The purpose of the merger is business expansion into the field of red biotechnology, which covers disease prevention and diagnosis, medical treatment, drug development, stem cell research, etc.
After the completion of the merger process, LG Chem is to invest 300 billion won (US$260 million) to 500 billion won (US$434 million) a year in red biotech R&D and facility expansion. This amount is more than three times LG Life Sciences’ annual investment for the same purpose.
At the same time, LG Chem is going to further enhance its competitiveness in the fields of business it is already in, such as basic materials, battery and information and electronics technology, while organizing a well-balanced business portfolio in an attempt to reach 50 trillion won (US$43 billion) in sales by 2025 and become one of the five largest companies in the global medical and chemical industry.
At present, the global red biotech industry is estimated to have a size of 1,100 trillion won (US$956 billion) and it is forecast to reach 1,400 trillion won (US$1,217 billion) in 2020 with an average annual growth rate of 5%. “The focus of the merger lies in drug development,” LG Chem explained, adding, “LG Life Sciences has simultaneously worked on three to four bio drugs, but the number will increase to 10 to 20 through the merger.”