Kwangdong Pharmaceutical is trying to shift from a food-and-beverage-centered business structure to reshape itself as a specialized drugmaker.
It is expanding the share of its pharmaceuticals business by bringing in an innovative drug pipeline focused on ophthalmology and rare diseases.
However, the lack of in-house new drug development capabilities and a weak governance structure are cited as limits to boosting long-term corporate value.
◇ 1.6 trillion won in revenue but an operating margin in the 1% range… 70% are external products
Kwangdong Pharmaceutical's revenue on a consolidation basis last year was 1.6595 trillion won, giving it a scale comparable to top domestic drugmakers such as Daewoong Pharmaceutical (1.5709 trillion won) and Chong Kun Dang pharmaceutical (1.6924 trillion won).
However, operating profit was 31 billion won, with an operating margin of 1.9%. That is significantly lower than Daewoong Pharmaceutical (12.5%), Hanmi Pharmaceutical (16.7%), and GC Biopharma (3.5%), leading to analysis that a distribution-centered revenue structure is weighing on profitability.
In fact, external in-licensed items labeled as "goods" accounted for about 70% (1.1617 trillion won) of total revenue last year. By contrast, "products" manufactured in-house posted 486.9 billion won in revenue, of which prescription drugs (ETC) accounted for only 28.5 billion won. The first quarter this year showed a similar trend. Led by "Jeju Samdasoo" (73 billion won), goods such as "Gardasil" and "Shingrix" accounted for 68.4% of total revenue, while in-house prescription drugs made up about 3% (7.2 billion won).
Kwangdong Pharmaceutical is pursuing a "license-in" strategy as an alternative. It sees ophthalmology and rare diseases as areas with large unmet needs and favorable for building expertise, and aims to bring in globally validated assets for commercialization. Early this year, it also created a "future innovation team" reporting directly to Chairman Choi Seong-won.
In ophthalmology, it secured "Uvegy," a presbyopia-improving eye drop approved by the U.S. Food and Drug Administration (FDA), as well as "NVK002," a pediatric myopia treatment. In rare diseases, it brought in the Fabry disease treatment "Elfabrio" and is distributing it. As a result, total pharmaceutical revenue has been steadily increasing from 349.7 billion won in 2023 to 456.6 billion won in 2025.
Alongside license-ins, Kwangdong Pharmaceutical is also contributing to investment funds for biotech startups, widening its open innovation base. However, to date, the in-house new drug pipelines or license-in cases secured through this approach appear limited. Some say most of the investments have remained financial in nature.
Some in the industry say Kwangdong Pharmaceutical needs to focus on securing its own new drug pipeline to strengthen its core competitiveness. After completing a phase 2a trial in 2020 for "KD-101," a synthetic obesity drug candidate based on natural substances, the company has not announced additional pipelines. The company's research and development (R&D) spending has long stayed at 1%–2% of revenue. In the first quarter this year, it was 3.986 billion won (1.7% of revenue), down from a year earlier.
◇ "EB issuance withdrawal" and other governance controversies… Task to restore market trust
Improving governance, which will determine market trust alongside business reshaping, is also key.
According to the Financial Supervisory Service's electronic disclosures, as of the end of last month, Chairman Choi Seong-won held a 6.94% stake. Even including related parties, the owner family's stake remains in the 19% range. By contrast, the second-largest shareholder, the U.S. institutional investor Fidelity Puritan Trust, holds 9.99%. As a result, the market has consistently raised the need for the owner side to defend management control.
The fact that a significant portion of the owner's stake has been pledged as collateral to financial institutions is also cited as a risk factor for changes in control. About 1.25 million shares, or roughly 36.2% of the chairman's holdings, are tied up as collateral for a 3.5 billion won loan, and many of the related parties' stakes are also pledged.
Kwangdong Pharmaceutical has long held a large treasury share position to compensate for the owner's low stake. Moves to issue exchangeable bonds (EB) using treasury shares and adopt restricted stock units (RSUs) followed. The Kwangdong Pharmaceutical board repeatedly granted RSUs to Chairman Choi at least three times last year, in July, September, and December.
During this process, governance controversies widened. Kwangdong Pharmaceutical sought to issue EB last October but withdrew it after a correction order from the Financial Supervisory Service. At the time, the FSS determined that the resale plan of the EB underwriter differed from the disclosure, imposed a penalty, and designated the company as an unfaithful disclosure entity.
Securing institutional transparency in governance is also a task. In March, Kwangdong Pharmaceutical amended its articles of incorporation to reflect an independent director system and separately appoint audit committee members, and recently created an "ESG committee" within the board composed entirely of the three outside directors (Kang Dae-hee, Jeong Eun-jin, and Lee Jae-won).
However, in its recently published environmental, social and governance (ESG) report, Kwangdong Pharmaceutical said, "There is no separate, codified internal policy or candidate qualification criteria regarding director appointments," and noted, "We do not conduct separate evaluations of individual independent directors."
It also announced its first shareholder return policy, but the market response is lukewarm. In February, Kwangdong Pharmaceutical established a mid- to long-term dividend policy centered on "returning at least 15% of separate net income to shareholders" and "paying a minimum dividend of 100 won per share if net income reaches at least 20 billion won."
After hitting a 52-week high of 12,800 won in February, the share price has steadily fallen and now sits in the 6,000-won range, diluting the effect of enhancing shareholder value, analysts say. In addition, news that the chairman received about 1.269 billion won in compensation last year has prompted reactions on stock forums such as, "The stock price isn't rising, only executives' salaries are," and "Let's gather minority shareholders' opinions."
Kwangdong Pharmaceutical did not respond to ChosunBiz's related inquiry.