韩企并购整合受阻引发子公司盈利压力文章，显示财务修复进度低于预期

Korean pharmaceutical and biotech companies that pursued mergers and acquisitions in recent years are grappling with the weak profitability of the subsidiaries they acquired. They invested up to trillions of won to expand into new businesses and overseas markets, but losses have continued. As a result, analysts say the companies have moved to normalize operations through additional capital injections and management changes.
According to industry sources on the 6th, SD Biosensor has invested about 572 billion won this year to improve the financial structure of Meridian, its U.S. diagnostics subsidiary. After providing 146.7 billion won in January, it lent an additional 117.3 billion won on the 20th of last month. In March, when a financial investor that had participated in the Meridian acquisition exercised a put option to recover its investment, SD Biosensor acquired the entire exchangeable bond for 308.1 billion won.
SD Biosensor's financial burden grew after it acquired Meridian for about 2 trillion won in 2023. Columbus Holding Company, Meridian's parent company, posted revenue of 323.5 billion won and a net loss of 724.4 billion won last year. The loss reflected impairment charges on goodwill and intangible assets after revenue forecasts were lowered due to delays in U.S. Food and Drug Administration (FDA) approval of new diagnostic products. SD Biosensor itself posted a net loss of 513.4 billion won last year.
Accordingly, the company launched efforts to normalize Meridian's business alongside a management change. Late last year, it appointed Andy Kitzmiller, a financial expert who had served as Meridian's chief financial officer (CFO), as chief executive officer (CEO). Lee Jung-woo, a researcher at Daol Investment & Securities, analyzed that "the financial structure shifted from a net cash to a net debt position after the Meridian acquisition," adding that "an improvement in Meridian's performance will be the key factor determining SD Biosensor's recovery."
LG Chem also faces the task of restoring the profitability of Aveo, a U.S. anticancer drug subsidiary it acquired for about 700 billion won in 2023. Aveo holds Fotivda, a kidney cancer treatment approved by the U.S. FDA. LG Chem had planned to boost Fotivda's sales through combination therapy with immuno-oncology drugs and by expanding indications, but development delays have led to continued losses. Aveo's revenue last year was 281.7 billion won, with a net loss of 31.3 billion won.
LG Chem plans to improve Aveo's profitability by commercializing follow-up anticancer drugs. To this end, it is conducting a Phase 3 trial of the antibody drug ficlatuzumab for head and neck cancer, targeting commercialization in 2028. It also appointed Michael Ferraresso, chief commercial officer (CCO), as the new CEO last month. The move aims to accelerate the expansion of Fotivda's sales and preparations for launching follow-up products. "Fotivda's sales are growing at double-digit rates every year," an LG Chem official said. "We plan to use Aveo's anticancer drug sales network to directly sell the head and neck cancer drug after approval."
Daewon Pharmaceutical is bearing a financial burden due to the poor performance of SD Biotechnologies, a cosmetics subsidiary it acquired for about 40 billion won in 2023. SD Biotechnologies, known for its mask pack brand "SNP," posted revenue of 30.1 billion won and a net loss of 5.4 billion won last year. Compared with 2018, when it posted a record 156.6 billion won in revenue, last year's revenue plunged to about one-fifth of that level. The company plans to reorganize its product lineup and strengthen its domestic and overseas distribution capabilities under Kim Hye-won, a former Amorepacific executive recruited in June this year.
Dongwha Pharm also acquired a 51% stake in TS Care, which owns the local pharmacy chain Trung Son Pharma, for about 39.1 billion won in 2023 to enter Vietnam. Despite the strategy of expanding the sales base for over-the-counter drugs such as Kashwalmyungsu through local pharmacy distribution networks, TS Care continued to post losses, recording revenue of 79.6 billion won and a net loss of 10.6 billion won last year.
Dongwha Pharm has focused on restoring TS Care's profitability this year. It had planned to increase the number of stores from about 140 at the time of the acquisition to 400 within the year, but is now adjusting the pace of expansion at around 200 stores.