Dong-A Socio Group, which grew on the back of the "Bacchus myth," has fallen into a rut, failing to show a new growth engine. Thanks to a stable cash-generating structure for decades since its founding, it bulked up, but as it has failed to show clear results in its transition to a biotech company, the recovery of market trust is also being delayed.
It revamped its image to shake off Oner risk, but critics say the "growth story" investors want is still nowhere to be seen.
◇ Embezzlement and rebates pour cold water on the "Bacchus myth"… returns to management through Yoon's special pardon
Dong-A Socio Group started in 1932 as Dong-A Pharmaceutical Co. and grew into a leading drugmaker with "Bacchus" at the forefront. In 2013, it shifted to a holding company structure, splitting the business into Dong-A Socio Holdings, Dong-A ST, and Dong-A Pharmaceutical Co., and has since established itself as a mid-sized group with more than 20 affiliates.
Top-line growth is continuing. Last year, Dong-A Socio Holdings posted sales of 1.4298 trillion won, up 7.2% from a year earlier, and operating profit of 97.8 billion won, up 19.1%.
Even so, the qualitative change in the revenue structure is limited. As the group's substantial revenue base still relies heavily on Bacchus, it has not been able to shed the label of a "Bacchus corporations."
At the top of the current governance structure is Chairperson Kang Jeong-seok, the third-generation Oner. As the largest shareholder with 29.26% equity in the holding company, the stake including related parties reaches 42.59%. A grandson of founder the late Kang Jung-hee and the fourth son of the late Honorary Chairperson Kang Sin-ho, Kang joined Dong-A Pharmaceutical Co. in 1989, served as head of Dong-A Otsuka and vice president of Dong-A Pharmaceutical Co., and rose to head of the holding company in 2013, leading the group for 13 years.
The management succession was not smooth. There was former Vice Chairperson Kang Moon-seok, the second son of the honorary chairperson Kang and once considered a strong successor, but as sales of Bacchus wavered with the early-2000s launch of Kwangdong Pharmaceutical's "Vita 500," the management was reshuffled, and Chairperson Kang took office in 2017.
However, as Chairperson Kang was taken into custody a year after taking office, the group faced its biggest crisis in 85 years since its founding. In 2017, Kang was indicted on charges of embezzlement and providing rebates to hospitals and clinics, and in 2018 he received a finalized sentence of two years and six months in prison. After being released in 2020, a work restriction blocked his return to management, but he was reinstated by a Liberation Day special pardon in 2023 and returned to management.
Since returning, Chairperson Kang Jeong-seok has focused on image renewal by putting ESG and research and development (R&D) at the forefront. He has served as chairperson of the Group Sustainability Council, supporting corporate social responsibility and new drug development strategies, and has signaled an intention to carry on the "gamaseot spirit" of sharing warmth like a pot of stew and fulfilling social responsibilities.
But the market's assessment remains cold. That is because clear business results sufficient to offset Oner risk have yet to follow.
◇ No "second Bacchus"… despite business diversification, a lack of future growth drivers
Looking at Dong-A Socio Group's earnings structure, Bacchus still takes an overwhelming share. Last year, Dong-A Pharmaceutical Co. posted sales of 726.3 billion won and operating profit of 86.9 billion won, up 7% from a year earlier.
Within the over-the-counter drug institutional sector, which accounts for about half of Dong-A Pharmaceutical Co.'s sales, Bacchus sales were about 270 billion won, taking a 19.43% share and remaining the largest component. While the share has been gradually declining from 23.14% in 2023 and 20.23% in 2024, it is still a core revenue source. Orthomol (8.35%) and Panpyrin (3.32%) followed.
Centered on offline distribution channels such as pharmacies, Bacchus maintains a structure with a high share of cash transactions, which makes it a stable cash generator but is cited as a limitation for business scalability and transparency.
In response, the group is seeking to nurture mid-sized brands to reduce its dependence on Bacchus, but results are limited. "Eolbaksa (Ice Bacchus Cider)," which had raised expectations as a second Bacchus, posted only 19.8 billion won in sales last year, and with concerns over ultra-processed foods surrounding energy drinks, achieving this year's sales target of more than 40 billion won is uncertain.
The health functional food brand Orthomol also saw sales fall by about 8% last year, slowing its growth. The assessment is that there is still no clear future growth driver to replace Bacchus.
Dong-A ST, which handles prescription drugs, also shows a clear gap between top line and bottom line. While sales increased to a record high, profitability worsened due to a higher cost ratio and rising R&D expense, and it fell into the red in the fourth quarter. Despite increased investment, there is a lack of new drug results or technology transfer performance sufficient to offset it.
The biotech business is beyond slow—its very presence is faint. "IMULDOSA," a biosimilar to the autoimmune disease treatment "Stelara," entered the U.S. market in Aug. last year, but with its share still stuck around 0.2%, its contribution to results is limited. As a latecomer lacking a differentiation strategy, analysts say it is difficult to expect meaningful results in the short term.
These structural limitations are being reflected directly in the stock price. Dong-A Socio Holdings' stock broke above 180,000 won in 2016 on expectations that cumulative sales of "Bacchus" would surpass 20 billion bottles, but then plunged about 60% as Chairperson Kang's Oner risk surfaced.
As of the close on the 14th, the stock is stuck around 96,800 won, and it has barely broken out of the 80,000–120,000 won range since 2020.
According to a recent report by Sangsangin Investment & Securities, Dong-A Socio Holdings' price-to-book ratio (PBR) has fallen to around 0.5 times, lingering at the bottom of its long-term trading range. The analysis is that there is a lack of clear event momentum to drive the stock higher.