Major domestic pharmaceutical and biotech corporations are moving to amend their articles of incorporation to expand business purposes. The fields are diverse, ranging from solar and energy generation to consulting and even car wash operations. Analysts say this reflects corporations' strategies to strengthen ESG (environmental, social and governance) management and rising electricity costs.
According to the industry on the 11th, domestic pharmaceutical and biotech corporations will hold a string of regular shareholders meetings starting on the 20th. Main agenda items include: ▲partial amendments to the articles of incorporation following revisions to the Commercial Act ▲mandatory cumulative voting ▲director appointments.
Among these, amendments adding new business purposes stand out. The trend is to broaden beyond existing pharmaceutical operations into health functional foods, energy, and investment and consulting.
Daewoong Pharmaceutical will take up an agenda item at its shareholders meeting on the 26th to add "health functional foods" and "solar power generation" to the business purposes in its articles. The company said this is intended to strengthen its health functional food business while expanding energy efficiency and ESG management. It is pushing to expand solar facilities centered on the Osong plant and the Magok research and development (R&D) center. In 2024, the company directly produced and used 1.002 terajoules (TJ) of energy through solar power generation.
On the same day, JW Pharmaceutical and JW Life Science will also move to amend their articles for business diversification.
JW Pharmaceutical added "investment, management advisory and consulting" to its articles. The company said the purpose is to strengthen investment and management support functions among affiliates.
JW Life Science will newly establish "investment management advisory and consulting" and "cogeneration, self-generation and self-consumption, sales and supply of energy (electricity and heat)" as business purposes. A company representative explained the reason for the amendment, saying, "There is a burden from electricity charges incurred in operating pharmaceutical production facilities, so we plan to establish a cogeneration plant at the Dangjin plant to pursue cost savings."
The pharmaceutical industry is cited as one with high electricity consumption due to maintaining temperature and humidity and operating aseptic facilities during drug production. The larger the production facilities, the greater the burden of electricity expenses.
Corporations' electricity bill burdens have grown compared with the past. Industrial electricity rates, which were 105.5 won per kWh in the fourth quarter of 2021, rose to 185.5 won in the fourth quarter of 2024. Although they have been frozen for more than a year since, domestic corporations say the already sharply higher electricity bills are affecting cost structures.
Accordingly, some pharmaceutical companies are analyzed to be seeking cost-saving measures through self-generation of energy, such as expanding solar facilities or introducing cogeneration plants.
Meanwhile, Dong-A ST will place on the agenda at the shareholders meeting on the 26th an amendment to add "car wash operation" to its business purposes. The company said the move is intended to clearly reflect in the articles the "Happy Car Wash" business it operates to expand employment of people with disabilities and support their independence. Earlier, the company hired a total of eight employees to operate the Happy Car Wash.
A company official said, "Employees who have completed customized job training specialized in car wash work here provide car wash services at reasonable costs," adding, "Through this, executives and employees will naturally take part in realizing social value, and workers with disabilities will work with pride in stable jobs and grow together."
Industry officials interpreted recent amendments by pharmaceutical companies to their articles as moves that go beyond simple business expansion to reflect both improvements to cost structures and ESG management strategies. A representative at a pharmaceutical company said, "Business purposes in the articles have a strong nature of keeping open the possibility of actual business execution," adding, "It can be seen as preemptive preparations that consider energy cost management and the exploration of new businesses at the same time."