Bukwang Pharmaceutical will complete the acquisition of UNION KOREA PHARM in June. Under the strategy of the largest shareholder, OCI Holdings, to enter the pharmaceutical and biotech business, securing a production base and strengthening research and development (R&D) are proceeding in tandem, drawing assessments that the company's business structure overhaul is accelerating.
Attention is on whether Bukwang Pharmaceutical will move closer to its goals of "entering the top 20 in domestic pharmaceutical sales by 2030" and "achieving an operating margin of more than 10%."
◇ OCI enters new business with Bukwang Pharmaceutical acquisition … key is expanding equity
OCI Holdings' acquisition of Bukwang Pharmaceutical dates back to March 2022. At the time, OCI (now OCI Holdings) bought about 11% equity from the previous owner side and became the largest shareholder.
The market was split then as a company engaged in solar and chemical businesses moved to acquire a mid-sized drugmaker founded in 1960. But OCI's plan to enter pharma and biotech did not stop at Bukwang Pharmaceutical. The company then reviewed the possibility of integrating with or acquiring Hanmi Pharmaceutical, but the talks failed as a management dispute among the founding family of Hanmi Group intensified.
In the end, OCI shifted to a strategy of expanding around Bukwang Pharmaceutical. OCI Holdings operates with a structure in which Chair Lee Woo-hyun, who holds equity in the 7% range, leads key group decision-making. In July last year, OCI Holdings took part in Bukwang Pharmaceutical's rights offering and increased its stake. As a result, OCI Holdings' equity rose from 11.32% as of Mar. 2024 to the current 17.11% (16,878,791 shares).
Under the current Monopoly Regulation and Fair Trade Act, a holding company must own at least 30% equity in a listed subsidiary (50% if unlisted). For OCI Holdings to make Bukwang Pharmaceutical a subsidiary, it must buy additional equity by September next year.
Some in the industry had weighed whether OCI Holdings would expand its equity in Bukwang Pharmaceutical or exit (unwind its equity).
OCI has not yet formalized a clear direction. If it fails to meet the obligation to expand equity, it must dispose of all equity or pay a penalty surcharge.
OCI Holdings' financial condition is not favorable at present. On a consolidation basis last year, it posted an operating loss of about 57.6 billion won and a net loss of 146.2 billion won. Its key group businesses—renewable energy, energy solutions, and chemical materials—all struggled.
◇ Why it targeted the delisted UNION KOREA PHARM
Against this backdrop, Bukwang Pharmaceutical moved to acquire UNION KOREA PHARM to expand its production base. The company plans to close the acquisition in June. The total acquisition price is about 30 billion won and will proceed via a third-party allotment rights offering. Through this, Bukwang Pharmaceutical will secure 74.97% equity (60 million shares) in UNION KOREA PHARM.
This transaction uses a rehabilitation procedure structure. UNION KOREA PHARM's total equity was negative 22.9 billion won last year, putting it in a state of complete capital erosion, and it logged losses for three consecutive years and received a disclaimer of opinion. After a debt-to-equity swap and a capital reduction, new share issuance will drive restructuring, followed by Bukwang Pharmaceutical acquiring equity.
What Bukwang Pharmaceutical targeted was expanding in-house production capacity by securing a manufacturing base.
UNION KOREA PHARM has facilities to produce antibiotics, injectables, and oral formulations. This manufacturing infrastructure is considered difficult to newly secure in a short period. In particular, its capacity to produce cephalosporin antibiotics, which inhibit bacterial cell wall synthesis to deliver bactericidal effects, is seen as an area capable of generating stable revenue and served as a key strategic factor in this acquisition.
There are, however, significant risks. UNION KOREA PHARM has been delisted, limiting access to the capital market. Additional investment and operating fund-raising are cited as key variables going forward. Bukwang Pharmaceutical plans to finalize financing and operating strategies after the acquisition.
◇ Bukwang Pharmaceutical accelerates dual track of restructuring and R&D amid profitability adjustments
Bukwang Pharmaceutical is run under a professional management system led by CEO Lee Jae-young. Lee, a former prosecutor, oversaw strategic planning at OCI Holdings and now oversees the management of Bukwang Pharmaceutical.
Lee is credited with improving profitability by overhauling a sales structure centered on contract sales organizations (CSOs) and driving cost efficiencies. In fact, on a consolidation basis, Bukwang Pharmaceutical turned a profit with 160.1 billion won in revenue and 1.6 billion won in operating profit in 2024. In 2025, revenue was 200.7 billion won and operating profit was 14.16 billion won, showing growth.
The company's key products are "Dexid" and "Thioctacid." As treatments for diabetic neuropathy, they are cash cows generating more than 10 billion won in annual sales.
In the first quarter this year, on a consolidation basis, revenue was 47.8 billion won and operating profit was 1.1 billion won. Revenue was flat year over year, but operating profit fell 62.6% from 3 billion won. On a conference call, Lee explained the reason for the decline in operating profit: "To prioritize securing production capacity for ethical drugs (ETC), we expanded contract manufacturing of some products such as over-the-counter (OTC) medicines and toothpaste, which increased cost burdens."
First-quarter prescription performance showed growth. Lee said, "Based on Ubist, ETC prescriptions rose 8.7% from a year earlier, and the central nervous system (CNS) segment grew 36%," adding, "Since March, the recovery trend has been clear, and in the second quarter we will regain target-level profitability."
Bukwang Pharmaceutical is reorganizing its production structure so that Bukwang Pharmaceutical focuses on ETC, while OTC and contract manufacturing (CMO) are transferred to UNION KOREA PHARM. Analysts say this is closer to a "redesign of the revenue structure" than a simple production transfer.
The company is also reshaping its R&D axis. Contera Pharma, Bukwang Pharmaceutical's Danish subsidiary, is pushing to spin off its RNA division into a separate corporation. The target timing is by 2027, and rather than an initial public offering (IPO), options mentioned include attracting a strategic investor (SI) or launching the new entity via CB/EB issuance.
The push to spin off reflects the view that the Parkinson's disease therapy (CNS) program and the RNA platform business differ in nature, and each should pursue investment and development strategies independently.
Contera Pharma's core pipeline, the Parkinson's disease drug candidate "CP-012," completed phase 1b in 2025, and the company is pushing to enter phase 2 in the United States and Europe in the third quarter this year. Plans have been mentioned to invest up to about 22 billion won in clinical costs.
The company's strategy places more weight on out-licensing (LO) after phase 2 than on direct commercialization. The market interprets that, alongside the acquisition of UNION KOREA PHARM, Bukwang Pharmaceutical is simultaneously expanding its CNS and RNA drug development axes and accelerating its business structure overhaul.
It unveiled preclinical data last month at a global conference for the RNA-based Canavan disease drug candidate "CP-102." This pipeline is a core asset that led to joint research with the global drugmaker Lundbeck.
In the pharmaceutical industry, there is a view that whether the OCI group can complete a pharma-bio value chain combining in-house production and R&D centered on Bukwang Pharmaceutical will determine the success or failure of its new business.
An industry official said, "It is meaningful that Bukwang Pharmaceutical is simultaneously pursuing production in-house and an R&D strengthening strategy," adding, "For the pharma-bio business to grow, much depends on the pace of equity expansion and capital input, which makes profitability improvements in OCI's existing energy and chemical businesses an important variable."