IMM PE seeks to sell S.Korean contract drugmaker at $784 mn

IMM Private Equity put a South Korean contract drugmaker up for sale at up to 1 trillion won ($784 million) in a deal that is likely to attract major pharmaceutical makers and PE firms at home and abroad.

IMM PE started the process to sell its 100% stake in Genuone Sciences Inc. and Citigroup Global Markets Ltd., which manages the deal, has been contacting potential buyers, according to investment banking industry sources on Monday.

Genuone is an integrated company founded by IMM PE in 2020 after acquiring the pharmaceutical business of Kolmar Korea Co., a supplier to global cosmetics brands such as Estee Lauder, and a subsidiary Kolmar Pharma Co. The Seoul-based PE firm paid 512.5 billion won for the takeover to Kolmar Korea, which needed cash to acquire CJ HealthCare Corp., currently HK inno.N Corp.

The contract development and manufacturing organization (CDMO) produces more than 670 medicines, of which some 250 products are exported to about 20 countries.

IMPROVING EARNINGS

Genuone’s profitability was forecast to grow 50% since IMM PE launched the company.

It was expected to log more than 60 billion won in earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2023 with sales of some 400 billion won. Its EBITDA rose to 55 billion won last year from 40 billion won in 2020 as sales grew 16% to 348 billion won during the period.

That came as global pharmaceutical manufacturers focused more on research and development, leaving production to CDMOs.

IMM PE invested 20 billion won right after the acquisition in expanding the capacity of Genuone’s two plants by 20-25% each, developing the CDMO as a producer of 5.5 billion chemical drugs a year.

The investment allowed the company to manufacture small volumes of reagents for clinical trials and commercial drugs in large quantities while diversifying its products such as oral solid dosages, injections, liquids, ointments and liquid in hard capsules.

About 80% of South Korean drugmakers including Hanmi Pharmaceutical Co., Chong Kun Dang Pharmaceutical Corp., Yuhan Corp. and LG Chem Ltd. are Genuone’s customers.

Given Genuone’s capabilities to provide one-stop service from early-stage R&D to production, IMM PE’s attempt to sell the company is likely to draw strong attention from potential buyers such as major pharmaceutical makers and PE firms. Investors are also keeping an eye on if Lotte Group, which is significantly expanding the CDMO business, and LG Chem, which is strengthening its bio portfolios, are interested in Genuone.

IMM PE has been investing in the bio and pharmaceutical sector on expectations that the industry is likely to benefit from the increase in the aging population since its establishment. The PE firm bought minor stakes in iNtRON Biotechnology Inc., Handok Inc., Genexine Inc. and Alvogen Korea Co.

Write to Jun-Ho Cha at chacha@hankyung.com
 
Jongwoo Cheon edited this article.