The Dong-A Socio Group, which grew on the back of the "Bacchus myth," has fallen into a rut without showing new growth engines. Thanks to a stable cash-generating structure built over decades since its founding, it bulked up in size, but as it failed to deliver clear results in its transition to a biotech company, the recovery of market trust is also being delayed.
It launched an image overhaul to shake off Oner risk, but critics say the "growth story" investors want is still nowhere to be seen.
◇ Embezzlement and rebates douse the "Bacchus myth"… returns to management through Yoon's special pardon
Dong-A Socio Group started as Dong-A Pharmaceutical Co. in 1932 and became a leading drugmaker that grew with "Bacchus." In 2013, it switched to a holding company structure and split its businesses into Dong-A Socio Holdings, Dong-A ST, and Dong-A Pharmaceutical Co., and it has established itself as a mid-sized group with about 20 affiliates.
Top-line growth continues. Dong-A Socio Holdings' sales last year rose 7.2% from a year earlier to 1.4298 trillion won, and operating profit climbed 19.1% to 97.8 billion won.
Even so, qualitative changes in the revenue structure are limited. As the group's actual revenue base still relies heavily on Bacchus, it has yet to shake off the label of a "Bacchus company."
At the top of the current governance structure is Chairperson Kang Jung-seok, the third-generation Oner. As the largest shareholder with a 29.26% equity stake in the holding company, his ownership including related parties reaches 42.59%. The grandson of the late founder Kang Jung-hee and the fourth son of the late Honorary Chairperson Kang Sin-ho, he joined Dong-A Pharmaceutical Co. in 1989, served as head of Dong-A Otsuka and as vice president of Dong-A Pharmaceutical Co., and in 2013 became chief of the holding company, 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 Bacchus sales wobbled with the early-2000s debut of Kwangdong Pharmaceutical's "Vita 500," the management was reshuffled, and in 2017 Kang took office.
However, when Kang was taken into custody a year after taking office, the group faced its worst crisis in its 85-year history. In 2017, Kang was brought to trial on charges of embezzlement and hospital and clinic rebates, and in 2018 he received a finalized sentence of two years and six months in prison. After being released in 2020, he was blocked from returning to management due to employment restrictions, but he was reinstated through a Liberation Day special pardon by former President Yoon Suk-yeol in 2023 and returned to management.
Since his return, Chairperson Kang Jung-seok has focused on an image overhaul led by ESG and research and development (R&D). Serving as chairperson of the group's Sustainability Council, he has supported strategies for corporate social responsibility and new drug development, and expressed his intent to carry on the "gamaseot spirit" of sharing warmth like a hearth and fulfilling social responsibility.
Still, the market's assessment remains cold. That is because clear business results sufficient to offset Oner risk have not followed.
◇ No "second Bacchus"… despite business diversification, future growth engines are "absent"
Looking at Dong-A Socio Group's performance structure, Bacchus still accounts for an overwhelming share. Dong-A Pharmaceutical Co.'s sales last year were 726.3 billion won, and operating profit rose 7% from a year earlier to 86.9 billion won.
Within the over-the-counter drug segment, 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 maintaining the largest portion. While the proportion has been gradually declining from 23.14% in 2023 to 20.23% in 2024, it is still a key revenue source. Orthomol (8.35%) and Panpyrin (3.32%) followed.
Bacchus maintains a structure with a high share of cash transactions centered on offline distribution channels such as pharmacies, making it a stable cash generator but also drawing criticism for limitations in business scalability and transparency.
In response, the group is working to foster mid-sized brands to reduce reliance on Bacchus, but results are limited. "Eolbaksah (Ice Bacchus Cider)," which had raised hopes as a second Bacchus, posted only 19.8 billion won in sales last year, and with concerns about 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 about 8% last year, slowing its growth. The assessment is that there is still no clear future growth engine 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 increased R&D expenses, and it swung to a loss in the fourth quarter. Despite increased investment, there is a lack of new drug results or technology transfer performance to offset it.
The biotech business is more than slow; it is barely noticeable. "IMULDOSA," a biosimilar (biosimilar) of the autoimmune disease treatment "Stelara," entered the U.S. market in August last year, but its market share remains around 0.2%, limiting its earnings contribution. As a latecomer lacking a differentiation strategy, analysts say it is difficult to expect meaningful results in the short term.
These structural limits are being reflected directly in the stock price. Dong-A Socio Holdings' shares topped 180,000 won in 2016 on expectations that cumulative sales of "Bacchus" would exceed 20 billion bottles, but later plunged about 60% as Kang's Oner risk surfaced.
As of the close on the 14th, the stock was around 96,800 won, and since 2020 it has barely broken out of the 80,000–120,000 won range.
According to a recent report by Sangsangin Investment & Securities, Dong-A Socio Holdings' price-to-book ratio (PBR) has fallen to about 0.5 times, staying 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.
Chairperson Kang's compensation is also a source of controversy. The total compensation that Chairperson Kang Jung-seok received last year rose 21% from a year earlier to 2.3 billion won, which is the highest level in the pharma-bio industry based on base salary (1.895 billion won). By contrast, professional manager CEO Kim Min-young received about 610 million won, and CEO Chung Jae-hoon received 819 million won, showing a substantial gap.