Lim Seong-gi, the founder of Hanmi Pharmaceuticals, who passed away in August 2020, left behind a heavy task not only for his bereaved family but also for the company. This is because Hanmi Pharmaceutical, Korea’s No. 1 research and development (R&D) pharmaceutical company, was shaken by the sudden death of its founder while the succession structure had not been decided. The situation in which none of the two children, one son and one daughter, could clearly take control of management continued for more than three years, and the leadership in new drug development and pharmaceutical sales, which had dominated other companies, began to be ceded to competitors one by one.

Although the founder’s wife (Chairman Song Young-sook of Hanmi Pharmaceutical Group), who had never touched the company’s management, took over as head, speculation continued that “Hanmi Pharmaceutical will be put up for sale unless management rights are clearly resolved.” The burden of paying inheritance tax exceeding 500 billion won also added support to these rumors.

In this situation, the solution that Chairman Song came up with was a merger with OCI, with Hanmi Pharmaceutical President Lim Joo-hyun as the head of the pharmaceutical and bio division. Through joint management, the company aimed to kill two birds with one stone by neatly organizing management rights in the pharmaceutical and bio sectors while also securing ample funds for new drug development. It is analyzed that OCI, which has become one of the top 5 pharmaceutical companies in Korea, is a business with nothing to lose in that it has a clear future growth engine.

○ Lee Woo-hyun and Lim Joo-hyun’s ‘double carriage’ system

As a result of the integration of the two companies on the 12th, OCI Holdings will secure a 27% stake in Hanmi Science. 18.6% will be secured through old shares and in-kind investment, and 8.4% will be secured through the issuance of new shares. It is known that most of the old shares are held by Chairman Song and President Lim.

Chairman Song is the largest shareholder with an 11.7% stake in Hanmi Science. President Lim’s shareholding is 10.2%. After this transaction, Chairman Song’s stake in Hanmi Science will be lowered to the 2% range. It is reported that Chairman Song will use the stock price sold to OCI Holdings to pay inheritance tax amounting to 200 billion won.

President Lim secured a 10.4% stake in OCI Holdings with the money from selling all of his shares in Hanmi Science. As an individual, he is the largest shareholder of OCI Holdings. OCI Holdings Chairman Lee Woo-hyun’s personal shareholding is only 6.6%, but when combined with specially related parties, it reaches 28.7%.

The integrated corporation to be established in the future will be led by Chairman Lee and President Lim as their respective representatives. As now, Chairman Lee will be in charge of advanced materials and new and renewable energy, and President Lim will be in charge of the pharmaceutical and bio business. The two decided to actively participate in various new businesses that could create integrated synergy.

○New drug development and growth engine ‘win-win’

From Hanmi Pharmaceutical’s perspective, integration with OCI is a ‘act of God.’ This is because it is possible to raise enormous funds for new drug development. Hanmi Pharmaceutical, which has about 30 pipelines (new drug development candidates), the largest in Korea, invests approximately 150 billion won every year into new drug development. Considering that Hanmi Pharmaceutical’s cash assets are at the level of 188.1 billion won (as of the end of September 2023), this is a tight level. There is no reason to refuse integration with ‘cash-rich’ OCI Holdings. As of the end of September last year, the company’s cash assets amounted to 1.0705 trillion won.

An official from Hanmi Pharmaceutical said, “Now that we have a strong backing, the development of new drugs will gain momentum.”

However, this ‘marriage’ is not unilaterally advantageous to Hanmi Pharmaceutical. For OCI, which has chosen pharmaceuticals and biotechnology as its future business, there is no partner more attractive than Hanmi Pharmaceutical, which has a wide and deep pipeline. OCI, which entered the pharmaceutical and bio business in 2018, invested mainly in promising bio venture companies with next-generation cancer diagnosis and anti-cancer treatment pipelines, but failed to achieve significant results. In 2022, he became the largest shareholder of Bukwang Pharmaceutical, which develops brain disease (central nervous system) treatments and anticancer drugs, but did not achieve success.

The reason OCI is focusing its attention on pharmaceuticals and biotechnology is because it judged that the renewable energy and materials business alone was insufficient to prepare for the future. This is because the nightmare in which OCIM, a polysilicon production subsidiary, suffered losses in 2018 and 2019 due to the offensive of Chinese companies, could be repeated at any time.

An official from OCI Holdings said, “We will develop new drugs with Hanmi Pharmaceuticals that will be used globally,” and added, “We also plan to jump into new businesses where the two companies can create synergy.”

Reporter Kim Woo-seop/Lee Ji-hyeon [email protected]