Medium-sized traditional corporations that have been established for over 40 years are pushing for initial public offerings (IPOs). They have maintained stable management centered on the domestic market for decades, but are facing growth limits, prompting them to seek overseas expansion and secure future revenue by pursuing listings.
According to the domestic pharmaceutical industry on 12th, well-known medium-sized corporations such as Myung In Pharm, Iksoo Pharm, Mothers Pharm, and Samik Pharm have begun serious preparations for listing by selecting underwriters and submitting preliminary examination applications to the Korea Exchange.
Recently, the company that has received the most attention in the market is Myung In Pharm. Founded in 1985 by Chairman Lee Haeng-myung, a former sales representative of Chong Kun Dang, the company has made its name known to the public with over-the-counter medicines such as the gum disease treatment "Icatan" and the constipation treatment "Meikin." With an annual revenue of around 200 billion won and an operating profit margin of about 30%, it has a stable revenue structure for a medium-sized pharmaceutical corporation. Last year, it recorded a revenue of 269.4 billion won and an operating profit of 92.8 billion won, achieving its largest performance since its establishment.
The main products of Myung In Pharm are not actually over-the-counter medicines like Icatan and Meikin, but rather prescription drugs that require a doctor's prescription. They mainly produce treatments for central nervous system (CNS) diseases such as dementia and Parkinson's disease at facilities that meet the standards of good manufacturing practice (cGMP), with sales from these products accounting for 80% of the total.
The primary reason Myung In Pharm is pursuing an IPO is to secure funds for research and development (R&D) expenses. Currently, Myung In Pharm is focusing on new drug development and expanding its product range. In 2021, it invested $6.2 million (86 billion won) in the Israeli biotech firm P2B and signed an exclusive sales and production contract for the Parkinson's disease drug "P2B001," which completed phase 3 trials in the U.S. and Canada.
Last year, the company entered into an exclusive contract for the treatment-resistant schizophrenia (TRS) drug "Ivenamide" with the Italian central and peripheral nervous system treatment developer Newron. Myung In Pharm is responsible for domestic clinical trials for Ivenamide in its global phase 3 trial. It plans to recruit 10% of the total patients in Korea and will bear the clinical trial costs itself. Additionally, the company will also share a certain percentage of the overall clinical trial costs, increasing the necessity of securing R&D funding.
There is a perspective that the reason behind the IPO push is for succession purposes. Chairman Lee, currently 77 years old, holds 95.3% of the equity. If the succession occurs under the current circumstances, the value of the shares being inherited would exceed 500 billion won, and with a tax rate of 50%, the inheritance and gift tax rate would rise to a maximum of 60% (maximum shareholder surtax applicable).
There are reports in the industry suggesting that Lee is seeking to reduce the burden of inheritance tax due to the surtax by trying to have the company evaluated in the market after going public. It is suggested that there is a plan to lower the excessively high company valuation (around 700 billion won) through the IPO. The company filed for preliminary examination listing with the Korea Exchange on the 30th of last month and aims to enter the KOSPI in July.
Medium-sized pharmaceutical corporations that have steadily grown in the domestic market have recently shown clear movements to secure global competitiveness through generational changes and new business ventures. In particular, it is interpreted that they have chosen IPOs as a financing method due to a growing demand for large-scale funds for expanding their new drug pipeline and entering overseas markets.
Samik Pharm, established in 1973, has begun preparation procedures aiming for a KOSDAQ listing in October. The company achieved its highest performance to date last year, generating sales of 54.5 billion won and an operating profit of 3.5 billion won from over-the-counter medicines such as the motion sickness drug "Nobomin Syrup," "Sobomin Syrup," and the antipyretic analgesic anti-inflammatory drug "Maparam Granules." It is currently conducting phase 2 trials for the shingles postherpetic neuralgia (PHN) treatment drug "SIKD1977" and plans to secure funds for further clinical trials through the IPO.
Iksoo Pharm, which has grown for 55 years with its products "Uwhangcheongsimwon" and "Gongjindan" since its founding in 1969, also set its sights on a KOSDAQ listing within the next three years. Last year, Iksoo Pharm's "Yongpyo Uwhangcheongsimwon" surpassed Kwangdong Pharmaceutical's "Kwangdong Uwhangcheongsimwon" in terms of sales volume, achieving the number one market share. Its annual revenue reached 37.4 billion won, setting a record high. Iksoo Pharm is also diversifying its product range into new drug development based on natural products and health functional foods, as well as prescription drugs.
Mothers Pharm, which entered the pharmaceutical industry by acquiring Anam Pharm in 2011, has also joined the IPO trend. Initially starting with contract manufacturing of pharmaceuticals (CMO), the company has focused on new drug development since establishing its own research laboratory in 2015. Drugs such as the hyperlipidemia treatment "Rosuem Jet Tablets" and the diabetes treatment "Teneglif Tablets" are generic drugs it has released. The company is currently in phase 1 trials for the treatment of dry age-related macular degeneration and has plans to build a pipeline of cancer drug candidates, including antibody-drug conjugates (ADCs), through potential mergers and acquisitions (M&A) or external technology introduction via the IPO.
Seok Geun-hee, a researcher at Samsung Securities, noted, "It is true that traditional medium-sized pharmaceutical corporations have grown steadily with stable performances until now, but because their scale is not large, there are limits to continued growth in the domestic market," analyzing that they are aiming to improve corporate structure in line with the changes of the times to target overseas expansion. He added, "I expect that there will be more attempts by medium-sized pharmaceutical corporations to secure new pipelines through M&A with domestic bio companies or to introduce technologies."