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Will challenges by 30-something heirs succeed?: Kukje, SamilThird-generation CEOs faced with various obstacles to surmount
  • By Lee Hye-seon
  • Approval 2017.04.24 13:05
  • 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 third installment of a four-part series. – Ed.

Nam communicates actively in SNS, adding young sense to old tradition

CEO Nam Tea-hun남태훈 of Kukje Pharma국제약품 is one of the youngest and most notable heirs in pharmaceutical kingdoms. Nam, the grandson of the founder Nam Sang-ok남상옥 and the oldest son of Chairman Nam Young-woo남영우, was born in 1980 and is in his 30s.

Nam graduated from the University of Massachusetts Boston as a business administration major. He also earned a master’s of business administration at Seoul National University. After that, he joined Hyorim Industry효림산업, a subsidiary of Kukje Pharma, moved to its marketing division as the general manager in April 2009, and has since received managerial training.

CEO Nam Tea-hun of Kukje Pharma is trying to create the image of a young company with active communication through SNS.

Nam has served as a deputy manager at the planning and management division, director of the sales and management division, assistant director at sales management office, vice president at marketing division and its chief operating officer (COO). In 2015, be became the CEO and vice president of Kukje Pharma and the CEO of Kukje P&B국제피앤비. In this past January, he finally became the CEO-president of Kukje Pharma and started his process of succession in earnest.

The industry’s assessment of CEO Nam is positive for now. Industry executives say Nam is trying to differentiate Kukje Pharma from other companies by adding a young image to the company with long tradition. He is reportedly seeking win-win approaches, meeting people not just from the pharmaceutical field but various other areas to hear their opinions.

So far, Kukje Pharma has shown its strength in the ophthalmology field, but its sales have been mired in doldrums, failing to rise above the low-100 billion won ($87 million) range for a long time. The prescriptions of its two major products -- retina disease therapy Tagen-F and artificial tears Qalone Eye Drops – have stood at 10 billion won, respectively, and the sales records of 20 other drugs or so have ranged from 1 billion won to 4 billion won a year.

It means the company does not have a sufficient number of blockbusters, whose sales reach 10 billion won.

Kukje’s investment into research and development is sluggish, too. Its R&D spending against sales stood at a mere 3.8 percent last year, remaining in the 3-percent range for third consecutive years. Even that was an improvement from 1.9 percent in 2011. Because of relative negligence in R&D sector, the company has fallen short of meeting the standards for becoming an innovative pharmaceutical company, failing to put its name on the government’s list of those companies.

There are many tasks Nam should tackle to continue the tradition of Kukje, starting with sales increase and R&D investment. He, too, seems to be well aware of his company’s weakness. This is why Nam declared his goal to make Kukje a global company, changing the company name from Kukje Pharma Industry to Kukje Pharma last year by erasing the word “Industry” and replacing its CI. He set the sales goal of 200 billion and the profit target of 20 billion won by 2020. And he promised the company would create revenue through cooperation and competition with domestic and overseas companies, elevating the company’s working conditions to the highest level.

He has also been actively investing into developing incrementally modified drugs. The company is developing five incrementally modified drugs, including glaucoma therapy, expecting to commercialize some of them in a few years.

Another area of interest for Nam is how to create a young image for his company of long history. He is trying to make Kukje a company more familiar for consumers by adding young senses to an old tradition. One such method is to make the most of SNS. Befitting a young CEO, Nam is making active communication with consumers and is positive to send international situations to outside world.

He made the “Kukje Pharma’s bucket list for 2017,” visiting regional chapters and communicating with their staffs. Recently, after a lot of thoughts, he made public the company’s decision to develop a glaucoma treatment in SNS, injecting an image of a company not negligent in R&D. Kukje Pharma, too, is aggressively using SNS. It has held a Facebook follower event to let people know about Kukje Pharma more. The industry watchers said these new attempts resulted from his young senses.

The company has made an intensive investment into the cosmetics as well. It established JEA H&B 제아H&B to import and distribute cosmetics, including Stila and Bourjois brands as well as its self-developed brand Lapothicell.

