Is there sibling rivalry in Lotte Group over the nutraceutical biz?

Bigsome Bio, a subsidiary of Lotte Chilsung Beverage, which specializes in customized health functional food, has declined to comment on the possibility of business collaboration with Lotte Healthcare within the same conglomerate.

As the healthcare industry emerges as the future growth engine for the Lotte Group, industry insiders are watching closely whether the subsidiaries of the conglomerate, which focuses on food, beverage, distribution, construction, and hotel businesses, will compete in the dietary supplement market.

When asked about the possibility of overlapping the nutraceutical business with Lotte Healthcare or collaboration plans between the two Lotte subsidiaries, Bigsome Bio CEO Park Ji-ye said, “No comment.” Park spoke at the KFDC Society of Regulatory Science conference at The K Hotel Seoul on Friday.

Park’s evasion of an answer to whether the two affiliates in charge of the healthcare business within the group could collaborate suggests there could be competition between them, as both companies focus on health functional food, the industry watchers said.

Bigsome Bio is a nutraceutical R&D and distribution platform company that was incorporated as a subsidiary of Lotte Chilsung Beverage last September. It is researching individually recognized nutraceutical ingredients while developing and launching dry food through independent and joint R&D.

The company has been selected as a special exemption case from regulation (regulatory sandbox) for the small-scale sale of nutraceuticals by the Ministry of Trade, Industry and Energy. It is participating in a demonstration project for personalized supplements and is providing a personalized nutraceutical service, “Fitamin,” in small-scale marketing in partnership with pharmacy chains and pharmacy platform, “Charmacist.”

Fitamin is a service that manufactures and sells personalized health functional food that meets individual dietary and health conditions through consultation with pharmacists. Bigsome Bio, which operates 90 offline stores in pharmacies, plans to increase the number to 200 next year.

Lotte Chilsung Beverage's stake in Bigsome Bio has been increasing. After investing about 9.5 billion won ($7.25 million) to acquire a 52.93 percent stake in Bigsome Bio last year, Lotte Chilsung invested about 2.8 billion won to acquire additional common shares in the third quarter, raising its stake to 67.05 percent.

Lotte Chilsung's stake is expected to increase further because CEO Park, who holds the remaining shares, has a five-year put option right. After the put option period expires, Lotte Chilsung can exercise its right to sell all or part of the remaining shares.

During her speech, Park also emphasized that the personalized nutraceutical industry will be combined with digital healthcare, such as wearable devices, collection of personal health information through applications, and healthcare services using it, making the audience think about the possibility that the company could compete with Lotte Healthcare.

Lotte Healthcare, established in April last year with an investment of 70 billion won from Lotte Holdings, also officially launched its healthcare platform “Cazzle”' in September. Cazzle provides customized healthcare information based on medical examination data, health survey information, and genetic test results and recommends nutritional products.

Lotte Healthcare has also launched a private-label (PB) dietary supplement called Fillpot, which is sold at Cazzle. The Fillpot line has 26 products, and Lotte Healthcare emphasizes that customers can purchase and consume only necessary ingredients individually.

In addition to Filpot, Lotte Healthcare also sells domestic and international health functional food brands, such as Raydel, New Origins (Yuhan Health Life), Garden of Life, Vita Collagen (DaesangWellife), and Alive through Cazzle, but has not yet collaborated with Bigsome Bio.

Later in the day, Lotte Healthcare also confirmed that no collaboration discussions have been made between the two companies.

"We don't have any specific plans at the moment," a Lotte Healthcare official said. “Since Cazzle is a platform, they will be able to sell their products through the platform after entering it.”

Lotte Group has recently been focusing on its biopharma and healthcare businesses. On June 6, Lotte Group announced its 2024 personnel appointments for 38 affiliates, including Lotte Holdings.

As part of it, Lotte Healthcare appointed Woo Woong-jo, who has been involved with the company since its inception, as its new CEO.

Lotte Holding's newly established Future Growth Office. Shin Yoo-yeol, the eldest son of Chairman Shin Dong-geun, was appointed as the head of the Future Growth Office. As the junior Shin is in charge of new businesses, he is expected to manage and supervise Lotte Biologics and Lotte Healthcare.