Pharma's China subsidiaries undergo massive changes

GC Biopharma is selling its China subsidiary at KRW 350 billion…Il-Yang Pharm has decided to liquidate TongHua IL-YANG

Beijing Hanmi Pharm affected by management dispute…China subsidiaries of CKD·Kwang Dong·Pharm Huons face poor sales performance

Companies seek to establish business operations in nations other than China…establishing new local subsidiaries in the U.S.·Europe·Vietnam

(From left) Beijing Hanmi Pharm, Yangzhou Il-Yang Pharm, and GC China.

China subsidiaries of South Korea's listed pharmaceutical and biotech companies are undergoing massive changes.

 

Il-Yang Pharmaceutical and GC Biopharma have liquidated or sold their China subsidiaries within the past year.

 

Hanmi Pharmaceutical (Hanmi Pharm)'s Beijing Hanmi Pharmaceutical, a local subsidiary of Hanmi Pharm in China, is affected by management disputes at headquarters.

 

China subsidiaries of Chong Kun Dang, Kwang Dong Pharmaceutical, Huons, and Boryung have faced a sharp decline in sales and operations profits.

 

In contrast, more companies are establishing business operations in countries other than China.

 

Celltrion, GC Biophama, Chong Kung Dang, SK Biopharmaceuticals, Kwang Dong Pharmaceutical, Huons, and Dongwha Pharmaceutical.

 

GC Biopharma·Il-Yang Pharmaceutical sells off·liquidate their China subsidiaries in the past year According to the Financial Supervisory Service (FSS) on September 10th, as of the first half of 2024, Samsung Biologics, Celltrion, Yuhan, GC Biopharma, Chong Kun Dang, Kwang Dong Pharmaceutical, Hanmi Pharm, Daewoong Pharmaceutical, Boryung, Handok, Huons, and Il-Yang Pharmaceutical have local subsidiaries in China and Hong Kong.

 

In the past year, listed pharmaceutical and biotech companies have implemented changes in their China subsidiaries.

 

In July, GC Biopharma signed a share purchase agreement (SPA) to sell all its Green Cross HK Holdings shares to China Resource Boya Bio-pharmaceutical, a subsidiary of CR Pharmaceutical.

 

Through this agreement, GC Biopharma will transfer the entire stake in its Hong Kong subsidiary to China Resource Boya Bio-pharmaceutical.

 

The company will also sell six China-based subsidiaries, which are subsidiaries of the Hong Kong corporation.

 

The deal includes its primary sources of sales, GC China and GC China Pharm.

 

The contract amount is CNY 1.82 billion (approximately KRW 350 billion).

 

Qiu Kai, Vice President of CR Pharmaceutical and President of China Resource Boya Bio-pharmaceutical (left) and Yong-jun Huh, CEO of GC.

 

In October 1995, GC Biopharma entered China by establishing GC China, specializing in plasma-derived agents, in Huainan, Anhui Province, China.

 

The company built three manufacturing plants producing plasma-derived agents and established a local manufacturing system.

 

In 2010, GC biopharma established Green Cross HK Holdings in Hong Kong and tied China subsidiaries into a subsidiary management system.

 

Then, the company established another manufacturing plant to produce plasma-derived agents and GC China Pharm to manage product distribution.

 

GC Biopharma secured KRW 350 billion in cash through the current deal.

 

The company plans to use the funds to stabilize the finances of corporations amid weakened business performance and strategically invest in potential business.

 

Despite selling local subsidiaries in China, GC Biopharma plans to continue its business operations in China.

 

While signing a SPA, GC Biopharma signed a 'Distribution Agreement' with CR Pharmaceutical to handle plasma-derived product distribution.

 

As part of the agreement, CR Pharmaceutical will be responsible for distributing 'Albumin,' a plasma-derived product produced at the Ochang plant, and 'Green GeneF,' a gene-recombinant hemophilia treatment.

