Hanmi Pharmaceutical Group introduced a professional management system after resolving a management rights dispute within the founding family, but now a non-executive director and majority shareholder is intervening in management through associates, causing internal discord. There are rising internal objections as the company is being directed to cut expenses and personnel in research and development (R&D) and quality control (QC), instead of developing new drugs, to import medications from outside or provide incentive sales to hospitals and clinics.
According to the pharmaceutical industry on the 24th, counsel Bae In-kyu, who joined Hanmi Pharmaceutical as an advisor at the recommendation of Chairman Shin Dong-guk of Hanyang Precision, has recently started working at Hanmi Pharmaceutical's Paltan factory and his coercive directives have grown employee dissatisfaction.
Employees at Hanmi Pharmaceutical claimed that counsel Bae pressured them significantly to cut R&D expenses and personnel at the Paltan factory. An employee at Hanmi Pharmaceutical said, "Counsel Bae is referred to as 'Chairman Shin Dong-guk's avatar' among staff in the group."
Chairman Shin Dong-guk holds 16.43% equity in the holding company Hanmi Science and is also a non-executive director there. An employee at Hanmi Pharmaceutical said, "Chairman Shin is openly intervening in Hanmi Pharmaceutical's management through counsel Bae, raising criticism that it's going beyond the authority of a non-executive director."
In response to the controversy, Chairman Shin stated to the press that "Counsel Bae has never mentioned personnel adjustments or cost reductions." This denies the claims of internal employees. However, recordings received by ChosunBiz from multiple sources support the claims of Hanmi Pharmaceutical Group employees, contrary to Chairman Shin's statements. After legal consultation, the voices of counsel Bae and the informants were both altered in the recorded video.
The published transcript includes part of counsel Bae's remarks to employees among the recordings received from informants. The transcript confirms sufficient circumstances that Chairman Shin is deeply involved in the management of Hanmi Pharmaceutical through counsel Bae.
While receiving a report from an employee, counsel Bae scolded, "The company is in this state because of the nonsense and chaos it's been through" and ordered cost-cutting measures through personnel reductions. He said, "It's better to reduce R&D expenses and buy medicine from elsewhere," and "reduce quality control (QC) personnel a lot."
He even instructed to strengthen sales and marketing to hospitals and clinics, which could be interpreted as illegal rebates for drug adoption, saying "Whether providing some new incentives to hospitals."
Counsel Bae's remarks are far from the management of the late Chairman Lim Sung-ki, who emphasized full support for new drug R&D and the importance of quality control. This also reflects the low level of understanding of the legal system in the pharmaceutical industry.
An employee at Hanmi Pharmaceutical noted, "How would employees feel when an outsider with no experience in the pharmaceutical industry comes in and makes such dismissive comments about the business?" He added, "It seems that they are only focused on reducing expenses to improve short-term finances, raising questions about whether the largest shareholder is primarily focused on boosting the stock price before selling his shares or handing over the company to realize profits."
Chairman Shin Dong-guk is a businessman operating Hanyang Precision in Gimpo, Gyeonggi Province, who bought shares in Hanmi Pharmaceutical at the recommendation of the late Chairman Lim. Both men hail from Gyeonggi's Tongjin-eup Gahyeon-ri and are alumni of Tongjin High School (formerly Tongjin Comprehensive High School).
Last year, Chairman Shin actively engaged in the management rights dispute involving the founding family of Hanmi Pharmaceutical. In June of the previous year, he backed the eldest and second son brothers, appointed as a non-executive director at Hanmi Pharmaceutical, and later reversed to support the mother-daughter side, also taking on the role of non-executive director at Hanmi Science, the holding company of Hanmi Pharmaceutical, in November.
The management rights dispute at Hanmi Pharmaceutical concluded in February when the eldest and second sons, Lim Jong-yoon and Jong-hoon, resigned from their positions as inside directors and chief executive officer of Hanmi Science, marking a victory for mother-chairman Song Young-sook and vice-chairman Lim Joo-hyun. The Hanmi Pharmaceutical Group stated it would shift to a professional management system and create a structure where the major shareholder supports from behind.
In March, during the Hanmi Science shareholders' meeting, Song Young-sook, the spouse of the late founder Lim Sung-ki, resigned from her position as chief executive officer, and former MERITZ Securities vice president Kim Jae-kyu took over as a professional manager.
Contrary to expectations, Chairman Shin Dong-guk has actively participated in management as a major shareholder. He is a non-executive director but has reportedly been coming to the Hanmi Pharmaceutical headquarters in Songpa-gu, Seoul, approximately twice a week since the shareholders' meeting in March. Chairman Shin is using the office formerly occupied by former CEO Lim Jong-yoon on the 17th floor of the Hanmi Pharmaceutical headquarters.
A source familiar with the internal situation at Hanmi Pharmaceutical stated, "I understand that Chairman Shin Dong-guk's intentions are conveyed through counsel Bae, and that Park Jae-hyun, the professional manager from Hanmi Pharmaceutical, often finds out about related matters afterward."
In the industry, it's been suggested that Kim Jae-kyu, the newly appointed representative from the holding company, might also be in communication with Chairman Shin Dong-guk. Given that Kim successfully introduced technologies from a bio company to develop the lung cancer new drug Lecarezo while at Yuhan Corporation, there are forecasts that the approach may lean towards acquiring external technologies rather than in-house development. This aligns with the points mentioned by counsel Bae regarding R&D and new drugs.
An industry insider noted, "Hanmi Pharmaceutical has been conducting research on candidate substances internally, but now, like Yuhan Corporation, it may move towards purchasing candidate substances from outside for development and subsequently exporting the technology, which differs greatly from the R&D methods led by the Hanmi founder and could potentially reignite the management rights dispute."