Luha PE Completes Acquisition of LabGenomics Management Rights
Targeting Customized Digital Healthcare Market Based on Diagnostic Data
[Asia Economy Reporter Jang Hyowon] “LabGenomics will become a platform company supplying ‘K-diagnostic devices’ to the United States, the world’s largest market. Along with this, we plan to expand into the ‘digital healthcare’ market based on data secured from diagnostics.”
On the 19th, Lee Jong-hoon, CEO of Luha Private Equity (Luha PE), said this in an interview with Asia Economy regarding the strategy after acquiring LabGenomics. The day before, Luha PE’s special purpose company (SPC) ‘Luhagalacticos’ completed a management rights transfer contract worth 122.7 billion KRW and became the largest shareholder of LabGenomics.
Lee Jong-hoon, who established Luha PE in 2021, worked as an analyst in charge of pharmaceuticals and bio sectors at Daishin Securities and Mirae Asset Securities from 2011, then managed venture funds at SV Investment, handling numerous bio company investments. After founding Luha PE, he invested about 20 billion KRW in the pre-IPO of Curiox Biosystems. The deal involving direct acquisition of management rights is his first with LabGenomics.
CEO Lee said, “While researching and investing in the bio industry, I encountered many companies with world-class technology but no actual profits,” and pointed out, “Having technology alone is not enough; it is a system where overcoming various hurdles such as each country’s approval and certification, and gaining doctors’ trust is difficult.”
Therefore, he thought it necessary to create an industrial environment where good domestic technology can generate profits. The first step was acquiring LabGenomics. LabGenomics is a genomic analysis in vitro diagnostic company that identifies various diseases through next-generation sequencing (NGS). Luha PE chose LabGenomics because it judged that LabGenomics is more competitive than companies whose performance surged rapidly with COVID-19 immune diagnostic kits.
CEO Lee analyzed, “Diagnostic companies spotlighted during COVID-19 produced diagnostic kits checking exogenous viruses through molecular diagnostics, immune diagnostics, and point-of-care diagnostics, making large profits. However, success depended more on industrial factors like mass production than technology,” and added, “These companies face risks of surplus production facilities post-COVID.”
He said, “LabGenomics generated profits with molecular diagnostic PCR kits during COVID-19 but is not primarily a point-of-care kit manufacturer,” and predicted, “In the post-COVID-19 era, the more advanced genomic diagnostic industry will grow significantly.”
COVID-19 diagnostic kits analyze whether viruses invading from outside are present in the human body. In contrast, genetic analysis can identify which parts of the numerous genes in the human body are faulty when a disease occurs. For example, in cancer cases, there are various causes, but genetic analysis can determine which gene is faulty and enable targeted therapy. This can create personalized treatments with cure rates exceeding 90%.
Luha PE plans to enter the United States, the world’s largest market, through LabGenomics. The U.S. in vitro diagnostic service market was about 76 trillion KRW in 2021 and is expected to grow steadily by more than 3% annually. LabGenomics plans to bring domestic products to the U.S. by acquiring a U.S. Clinical Laboratory Improvement Amendments (CLIA) lab rather than obtaining FDA approval for each single product.
CLIA labs are institutions providing FDA-certified in vitro diagnostic tests. Products used there can be utilized in the U.S. market without FDA approval, enabling rapid market entry for domestic products. Luha PE plans to use not only LabGenomics products but also products from many capable domestic diagnostic companies in the U.S. To this end, it has already signed memorandums of understanding (MOUs) with companies such as Engen Bio, Geninus, and DExom to build a ‘K-diagnostic’ portfolio.
CEO Lee said, “We are currently looking for CLIA labs that can create synergy effects with domestic products in the 40 to 50 billion KRW sales range, and about two are under due diligence,” adding, “The acquisition fund is expected to be around 100 to 120 billion KRW.”
LabGenomics also plans to target the personalized digital healthcare market. Recently, ‘ancestry search services’ have become popular in the U.S. This service finds one’s roots through genetic diagnosis. It is a service gaining attention not for health diagnosis but for self-knowledge. Some analyses say this market has already exceeded 1 trillion KRW in size.
In fact, LabGenomics recently signed a supply contract for ‘Direct-to-Consumer (DTC) genetic testing’ with BankSalad, a my-data specialized company. BankSalad’s testing service is so popular that 210,000 people use it annually.
CEO Lee said, “Data on individual human body characteristics can be derived from diagnostics,” and added, “LabGenomics will target the digital healthcare market that can provide personalized prevention and monitoring beyond diagnostics and treatment.”
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