The management rights dispute between the founder's family of Hanmi Pharmaceutical Group, which lasted for over a year, has ended with the victory of the 'four-member coalition' on the side of the mother and daughter. The pharmaceutical industry evaluates this as a win for major shareholder Shin Dong-guk, chairman of Hanyang Precision, who joined forces with the mother and daughter, and for Radifangs Partners.
On the 13th, Hanmi Pharmaceutical Group held a board meeting, during which the representative director Lim Jong-hoon, the second son of the late founder Lim Sung-ki, resigned from his position, and Lim's wife, Song Young-sook, was appointed as the new chief executive officer.
First son Lim Jong-yoon, chairman of Korigroup, was recently appointed vice-chairman (chairman of the board) of Beijing Hanmi Pharmaceutical Co., Ltd. (Beijing Hanmi), following his resignation from the board of Hanmi Science. Thus, the management rights dispute of the founder's family has come to an end.
Chairman Shin, founder of Hanyang Precision, is a close hometown junior of Lim Sung-ki. He became the largest individual shareholder by purchasing stock equity on Lim's recommendation in 2010 and played a problem solver role in this management rights dispute involving the founder's family.
There are analyses suggesting that continuing the intent of Lim Sung-ki, the founder of Hanmi Pharmaceutical, known as a 'new drug development family,' essentially lies in Chairman Shin's hands. The four-member coalition, including Chairperson Song Young-sook and Chairman Shin Dong-guk, is expected to focus on stabilizing the group, boosting stock prices, and driving performance growth.
However, some in the market are skeptical about whether Shin, who has a background in manufacturing, and the private equity firm Radifangs have the willingness to invest significantly in research and development. In response, Hanmi Pharmaceutical Group emphasized, 'The four-member coalition, including Shin, Chairman, and Radifangs, has a strong commitment to new drug development, which is the DNA and core competitiveness of Hanmi Pharmaceutical.'
◇Shin Dong-guk, utilizing Hanyang Precision… strong will to recover stock prices
The four-member coalition that holds management rights has a strong will to stabilize Hanmi Group's management and recover the corporate stock value that had decreased due to the management rights dispute.
An industry insider who requested anonymity noted, 'The four-member coalition has a strong resolve to correct the stock price, which has been shaken by the risks of management rights disputes, and will ensure that the establishment of a professional management system, which has been declared so far, proceeds without fluctuation.'
There is attention from both inside and outside the group towards the structure that could allow Hanyang Precision to exert influence over Hanmi Pharmaceutical Group's management. Chairman Shin has actively utilized Hanyang Precision in the management rights dispute.
Hanyang Precision, a mid-sized enterprise based in Gimpo with annual sales of about 80 billion won, is fully owned by Chairman Shin. Initially, he shared ownership with co-founders, but in 2011, he bought out all the shares.
Last year, Chairman Shin expanded his equity stake by purchasing approximately 4.44 million shares (6.5% ownership) of Hanmi Science, which the mother and daughter held, for 164.4 billion won. At that time, Hanyang Precision contributed 100 billion won, and the remaining 64.4 billion won was financed with personal funds from Chairman Shin. Hanyang Precision secured the funds through loans backed by factory land. This enabled the mother and daughter to prepare inheritance tax resources, while Chairman Shin's side became the largest shareholder of Hanmi Science with 18.93% (including the 3.95% equity held by Hanyang Precision). In December of last year, Chairman Shin also purchased a 5% stake from Lim Jong-yoon, chairman of Korigroup, who had been struggling with cash flow.
◇Will the Merck-style professional management system succeed?
With the end of the management rights dispute, Hanmi Pharmaceutical has major tasks remaining in establishing a professional management system and stabilizing management. However, the industry has raised questions about whether Hanmi Group and subsidiary businesses can move in a unified direction under the four-member coalition, which has subtly different interests.
Research Institute Lee Ji-soo from DAOL Investment & Securities noted, 'The negative factors stemming from the management rights dispute within Hanmi Pharmaceutical Group are seen to have been resolved,' adding, 'However, it’s crucial that the group and subsidiary management harmonize and unite as a 'union' moving forward, but whether this can unify business direction is key.'
Currently, the brothers, who have fiercely contended for management rights against the mother and daughter, remain at the boards of Hanmi Science and Beijing Hanmi, both major subsidiaries of Hanmi Pharmaceutical.
The market views this as a somewhat disharmonious situation in terms of management. A pharmaceutical industry insider pointed out, 'Beijing Hanmi contributes significantly to Hanmi Pharmaceutical's revenue, but if Chairman Lim Jong-yoon, who holds the management rights of Beijing Hanmi, decides to pursue other business endeavors, it could diverge from the group’s intended business direction,' adding, 'The role of major shareholder Shin Dong-guk is very important.'
Although Song Young-sook has been appointed as the new CEO of Hanmi Science for now, it is expected that a professional manager will soon be appointed. Previously, Chairman Shin Dong-guk stated in a media interview, 'Hanmi Pharmaceutical should continue with CEO Park Jae-hyun, and Hanmi Science should transition to a professional management system with Lim Jong-hoon stepping down.' CEO Park Jae-hyun is a professional manager with over 30 years of experience at Hanmi Pharmaceutical and is supported by the four-member coalition.
Chairmen Song and Shin stated that they would adopt the Merck (MSD) style of professional management system.
Merck operates two committees, the family committee and the partner committee. The family committee, composed of a member of the Merck family and external experts, selects the members of the partner committee, which then appoints Merck's top executives.
Once a new professional manager is appointed, organizational restructuring is expected along with the clarification of roles among Chairman Shin Dong-guk, the largest shareholder of Hanmi Science, the mother and daughter, and the brothers.
Strengthening the cohesion among employees is also an urgent issue. Hanmi Science has controlled employees to prevent the core business from performing normal operations, such as financial accounting, human resources, and IT tasks, leading to conflicts between the holding company and the core business. During this process, Hanmi Pharmaceutical has even filed a lawsuit against Hanmi Science.
Hanmi Pharmaceutical Group is expected to announce the new director appointments and future management structure at the regular shareholder meeting in March.