The governance of the Korean drugmaker Dongwha Pharm, symbolized by "Buchae-pyo Hwalmyung-su," is in flux. About a year after President and CEO Yun In-ho, the fourth-generation Oner, stepped to the forefront of management, his older sister and uncle stepped down from front-line roles. In business circles, analysts say a full-fledged "traffic control" over the 129-year-old family succession is underway.
◇ One year under CEO Yun… older sister steps back from management to serve as adviser
Dongwha Pharm began in 1897 as Dongwha Yakbang. The late Yun Chang-sik acquired Dongwha Pharm during the Japanese colonial period. His son is the late honorary chairman of Dongwha Pharm, Yun Gwang-yeol. The eldest son of the late honorary chairman Yun Gwang-yeol is Chairman Yun Do-jun, and the younger son is former Vice Chairman Yun Gil-jun. The eldest daughter of Chairman Yun Do-jun is former executive director Yun Hyeon-gyeong, and his son is CEO Yun In-ho.
Born in 1984, CEO Yun In-ho was promoted in Mar. last year and has been leading the company with professional manager CEO Yu Jun-ha. Yun joined the finance department at Dongwha Pharm in 2013. He then served as Director General of the strategic planning office, director, senior managing director, executive vice president, and vice president before becoming president (co-CEO) last year.
Then, Yun In-ho's older sister, former executive director Yun Hyeon-gyeong, stepped down from a front-line management role at the end of that year. It is said that conflict between the siblings was significant during this process. A Dongwha Pharm official said, "Based on internal executive appointments, she has taken on an advisory role related to corporate social responsibility (CSR)."
Former executive director Yun Hyeon-gyeong joined Dongwha Pharm earlier than CEO Yun In-ho and received fourth-generation management training. Joining the advertising and public relations office in 2008, she was promoted after serving as Vice Administrator of the new product development office, becoming a director of the communications team and a senior managing director of the derma business unit in 2012. Afterward, the digestive aid for women "Miin Hwalmyung-su" launched by Dongwha Pharm is regarded as her signature work. She also placed the skin care brand "Hwalmyung" in Lotte Duty Free and Sephora.
Former Vice Chairman Yun Gil-jun also retired upon reaching the mandatory retirement age at the end of last year. However, his son and CEO Yun In-ho's younger cousin, Yun Hyeon-ho, joined Dongwha Pharm as a manager last year and is in charge of production planning.
Meanwhile, under CEO Yun In-ho, Dongwha Pharm in Mar. this year nominated former Blue House senior presidential secretary for civil affairs Woo Byung-woo as an outside director candidate but withdrew the nomination. Instead, the company appointed Kim Seong-su, a professor at Yonsei University Law School, as an outside director. At the time, it was reported there was an internal assessment that a figure with legal capabilities was needed. Woo, who was implicated in the state capture scandal, had his prison sentence finalized by the Supreme Court and was later pardoned under the Yoon Suk-yeol administration.
◇ Fourth-generation Oners Yun In-ho and Yun Hyeon-ho expand Dongwha Pharm equity side by side
The current corporate governance chain runs from CEO Yun In-ho → DWP Holdings → Dongwha Pharm. DWP Holdings is the largest shareholder with 15.22% equity in Dongwha Pharm. CEO Yun In-ho holds 60% equity in DWP Holdings. The equity of related parties including Yun stands at 100%. CEO Yun In-ho and manager Yun Hyeon-ho concurrently serve as CEO and internal director, respectively, of DWP Holdings, which was established in 2019.
Fourth-generation Oners, CEO Yun In-ho and manager Yun Hyeon-ho, increased their Dongwha Pharm equity side by side last year. Each received equity as a gift from their fathers. CEO Yun's equity in Dongwha Pharm rose from 2.3% last year to 6.43%. Manager Yun Hyeon-ho increased equity from 0.32% to 0.37%. Chairman Yun Do-jun (5.13 → 1%) and former Vice Chairman Yun Gil-jun (1.89 → 1.84%) saw their Dongwha Pharm equity decline last year.
Separately, the equity of CEO Yun In-ho's older sister, former executive director Yun Hyeon-gyeong, remains unchanged at 0.06%. The equity held by the largest shareholder and related parties totals 33.64%. A Dongwha Pharm official said, "We understand Chairman Yun gifted equity to support CEO Yun."
One key task for Dongwha Pharm now is surpassing 500 billion won in sales. The company recorded 496.4 billion won in consolidated sales last year, up 7% from a year earlier. Operating profit was 260 million won, down 98% year over year. Sales of the Hwalmyung-su digestive aid, the PANCOLD cold medicine, and the Fucidin wound treatment lineup account for 34% of the total.
Some say the company needs to secure new growth drivers through active new drug development. Dongwha Pharm's consolidated research and development spending last year was 25.7 billion won. R&D accounted for 5% of total sales. A Dongwha Pharm official said, "While strengthening existing businesses such as over-the-counter and prescription drugs and health functional foods, we plan to focus on innovative new drugs, incrementally modified drugs, and functional materials."