 

Additionally, CR Pharmaceutical will handle the distribution of GC Wellbeing's hyaluronic acid fillers in China.

 

Ahead of GC Biopharma, Il-Yang Pharmaceutical agreed to liquidate its China corporation, TongHua IL-YANG, in August 2023.

 

The company has filed lawsuit against Chinese partnering company over a joint venture contract.

 

When the liquidation is completed, Il-Yang Pharmaceutical will be left with Yangzhou Il-Yang Pharm, located in Jiangsu, China.

 

Il-Yang Pharmaceutical has decidede to liquidate its China corporation, TongHua IL-YANG.

 

The company is still processing the liquidation process.

In 1996, Il-Yang Pharmaceutical established TongHua IL-YANG as a joint venture in Jilin Province, China.

 

Over the past 28 years, Tonghua Il-Yang has significantly contributed to Il-Yang Pharmaceutical's sales, recording sales of KRW 40.4 billion in 2022 alone.

 

However, to focus its resources on strategic priorities in the Chinese market, Il-Yang Pharmaceutical has decided to liquidate Tonghua IL-YANG.

 

China subsidiaries of Chong Kun Dang·Kwang Dong·Huons sales slump…Daewoong's sales jump China subsidiaries of other companies are facing sales slump.

 

Il-Yang Pharmaceutical's other China subsidiary, Yangzhou Il-Yang Pharm, generated KRW 50.2 billion in sales in the first half of 2024, which is down 8% from KRW 54.6 billion in the first half of last year.

 

Its operating profit during the same period reduced by 19%, from KRW 3.5 billion to KRW 2.8 billion.

 

Kwang Dong Pharmaceutical's combined sales from its China subsidiaries have decreased from KRW 29.3 billion in the first half of last year to KRW 13.2 billion in the first half of 2024, falling to less than half.

 

Chong Kun Dang’s Qingdao Chong Kun Dang Health maintained sales at approximately KRW 8.7 billion in the first half of the year, similar to the previous year.

 

However, its operating profit turned from a KRW 400 million surplus to a KRW 400 million deficit.

 

Meanwhile, Huons’ China subsidiary, Beijing Huonland Pharmaceutical, experienced a 39% decrease in sales, dropping from KRW 11.1 billion to KRW 6.7 billion over the past year.

 

Its operating profit also decreased by 7%.

 

Daewoong Pharmaceutical's performance in China has improved.

 

The combined sales of Daewoong's four China subsidiaries, including Beijing Daewoong Pharmaceutical, increased by 14%, from KRW 12.8 billion in the first half of 2023 to KRW 14.6 billion this year.

 

Last year's operating loss, amounting to KRW 3.4 billion, has significantly decreased to less than KRW 30 million in the first half of this year.

 

Beijing Hanmi Pharm affected by management dispute…yet sales have skyrocketed Beijing Hanmi Pharm, unlike other China subsidiaries, has been performing exceptionally well.

 

For the first half of 2024, sales of KRW were reported at 226.5 billion, a 13% increase from KRW 201.1 billion in the same period last year.

 

If this trend continues, it is expected to surpass last year's record sales of KRW 397.7 billion.

 

However, Beijing Hanmi Pharm is facing changes amid ongoing Hanmi Science's management dispute.

 

Beijing Hanmi Pharm recently faced internal conflicts over the appointment of a new chairman of the board.

 

Former chairman Song Young-sook, also the chairman of Hanmi Science, stepped down, and Park Jae-hyun was appointed the new chairman.

 

Im Jong-yoon, an internal director at Hanmi Science, has contested this move.

 

Im Jong-yoon, the in-house director, called for a temporary board meeting on September 2nd to demand Park Jae-hyun's replacement as chairman of Beijing Hanmi Pharm.

 

However, the board rejected this proposal.

 

Following the meeting, Im Jong-yoon reported Park Jae-Hyun to the police for alleged obstruction of duty.

 

Ultimately, Song Young-sook, the chairman of Hanmi Science, embarked on a business trip to China, accompanied by Vice Chairman Im Joo-hyun and CEO Park Jae-hyun.

