LG Chem Ltd., chemical and battery making unit under South Korea’s major conglomerate LG Group, will invest 100 billion won ($88 million) in LG Life Sciences Ltd. every year for the next five years to nurture the bio and pharmaceutical business as the company’s new growth engine, LG Chem president and chief financial officer Chung Ho-young said.

Chung made such a pledge after many investors have voiced concerns over the upcoming merger arguing that the company should focus on its core secondary battery and mobile phone material segment that is still grappling with low profitability rather than making uncertain investments.

Chung said “LG Chem would continue to focus on its core basic material sector but it should lower its dependency on businesses that are highly affected by external factors such as oil price or supply and demand.” The company has branched out into electric car battery making to diversify its business portfolio, but it needed a more promising new growth engine such as bio business, he added.

“In order to strengthen bio business, we will hire more research and development (R&D) talents and establish strategic partnerships with small- and medium-sized companies and startups instead of seeking mergers and acquisitions,” he said.

LG Chem plans to transform LG Life Sciences into its new drug development unit after the merger. LG Life Sciences has been steadily making profits, but it has lacked funds to invest in long-term projects to develop novel drugs with high-added value, Chung said. While focusing on developing new drugs, the company will continue to make efforts to aggressively market LG Life’s well-received vaccines and synthetic drugs to maximize profitability, he added.

"After the merger, we will seek ways to shorten the period of drug development that currently takes about eight to 10 years by 10 to 20 percent,” Chung said.

LG Chem shares closed Monday at 251,000 won, up 0.2 percent or 500 won from the previous session.

By Lee Yong-gun and Yoon Jin-ho

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