LG expands bio sector with record R&D investments

[Courtesy of LG Electronics Inc.]

LG Group is ramping up investment in research and development (R&D) in the bio sector, a key future growth engine, as part of an initiative led by Chairman Koo Kwang-mo.

According to LG Group on Tuesday, the group’s bio sector is focusing on new drug development, aiming at expanding its new drug pipeline while reviewing mergers and acquisitions (M&A) and securing advanced bio technologies.

LG Chem Ltd.’s life science division, leading the group’s bio business, has experienced significant annual sales growth since Koo assumed office in 2018. Sales rose to 1.18 trillion won ($853.8 million) in 2023 from 575.1 billion won in 2018, more than doubling in five years.

A notable highlight is the sharp increase in R&D investment, which more than tripled to 375 billion won in 2023 from 123.8 billion won in 2018LG Chem’s life science division invested 108 billion won in R&D in the first quarter of 2024, a 66.2 percent increase from the 65 billion won it invested during the same period the previous year.

Sales totaled 285 billion won for the first quarter of 2024, with the investment-to-sales ratio at a record 37.9 percent. The R&D expenditure ratio to sales surpassed 30 percent for the first time in 2022 and has consistently remained above 30 percent, the highest level of R&D investment in the industry. “The rapid growth in the bio sector leads to large-scale R&D investments, enabling a virtuous cycle,” an LG Group official said.

The company is already seeing tangible results. LG signed a 400 billion won contract with U.S. biopharmaceutical company Rhythm Pharmaceuticals Inc. for a rare obesity treatment technology export in 2024. It also successfully completed the acquisition of Aveo Pharmaceuticals Inc., which owns an FDA-approved kidney cancer treatment that began in 2023, and recently invested in three bio startups, including health care data analytics company Aetion Inc.

Since taking office, Koo has aimed to make LG a global pharmaceutical company centered around LG Chem. He reviewed new drug pipeline development at LG Chem’s life science R&D facility in 2022 and urged efforts to improve new drug pipeline development. He visited Boston in 2023 to evaluate the new drug business and global commercialization strategies.