LG Chem in talks with Glenwood to sell off diagnostics unit

LG Chem Ltd. is slated for exclusive talks with Seoul-based Glenwood Private Equity to sell off its in vitro diagnostics business, according to biopharmaceutical industry sources on Wednesday.

The South Korean conglomerate LG Group's unit and lead financial advisor Samjong KPMG tapped the PE firm as a preferred bidder on May 2. The deal is estimated to reach 100 billion-150 billion won ($74.8 million-$112.2 million), sources said.

Glenwood, specializing in carve-out strategies that partially divest non-core businesses or subsidiaries, competed with local peers such as STIC Investments, Korea Investment Private Equity and EUM Private Equity in a bidding round last month.  

LG Chem, running petrochemicals, advanced materials and life science divisions, started producing diagnostics reagents in 1992. Its mainstay products include rapid antigen test (RAT) kits and polymerase chain reaction (PCR) equipment for allergy and viral respiratory infection tests.

The company won a license to import in vitro diagnostics devices in 2006 and was approved to domestically manufacture such tests in 2013.

MORE FOCUS ON NEW DRUG DEVELOPMENT

LG Chem has considered an exit from the diagnostics market as it has lost competitiveness in the fast-changing industry since the pandemic. While it launched COVID-19 RATs and PCR reagents in May 2021 and July 2022, respectively, local rivals such as Seegene Inc. and SD Biosensor Inc. earlier swept the market by launching the test kits immediately after the outbreak of the pandemic.

The life science division will focus on the production of new drugs such as anti-cancer treatments, as well as invest 2 trillion won in research and development of such medicines between 2023 and 2027.

It completed a $571 million purchase of US biotech AVEO Pharmaceuticals Inc. in January to strengthen its anti-cancer drug portfolio and accelerate its foray into the US. 

The firm also constructed Korea’s first pharmaceuticals plant dedicated to clinical trials in February. The new facilities in Osong, North Chungcheon Province, manufacture both biologics and chemical drugs.

Write to Jeong-Min Nam and Ji-Eun Ha at peux@hankyung.com

Jihyun Kim edited this article.