 

Beijing Hanmi Pharm decided to maintain the leadership under Song Young-sook.

 

Additionally, Beijing Hanmi Pharm is undergoing an internal audit by its parent company, Hanmi Pharm.

 

Hanmi Pharm is investigating allegations that during his tenure at Beijing Hanmi Pharm, Im Jong-yoon, the in-house director, directed all of Beijing Hanmi Pharm's pharmaceutical distribution to Kory Group, which is known to be owned by him.

 

Companies are establishing subsidiaries in nations other than China, including the U.S.·Europe·East Asia While China subsidiaries face difficulties for various reasons, pharmaceutical and biotech companies are considering nations other than China.

 

Several companies have newly established local subsidiaries in the U.S., Europe, and East Asia.

 

At the end of 2023, Celltrion merged with Celltrion Healthcare, resulting in the integration of numerous overseas subsidiaries previously managed by Celltrion Healthcare.

 

As of the end of 2023, 32 overseas subsidiaries under Celltrion Healthcare have been reclassified as part of Celltrion.

 

Previously, Celltrion Healthcare was responsible for the international export of Celltrion’s biosimilar products and had established local subsidiaries worldwide.

 

In the first half of this year, Celltrion established new subsidiaries in four European regions, including Switzerland, Spain, Portugal, and Sweden.

 

These new corporations will distribute Celltrion's biosimilars in their respective countries.

 

With the addition of these four new subsidiaries, Celltrion's European subsidiary count has increased to 13..

 

In August of last year, SK Biopharmaceuticals acquired a 60% stake in Proteovant Science from Roivant Sciences, a U.S.-based company.

 

Following this acquisition, the company was renamed as SK Life Science Labs.

 

This entity will oversee SK Biopharm's R&D activities in the United States.

 

SK Biopharmaceuticals' existing U.S.

 

subsidiary, SK Life Science, reported sales of KRW 307.9 billion for the first half of this year, a 36% increase from KRW 227.1 billion in the same period 2023.

 

The company's net profit rose by 43%, from KRW 19.1 billion to KRW 27.4 billion.

 

The revenue growth is attributed to the expanded prescription of Xcopri (cenobamate).

 

Dongwha Pharmaceutical and Huons have ventured into the Vietnamese market.

 

In December 2023, Dongwha Pharmaceutical invested KRW 36.6 billion to acquire Jungseon Pharma, a Vietnamese pharmacy chain operator.

 

Founded in 1997, Jungseon Pharma operates over 140 pharmacies in southern Vietnam and reported a sales of KRW 36 billion in the first half of this year.

 

Dongwha Pharmaceutical plans to introduce its over-the-counter products, such as Whal Myung Su, EACH, and Pancold, into the Vietnamese market.

 

In November 2023, Huons established 'HuM&C Vina' in Vietnam.

 

According to Huons, the demand for beauty and wellness products in the Southeast Asian market has increased, leading to rapid sales of injectable vials and ampoules.

 

Huons has set up a medical container production facility in the Thai Binh Province of Vietnam.

 

In addition, during the first half of this year, Chong Kun Dang established CKD-USA in Boston, USA.

 

This new entity will handle the company's pharmaceutical clinical development in the United States.

 

Similarly, Kwang Dong Pharmaceutical set up the 'Korea e Platform' in the Czech Republic in July 2023 to engage in product wholesaling.

 

In March 2023, GC Biopharma became the largest shareholder of the American cancer diagnostics company 'Genece Health' by investing KRW 84.7 billion.

 

In September 2022, the company acquired the Korean pharmaceutical automatic classification and packaging system firm 'Cretem.' Additionally, in April of the same year, GC Biopharma established a special-purpose corporation named 'COERA' in the United States.

 

Through this, the company acquired 'BioCentriq,' a US-based contract development and manufacturing organization (CDMO) specializing in cell and gene therapies.