Myung In Pharm, famous for the gum disease treatment Iga-tan, has formally begun the IPO (initial public offering) process on the Korea Composite Stock Price Index (KOSPI) market. The company, which has operated as an unlisted firm, is drawing industry attention by listing on the KOSPI in its 40th year since founding.
According to the industry on the 8th, Myung In Pharm will conduct a demand forecast for institutional investors from the 9th to the 15th to determine the final offering price. It then plans to list on the KOSPI after the general subscription on the 18th–19th. The company plans to offer a total of 3.4 million shares, and the expected offering price is 45,000–58,000 won. The lead manager is KB Securities.
The company is promoting its growth in performance and high operating margin as points to attract investment.
Last year, the company's consolidated sales were about 269.4 billion won and operating profit was 92.8 billion won, resulting in an operating margin of 34.4%. It was the largest performance since the company's founding. Last year the average operating margin in the domestic pharmaceutical industry was 9%. It even overwhelms leading companies in the industry. Hanmi Pharmaceutical's operating margin was 14.5%, and Daewoong Pharmaceutical's was 13%. Yuhan Corporation, the traditional industry leader, recorded only 2.7%.
Myung In Pharm plans to use the funds raised through the IPO to diversify its business. The fields the company is focusing on are pellet production and developing new drugs for central nervous system (CNS) disorders such as schizophrenia.
In pharmaceutical formulations, pellets refer to small spherical or hemispherical granules that contain active ingredients. They are manufactured as multiparticulates and are used by being filled into capsules or used in tablet form. Pellet formulations can control the rate and location at which a drug is released in the body, so they are mainly used to develop extended-release formulations that release drugs slowly and provide longer-lasting effects.
The domestic pellet drug market is on the order of 350 billion won. It is not a large market, but aside from Myung In Pharm most of it depends on imports. The company sees the market as one with no domestic competitors and few overseas competitors, allowing for stable revenue generation, and its strategy is to further strengthen competitiveness in this field.
Currently, Myung In Pharm is developing improved drugs that apply pellet technology to enhance drug delivery systems, including anti-Parkinson's drugs, combination therapies for hypertension and hyperlipidemia, antiplatelet–proton pump inhibitor (PPI) combination therapies, and others. Examples include extended-release pellet formulations that convert drugs taken three times a day into once-daily dosing, and enteric pellet formulations designed to release the drug only in the intestine rather than the stomach.
The company is promoting construction of the second Balan plant in Hwaseong, Gyeonggi, targeting completion next year, and plans to use funds raised from the listing to operate the new plant as a dedicated production facility for pellet and capsule products. It also has a plan to strengthen its portfolio by investing a total of 5 billion won—1.5 billion won next year and 3.5 billion won in 2027—to acquire pellet formulation technologies from Indian or Chinese pharmaceutical companies.
Although Myung In Pharm is famous for Iga-tan, its main drugs are actually CNS specialty medicines for depression, schizophrenia, and anxiety and sleep disorders. It currently holds about 200 medicines in the CNS treatment field. Based on this, it achieved the No. 1 domestic market share in the CNS field for two consecutive years.
The company is also challenging the development of new CNS therapeutic drugs. It plans to invest funds secured through the IPO into research and development (R&D). First, it said it will invest a total of 35 billion won in global phase 3 clinical trials of the schizophrenia treatment candidate Evenamide.
In the market, various interpretations followed regarding the timing of Myung In Pharm's listing and the offering price. There is suspicion that 76-year-old Chairman Lee Haeng-myung, born in 1949, used the listing as a means to transfer shares to his children.
Some have also viewed that the offering price might have been set below corporate value to serve as a succession method and reduce inheritance tax. Myung In Pharm's corporate value is estimated at more than 500 billion won, and it is assessed that when an inheritance takes place, surcharged taxation for major shareholders could apply, raising the inheritance tax rate to as high as 60%. If the valuation is lowered at listing, one can enjoy capital gains from post-listing share price increases and thereby reduce the resulting inheritance tax.
However, regarding these suspicions, Myung In Pharm rebutted, saying "this listing is not being pursued for succession purposes." Myung In Pharm CEO and chairman Lee Haeng-myung replied to market suspicions, saying, "If it were for succession, as the largest shareholder I would have distributed all the company's cash first and then carried out what is known as an empty-shell listing," and adding, "We will establish a professional management system within three to four years." An empty-shell listing refers to the owner family taking the company's cash through dividends or other means and then listing while the company has almost no assets or profits.
Lee said, "Myung In Pharm is ready to leap onto the global stage beyond No. 1 in Korea, based on decades of unrivaled capabilities in the CNS field and a one-stop value chain," and added, "We will use this IPO as a springboard to strengthen competitiveness in the global market and create new business opportunities to support long-term growth."