The wave of merger and acquisition, the means for global pharmaceutical firms to expand, has caught up with the Korean industry as more and more make breakthroughs in new drug inventions and need to market them.

M&As in local pharmaceutical scene had been rare as drug-makers mostly sold and profited from copycat products. But it is no longer the case as more bio companies reap fruit in their lab works and richer under flood of capital investment in the bio sector.

Early this month, Korean bio company Pro-Tox Inc. acquired the management right and a 51 percent stake in mid-sized drug company Medica Korea Co. for 38 billion won ($33 million). Pro-Tox is a bio company that has been developing protoxin, a new type of botulinum toxin, and it bought Medica Korea to establish production facilities of botulinum toxin, a neurotoxic protein produced by the bacterium Clostridium botulinum and related species that can be used for medical, cosmetic, and research use.

Medica Korea is a mid-sized drug company specializing in skin treatment already has a marketing network in beauty care clinics.

Unlike the general trend in the global market where pharmaceutical companies purchase bio startups, in Korea it is the other way around with the bio companies shopping for small-scale pharmaceutical companies.

Local bio companies that have so far focused on research and development turned their eyes to small- and mid-sized pharmaceutical companies to secure production facilities. Local drug companies reaching their limit because they mostly produced generic drugs welcome the M&A proposals.

In May, another bio company LegoChem Biosciences Inc. that has antibody-drug conjugates (ADC) platform technology acquired Hanbul Pharm. As Hanbul Pharm owns Good Manufacturing Practice (GMP) certification facility that produces internal solid dosage forms, hard capsule, soft capsule and eye bath drops, the M&A deal helped LegoChem Biosciences secure the production facility without permission and certification procedure.

Previously, Crystal Genomics together with its partner company Hwail Pharm Co. had acquired BTO Pharm Co. in December last year and made the company its subsidiary. BTO Pharm was spun off from mid-sized drug company BTO with sales of 11.2 billion won.

Crystal Genomics decided to acquire BTO Pharm right when it urgently needs to improve profits through self-production. The company expects increased yield in its novel drug Acelex to translate to jump in profit figures.

Experts predict that more and more bio companies are likely to acquire pharmaceutical companies as they need manufacturing facilities to make money on the hard-won breakthrough in their lab works.

“Capital has been abundant in the bio sector and companies will use the funds to secure or expand production facilities and distribution network,” said an official of Korea Biotechnology Industry Organization.

By Kim Gi-chul

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