Korean biopharma companies seek M&As for new growth sources

DongKoo Bio & Pharma Co.’s CELL BLOOM. [Courtesy of DongKoo Bio & Pharma]

South Korean biopharmaceutical companies are aggressively engaging in mergers and acquisitions (M&A) and equity investments in a bid to find new businesses that will serve as future revenue sources.

According to the biopharma industry on Wednesday, DongKoo Bio & Pharma Co. is accelerating its overseas business expansion to diversify its business structure centered on domestic specialty drugs. The company is also looking for acquisition targets.

DongKoo Bio & Pharma recently signed a memorandum of understanding (MoU) with Filipino healthcare group Adization Inc. to enter the local market. The company will open a dermatology hospital in the country and launch a cosmetics brand, CELL BLOOM.

In February, DongKoo Bio & Pharma also signed a joint venture agreement with LVMC Holdings in Laos to establish a local generic drug production plant.

The moves come under a blueprint to build its own total healthcare ecosystem by setting up business bases in key regions in Southeast Asia.

“We plan to increase the proportion of overseas sales to more than 30 percent from less than 10 percent by boosting our global business, including our efforts to function as a global contract manufacturing organization (CMO),” said Cho Yong-joon, chief executive officer at DongKoo Bio & Pharma.

Bridge Biotherapeutics Inc, a Korean drugmaker engaged in developing new drugs, added diagnostic device manufacturing to its business purpose in its articles of incorporation early this year and acquired more than 50 percent stake of Ellipse Diagnostics Inc., a U.S.-based medical technology company based on a magnetic external control technology platform, in April.

The company is also speeding up partnership agreements with major diagnostic firms following the stake acquisition.

Daewon Pharmaceutical Co. is eyeing the cosmetics business, the most active new business area for biopharma companies. The company has recently joined the competition to acquire rehabilitation company SD Biotechnologies Co., which sells sheet masks and basic skincare products.

Other pharmaceutical and biotech companies are expected to invest in new businesses.

Celltrion Group, through the merger of its three affiliates, plans to use the combined entities to increase investments in new areas such as analytics, diagnostics, and telemedicine.

SK bioscience Co., meanwhile, is also examining M&As by joining Project NextGen, which the U.S. government is promoting as a strategy to prepare for the next pandemic.

The company, in an effort to expand its presence in the field of cellular gene therapy (CGT), one of its new growth engines, is prioritizing the viral vector, a raw material for CGT that is in short supply, and pursuing relevant M&As.

“Given the nature of the new drug development business, an increasing number of bio pharma companies are looking for shortcuts to make profits in a relatively short time by investing in equity or engaging in acquisitions,” said an industry official.