Celltrion Adds Cosmetics and Health Supplement Manufacturing and Sales to Business Objectives
Diagnostic Kit Development Underway... Medical Device Business Also Reflected
Dongkook Pharmaceutical Plans to Add Animal Drug Manufacturing and Import
Concerns Over Declining Core Competitiveness Due to Reckless Business Diversification
[Asia Economy Reporter Kim Ji-hee] The pharmaceutical and bio industries are struggling to find future growth engines. At the shareholder meetings scheduled for the end of this month, several pharmaceutical and bio companies plan to add cosmetics and veterinary pharmaceuticals to their articles of incorporation as business objectives. Although they are not immediately entering these new businesses in earnest, this move is interpreted as a willingness to keep possibilities open for various businesses and focus on discovering new revenue sources.
Cosmetics and Health Supplements... Expanding Horizons for Celltrion
According to Celltrion on the 12th, the company will hold its regular shareholders' meeting on the 26th at Songdo Convensia in Incheon and add "manufacturing, exporting, wholesale, and sales of cosmetics and health functional foods" to its business objectives. Contract manufacturing, logistics, warehousing, and import-export related to cosmetics will also be discussed.
A Celltrion official explained, "This addition to the business objectives is not an immediate challenge to new businesses like cosmetics but one of several businesses where possibilities are being kept open."
This is not the first time Celltrion has amended its articles of incorporation to find future growth engines. At the 2019 shareholders' meeting, Celltrion changed "manufacturing, exporting, and sales of biological medicines" to "manufacturing, exporting, wholesale, and sales of pharmaceuticals," signaling its entry into the synthetic pharmaceuticals market.
Shortly after, last year, by acquiring some pharmaceutical businesses in the Asia-Pacific region from multinational pharmaceutical company Takeda Pharmaceutical, Celltrion strengthened its synthetic pharmaceuticals business, laying the groundwork for its leap into a comprehensive pharmaceutical and bio company.
In particular, the cosmetics business added to the business objectives this time is considered the field in which Celltrion has shown the greatest interest outside its core bio industry.
Celltrion Skincure, a cosmetics affiliate established in 2013, currently operates the premium cosmetics brand "Celcure" and the health supplement brand "InnerLab." Despite extensive marketing and the appointment of Seo Jin-seok, the eldest son of Honorary Chairman Seo Jung-jin, as CEO in 2017, the company has yet to escape the red since its establishment.
For this reason, there is analysis that with this addition to the business objectives, Celltrion, which has so far only conducted research and development (R&D) on cosmetics, may be gearing up to actively engage in related businesses.
Additionally, Celltrion plans to reflect "medical devices" in its business objectives due to its ongoing diagnostic kit development work. In December last year, Celltrion agreed to exclusively supply the COVID-19 antigen diagnostic kit "DiaTrust," jointly developed with in vitro diagnostics specialist Humasis, to Prime Healthcare Distributors in the United States.
"Pharmaceuticals Alone Are Difficult" vs. "Weakening Core Competitiveness"
Celltrion is not the only company seeking growth breakthroughs through business diversification. Hanmi Pharmaceutical, Chong Kun Dang, and Dongkook Pharmaceutical are also expected to revise their business objectives and concretize new business plans at their upcoming shareholder meetings.
Dongkook Pharmaceutical is focusing on the veterinary pharmaceuticals market. At this shareholders' meeting, an agenda to add "manufacturing, importing, and sales of veterinary pharmaceuticals" to the business objectives has been proposed. A Dongkook Pharmaceutical official said, "We do not have specific details or plans for the veterinary pharmaceuticals business yet," adding, "Some departments have shown interest in this business, so we are adding it to explore future opportunities."
Hanmi Pharmaceutical and Chong Kun Dang, holding shareholder meetings on the 26th, plan to approve agendas to newly add "medical and pharmaceutical research and development" and "research, development, provision of technical information, academic services, and related consignment services" to their business objectives, respectively. These companies are changing their business objectives to apply for government R&D support and national projects.
Expectations and concerns are mixed regarding pharmaceutical and bio companies seeking new growth engines. While there is positive evaluation that they must actively pioneer new businesses for sustainable growth, there are also opposing voices warning that indiscriminate business diversification could weaken competitiveness in their core businesses.
An industry insider said, "Given the increasingly difficult business environment, it is hard to rely solely on the pharmaceutical business, which requires massive capital investment from the development stage," but also pointed out, "It is important to note that although many pharmaceutical and bio companies have entered the cosmetics business closely related to their core business over the past four to five years, not many have successfully established themselves in the market."
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