis management capacity may be put to the test again, depending on whether or not the clinical trials of Efpeglenatide, which was exported to Sanofi, are resumed.

Hanmi Pharm signed a contract to export technologies of three antidiabetic therapy candidates to Sanofi in 2015 but changed the deal in December, withdrawing one of them and postponing the clinical trials of Efpeglenatide to this year. If the clinical tests proceed as planned, there would be few problems, but another postponement could lead to doubts about Hanmi’s technological ability. If things go awry, it will result in a situation that forces CEO Lim to demonstrate his crisis management ability.

Lim’s younger brother, Jong-hoon, executive director of Hanmi Pharm, took his first step into management last March when he was named an internal director. As an internal director has the right to make managerial decisions, he can exert influence on the company’s overall management. As the co-CEOs of Woo Jong-su우종수 and Kwon Se-chang권세창 are leading Hanmi Pharm, Executive Director Lim Jong-hoon will have to win the recognition of his managerial ability through his activities as an internal director.

Green Cross operates with two brothers as its CEOs

In January, there was a rumor in the pharmaceutical industry that Green Cross Holdings녹십자홀딩스 President Lee Byung-geon이병건 would move to Chong Kun Dang Holdings and Green Cross would enter into a system managed by brothers. The rumor turned out to be true when Green Cross Vice President Huh Yung-jun became the CEO of the company, following the example of his elder brother Eun-chul, chief executive officer of Green Cross.

CEO Huh Eun-chul at Green Cross (left) and CEO Huh Yung-jun at Green Cross Holdings

They are the sons of the late Green Cross Chairman Huh Young-sup허영섭 and the grandsons of its founder, Huh Jae-kyung허재경. After the death of Chairman Huh, his younger brother Huh Il-sup허일섭 had led the group, along with Vice Chairman Cho Sun-tae조순태. Then Huh Eun-chul took over from his uncle and had served as a cochairman of Green Cross, along with Cho, until he became its sole CEO in 2016.

After he entered Green Cross in 1988, Huh Eun-chul worked at the planning and management office of the headquarter office and the group’s life science institute and the planning office of the Green Cross R&D division. He later became the company’s chief technology officer (CTO) and vice president in charge of planning and control. He has served as its president and CEO since 2015.

According to industry watchers, CEO Huh is an exact and efficient type who prefers to handle work in precise ways. He is also sharp in details, meeting medical staffs and patients in person at international conferences to promote the company’s hit products, including its hemophilia therapy.

On the other hand, he reportedly abhors uncertainties and things that occur amid his ignorance. When a problem occurs, he makes a quick decision to minimize its effects. Industry watchers attributed the dismantling of an in-house team early this year to such a management style of its CEO.

New vice president and CEO of Green Cross Holdings, Huh Yung-jun, joined the company in 2003 and has since received managerial training there.

He worked at a management planning division and sale planning division and served as vice president responsible for its management office. He has worked at the company for more than a decade, but the evaluation of his management ability has just started, now that he has just taken up the top post of the group’s holding company.

Can ‘brothers’ management’ in the two companies succeed?

Brothers have attempted to co-manage business groups and their subsidiaries across many industries, but few have succeeded. Aside from the Doosan Group, in which brothers take turns to serve at the top posts of subsidiaries and foundation, most other brothers fell into slugfests over managerial control.

The situation is the same with the pharmaceutical industry. Brothers who had lost in the power struggle at Ahn-gook Pharm and Daewoong Pharmaceutical handed over all their shares or chose to break the group into separate units. As there are few cases of success through producing synergic effects, it is with considerable concerns the industry is watching the experiments of Hanmi and Green Cross that have few role models.

“It’s too early to judge the management system of the two companies. The reason they gave different companies to brothers was to assess their management abilities,” an industry executive said. “If the previous examples are any guide, however, the most dangerous periods are the aftermath of the preceding chairmen.”

Noting that value systems, management goals, and strategies can differ even among brothers brought up at the same home, he said, “No one knows whether brother management can generate synergy effect or serve as the beginning of trouble.”

lhs@docdocdoc.co.kr

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