Huh replaces CI, promises ‘youth,’ ‘trust’ upon takeover of CEO post

CEO Huh Seung-bum허승범 of Samil Pharm삼일제약 is the grandson of the late honorary chairman, Huh Yong허용, and the son of Chairman Huh Kang허강. He was born in 1981 and is one of the young heirs in their 30s.

CEO Huh Seung-bum of Samil Pharm announced a new start as “a reliable human care company with young energy and specialty” at a ceremony in March.

Huh graduated from Trinity College in the United States, joined the marketing division of Samil Pharm in 2005 and has since served as the head of its planning and control office and the chief of management and support headquarters.

The company started the succession process in earnest in 2013 when Huh was promoted to the company’s CEO and vice president. Huh spent one year under a double-CEO system with his father, and took part in the management the following year by taking over the CEO-president post.

The junior Huh has broad interests in domestic and overseas industrial trends, paying particular attention to enhancing ophthalmology and liver disease areas. Samil Pharm has a long history with its founded tracing back to 1947. Its main products include Korea’s first yeast drug Ebioze and Brufen Syrup for children.

The company has its strength in the ophthalmology field in the prescription drug market. It established a joint-venture company, Samil Allergan삼일엘러간, with Allergan Korea한국엘러간 in 2009 under equity ratios of 51-49 to strengthen the ophthalmology field. In 2014, however, Samil handed over all of its stakes to Allergan Korea and has since operated its ophthalmology business part independently.

Since CEO Huh took over, Samil has expanded its ophthalmology product lines. When he became vice president in 2013, the company released artificial tears Hyabak without preservative for the first time in Korea and signed a contract to sell glaucoma therapy Monoprost developed by the French company, Laboratoires Théa, in 2016. It also made a deal to sell allergic conjunctivitis therapy Talion Ophthalmic Solution and antibacterial eye drop Ozex of Dong-A ST. It is reportedly examining various drug pipelines to add ophthalmology disease treatments.

The company is interested in liver diseases, too. It released chronic hepatitis B therapy Enped in 2015 and made a contract with an Israeli company Galmed to manufacture and commercialize Non-alcoholic Steatohepatitis (NSAH) therapy Aramchol in 2016. And it plans to invite scholars related to liver diseases and hold a “liver forum’’ to strengthen its position as a specialized company in these illnesses. Besides, the company has expanded its musculoskeletal system pipelines, by, for example, making a contract to sell joint inflammation therapy LAYLA made by PMG Pharm한국피엠지제약.

Samil, however, has similar weaknesses of flat sales and insufficient R&D investment. Its sales sharply increased to 96 billion won in 2016 from 87.4 billion won in 2015, but still hovered below 100 billion won. The 2016 turnover, of course, showed a high potential of hitting the company’s sales target of 100 billion won before long.

Small investment in R&D is another task Huh ought to tackle. R&D ratio to sales remained at the low level of 1.3 percent last year, down from 3.3 percent in 2014. The company failed to be on the list of innovative pharmaceutical companies because of the insufficient R&D spending.

CEO Huh seems to have the will to wrestle with the issue. He has set about to peg its R&D loopholes, by beefing up research staffs and supplementing other related sectors. Huh ushered in Lee Jung-min이정민 as director of its Central R&D Center중앙연구소 in November 2016, demonstrating his intention to enhance research and development. Director Lee had played a crucial role in researching and developing some new medicines, natural new products, incrementally modified drugs and bio new products, at Yungjin Pharmaceutical영진약품, Sinil Pharm신일제약, and Jinyang Pharm진양제약.

Huh also recruited Dr. Kawk Wie-jong곽의종, who served as the CEO of Pharmaking, as an advisor, to also remake Samil as a company specialized in liver diseases. Kwak had worked in the development division at Handok, as well as a senior researcher, plant manager, and the head of R&D Division at SK ChemicalSK케미칼.

And Huh has proposed a new vision to give Samil Pharm a unique color and replaced its CI as well. At a ceremony in March, he declared a new start as a “reliable Human Care Company with young energy and specialty.” He also revealed his ambition to make Samil a successful company with 100 years of history.

The successors at Kukje and Samil are both young and attempt to harmonize tradition and changes. The industry is watching with interests whether and how the two young heirs will turn their ambitions of bringing about changes to their old companies into reality.

lhs@docdocdoc.co.kr

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