Choi Yoon-so, CEO of T&L, "A Second Leap with Wound Treatment Materials That Stop Discharge"

Interview with Choi Yoon-so, CEO of T&L, Ahead of November KOSDAQ Market Listing

[Asia Economy Reporter Eunmo Koo] T&L, which is set to be listed on the KOSDAQ market next month, is taking a step forward as a high-performance medical material company based on the growth of the wound care material market.

On the 12th, Yoonso Choi, CEO of T&L, said in an interview with Asia Economy, "The wound care material market is expanding beyond its original medical purpose to include skin beauty-related uses, leading to market growth and improved profitability. The funds raised through this initial public offering (IPO) will be invested not only in existing businesses but also in research and development of new projects to serve as a foundation for the company's second leap forward."

T&L is a company that researches, develops, and manufactures medical materials, with wound care materials, a type of moist dressing, being its representative business sector. When a wound occurs, exudate, commonly called wound fluid, is produced. Wound care materials absorb this fluid and prevent contamination, thereby aiding wound healing.

CEO Choi explained, "The exudate contains cells that help skin regeneration. While traditional dry dressings absorb the exudate and allow it to evaporate, leaving scars, wound care materials prevent evaporation of the exudate and maintain a moist environment, facilitating smoother skin regeneration."

The most in-demand wound care product is hydrocolloid. Hydrocolloid is a thin moist dressing used for minor abrasions, acne wounds, and after mole removal procedures, which T&L first developed domestically in 2007. Acne patches sold at pharmacies or health and beauty (H&B) stores are typical hydrocolloid products.

CEO Choi cited T&L's competitiveness in wound care materials as being the only domestic company capable of managing the entire process from raw material blending to finished product manufacturing, enabling the supply of products optimized for market demand. He emphasized, "Even within hydrocolloids, some products prioritize adhesion while others focus on absorption. Since we manage raw material blending, we can control over 20 factors affecting the final physical properties, allowing us to create customized products for customers."

Based on this, T&L offers a diverse product lineup including hydrocolloids, foam, hydrogel, silicone, and fiber materials, supplying products to over 50 domestic and international companies such as JW Pharmaceutical, Daewoong Pharmaceutical, and Nicomedical.

However, there is criticism that the manufacturing ODM (Original Design Manufacturing) ratio for its core businesses?wound care materials and orthopedic fixation materials?was about 65% as of last year. This poses a risk that changes in major clients' policies, competitors' advances, or conflicts over delivery prices could negatively impact sales and profits. Regarding this, CEO Choi explained, "No single ODM client accounts for more than 10% of total sales. Even though the ODM ratio is high, it is diversified by country and client, so problems in one area do not significantly affect us."

The company views the wound care material market as having sustainable growth potential. With an aging population, chronic skin damage such as pressure ulcers is increasing, and the use of these materials for skin beauty purposes like acne treatment is expanding. According to the Korea Medical Devices Industry Association, the domestic wound care material market grew from approximately 73.2 billion KRW in 2014 to 105.1 billion KRW in 2018, showing an average annual growth rate of 9.5%. The global market is also expected to expand from 4.8 billion USD in 2015 to 5.6 billion USD this year.

T&L has maintained stable performance despite the COVID-19 pandemic. Last year, sales reached 32.7 billion KRW and operating profit 7.7 billion KRW, up 24.1% and 40.8% respectively from the previous year. In the first half of this year, sales were 18.3 billion KRW and operating profit 4.4 billion KRW, with an operating margin of 24.0%. CEO Choi forecasted, "Although sales of fracture fixation materials decreased due to reduced outdoor activities amid COVID-19, sales of wound care products increased, leading to an expected growth of about 20% compared to last year." The company expects an average annual sales growth of 10-15% over the next five years.

The company plans to expand its scope through new businesses such as smart patches. Smart patches, which can remotely regulate body temperature, are attracting attention as next-generation wearable medical devices in the aging society. T&L plans to develop these as low-irritant artificial skin forms based on its adhesive technology for wound care materials, creating a new revenue model in the medical device industry. CEO Choi said, "Industrial smart patches used for animals or fresh food do not require clinical trials, so marketing could start around next year. Medical smart patches requiring clinical trials could be marketed in 2-3 years."

The proceeds from the public offering will be used for research and development, facility investment, and talent acquisition. CEO Choi stated, "We plan to allocate a significant portion of the funds to additional R&D of existing products, finalizing research on new business items, and related facility investments." He added, "Obtaining KOSDAQ listing status is also expected to make it easier to attract excellent talent."

T&L plans to raise a total of 800,000 shares through this offering, including 760,000 shares for the general public and 40,000 shares for the employee stock ownership association. The expected offering price is between 34,000 and 38,000 KRW per share, with a total expected offering amount of approximately 27.2 to 30.4 billion KRW. After a demand forecast (pre-subscription for institutional investors) on the 22nd and 23rd, general subscription will take place on the 27th and 28th, with the company scheduled to be listed on the KOSDAQ market in early November. The lead underwriter is Korea Investment & Securities.

CEO Yoonso Choi was born in 1959, graduated from Sungkyunkwan University with a degree in Textile Engineering, and earned his master's and doctoral degrees from Tokyo Institute of Technology in Japan. After working as a researcher at the Institute of Physical and Chemical Research in Japan and the Central Research Institute of DongSung Chemical, he has served as CEO of T&L since 1998.