S. Korean SMEs Scramble to Acquire Foreign Biotech Firms

An increasing number of South Korean small and medium-sized companies are pushing into the biotech industry by acquiring promising but undervalued foreign pharmaceutical venture companies.

According to industry sources on June 13, Feelux Co., a manufacturer of lighting products, announced on June 12 that it decided to take over 100% stake in Liminatus Pharma, LLC, a pharmaceutical R&D company in the U.S., for 16.1 billion won (US$14.87 million). The company also bought a 62.34% stake in Viral Gene Inc., a U.S.-based bio venture firm that develops vaccines for colorectal cancer, for 37.5 billion won (US$34.64 million) in February. FEELUX showed its will to drive future growth through biotech by acquiring two anticancer treatment developers in about five months.

There are a lot more Korean manufacturers which joined the pharmaceutical industry the same way as Feelux did. In April, SFC Co., which produces plastic films, took over a 24.48 percent stake in AIVITA Biomedical Inc., a U.S.-based company specializing in innovative stem cell treatments for cancer and immunological and brain diseases, for 15.4 billion won (US$14.23 million). The company is also planning to establish its bio affiliate in the near future.

In May, IT service provider Tongyang Networks Corp. become the largest shareholder of Medigene AG, a publicly listed biotechnology firm headquartered in Germany, by purchasing its 1.65 million shares, or 6.72 percent, for 30.3 billion won (US$27.99 million). Medigene currently works on immunotherapies which are recently regarded as next-generation anti-cancer treatments.

These companies are primarily interested in commercializing the new drugs that have been developed by their acquired firms. They are following in the footsteps of SillaJen Inc. and HLB Co. that are now considered representative biotech companies on the KOSDAQ market. SillaJen has obtained the source technology for Pexa-Vec, a treatment for liver cancer which is its representative pipeline, by acquiring U.S. bio venture, Jennerex Biotherapeutics Inc.

HLB, Korea’s only manufacturer of lifeboats, also took over LSK Biopharma Inc., a U.S.-based biotech firm that developed Rivoceranib, a targeted agent for gastric cancer, in 2015.

Currently, SillaJen ranks second in terms of market capitalization on the KOSDAQ with 5.45 trillion won (US$5.03 billion), while HLB comes in fifth with 3.8 trillion won (US$3.51 billion).

An official from the industry said, “It is desirable that more and more companies are pushing into the bio market. However, it is too early to conclude that all these companies will be successful since the chance of success for new drugs is merely 0.02%.”