"Next is New Drugs and Bio"… Petrochemical Companies Accelerate Business Diversification

SK Chemical and LG Chem Continue Expansion

[Asia Economy Reporter Oh Hyung-gil] Petrochemical companies are stepping on the accelerator in the new drug and bio sectors.

They are focusing on new drugs and bio with growth potential to diversify their business from the existing petrochemical-based areas. It is analyzed that they have advantages in competing with existing pharmaceutical companies in terms of financial power and research and development (R&D) know-how.

According to the related industry on the 28th, SK Chemicals introduced a mid- to long-term growth strategy at the regular shareholders' meeting held that day to upgrade its chemical materials business centered on petrochemical products to green materials, and its pharmaceutical business centered on synthetic drugs to bio. The plan is to grow sales to 4 trillion won by 2025, including 1.8 trillion won in the green materials sector and 1 trillion won in the pharmaceutical and bio sectors.

SK Chemicals sells specialty medicines such as the blood circulation enhancer Gineksin, arthritis treatment JoinS, and anti-inflammatory pain patch Trust in the pharmaceutical field. In addition, it is developing new drugs for non-alcoholic steatohepatitis, fibrotic diseases, and rheumatoid arthritis, and plans to secure new technologies in new areas such as gene editing and therapeutics, targeted protein degradation, and cell therapy in collaboration with external companies.

In particular, its subsidiary SK Bioscience is also expanding its COVID-19 vaccine business. While promoting the development of vaccines against COVID variants such as Omicron, it aims to start clinical trials by the end of this year for a combined COVID and influenza vaccine. The next-generation pneumococcal vaccine is currently in global Phase 2 and is expected to enter Phase 3 clinical trials next year.

Jeon Kwang-hyun, President of SK Chemicals, said, "Solving the plastic waste problem and improving human health through new technologies are challenges that companies must solve and great opportunities for growth," adding, "They are essential tasks to be achieved in the mid- to long-term for survival and growth."

LG Chem also positioned new drugs as a new growth engine alongside its battery materials business. It plans to promote research and development (R&D) in life sciences fields such as synthetic new drugs, biopharmaceuticals, and vaccines.

New drug R&D is expected to yield results soon. It is developing treatments including a hereditary rare obesity drug (Phase 1 clinical trial), a new drug for hereditary obesity through appetite suppression mechanisms, a non-alcoholic steatohepatitis treatment drug (Phase 1 clinical trial) for which there is no effective existing treatment, and a gout treatment drug (Phase 2 clinical trial).

Shin Hak-cheol, Vice Chairman of LG Chem, emphasized, "We plan to grow focusing on next growth engines such as battery materials, sustainable solutions, and global new drugs," adding, "We aim to become a global pharmaceutical company with innovative new drugs by concentrating on oncology and diabetes/metabolic areas."

OCI, which became the largest shareholder of Bukwang Pharmaceutical last month, plans for Vice Chairman Lee Woo-hyun and others to actively participate in Bukwang Pharmaceutical's management. OCI signed a stock purchase agreement last month to acquire 7.73 million shares (11%) of Bukwang Pharmaceutical for 146.1 billion won. GS Group made its first entry into the medical bio business by acquiring Hugel, the number one domestic botulinum toxin company, together with domestic and foreign private equity funds.