The report cards of two companies that passed through CJ Group's hands have sharply diverged. HK inno.N (then CJ Healthcare), which CJ sold, has joined the "1 trillion won sales club." CJ Bioscience (ChunLab), which it acquired afterward, has not escaped the red. Where did the fortunes of the two companies begin to diverge?
CJ CheilJedang entered the pharmaceutical business by acquiring Youpung Pharmaceutical in 1984 and strengthened prescription drugs by acquiring Hanil Pharmaceutical in 2006. To bolster research and development capabilities, CJ CheilJedang spun off its pharmaceutical business in 2014 and launched CJ Healthcare. CJ Healthcare was sold to Kolmar Korea for 1.31 trillion won in 2018.
Afterward, in 2021, CJ CheilJedang reaffirmed its commitment to the bio business by acquiring ChunLab, a microbiome research company, for 98.3 billion won. It then merged ChunLab with CJ CheilJedang's red bio (medical and pharmaceutical) institutional sector to launch CJ Bioscience.
CJ Bioscience is developing anticancer drugs and more using the microbiome. Microbiome is a portmanteau of microbe, meaning microorganism, and biome, meaning ecosystem. The goal is to develop various therapeutics based on the microorganisms that live in the human body.
Coincidentally, the performances of the two companies have diverged. Since CJ CheilJedang acquired it, CJ Bioscience has yet to deliver clear results. CJ Bioscience has not posted an operating profit from 2014 through last year. On a consolidation basis, cumulative sales for the third quarter last year were 2.4 billion won, down 4% from a year earlier, and operating loss came to 19.6 billion won. It booked a loss after investing 13.8 billion won in research and development.
The company's most urgent task is improving profitability. Its main pipelines (new drug candidates) include CJRB-101, an anticancer drug candidate to treat Non-small cell lung cancer (NSCLC) and head and neck cancer, and CJRB-201, a candidate to treat inflammatory bowel disease. The anticancer candidate is in clinical trials, and the inflammatory bowel disease candidate is in the preclinical stage.
A CJ Bioscience official said, "Research and development expenses were invested in the new drug development process," and noted, "We are reviewing a technology transfer of the therapeutic candidates." The official added, "We aim to expand our portfolio with a high-functionality probiotics business and leap forward as a health and wellness company."
CJ Bioscience plans to reorganize its board after a shareholders meeting on the 26th to pursue stronger profitability. The current inside directors are CEO Yun Sang-bae and management leader Choi Im-jae. After the shareholders meeting, Choi will resign, and the inside director post will be filled by management leader Oh Gwi-heung.
Oh joined CJ CheilJedang in Dec. 1999 and was promoted to executive director in charge of bio business management in 2020. After serving as the white bio (bio materials) Corporate Finance management leader, Oh joined CJ Bioscience in July last year. Oh currently oversees business management, including finance. After joining the board, Oh is expected to focus on strengthening profitability. The company said, "We determined this person is the right fit to lead growth."
By contrast, HK inno.N, which left CJ Group, is seeing sales soar. Last year, HK inno.N's consolidation sales were 1.0632 trillion won, up 19% from a year earlier. Operating profit rose 26% to 110.9 billion won. In 2019, the year after the sale, HK inno.N launched the third-generation gastrointestinal drug "K-CAB" and quickly expanded its market dominance. K-CAB is characterized by rapid onset and improved relief of nighttime heartburn. Recently, the company applied to the U.S. Food and Drug Administration (FDA) for item approval of K-CAB, seeking to expand onto the global stage.
An industry official said, "The company CJ Group sold has improved results, while the one it acquired is sluggish," adding, "The two companies have split into extremes." The pharmaceutical and bio industry is watching to see how the two companies' futures will unfold.