Reduced Demand for Diagnostic Kits
In Vitro Diagnostic Distributor 'Miraero' Acquired for 11.4 Billion KRW
[Asia Economy Reporter Myunghwan Lee] SD Biosensor, a company specializing in in vitro diagnostic kits, is focusing on the 'POSCO Corona' strategy. As performance slowed due to the calming trend of COVID-19, the company plans to find a breakthrough through mergers and acquisitions (M&A).
On the 20th, SD Biosensor decided to acquire 'Miraero,' an in vitro diagnostic distributor based in Panama, for 11.4 billion KRW. Miraero, established in Panama in 2004, is a company that distributes and sells in vitro diagnostic devices, supplying SD Biosensor's rapid diagnostic products throughout Central America and Caribbean countries. Through this acquisition, SD Biosensor has secured direct sales systems in North America (Meridian Bioscience), Central America, and South America (Eco Diagnostica). Previously, SD Biosensor announced in July last year its plan to acquire the U.S. diagnostic company Meridian Bioscience for about 2 trillion KRW and completed the acquisition earlier this month. A company official stated, "We will continue to build additional direct sales systems to become a global in vitro diagnostic company."
There are also expectations that SD Biosensor can pursue additional M&A based on its abundant cash reserves. According to Korea Investment & Securities, SD Biosensor's cash and cash equivalents are estimated to be about 600 billion KRW. Researcher Songhoon Jeong of Korea Investment & Securities said, "(SD Biosensor) will continue M&A of in vitro diagnostic manufacturers and distributors based on abundant resources," adding, "It will diversify sales countries and strengthen local production capabilities through M&A."
The company is also actively exploring future growth engines such as molecular diagnostic kits. This is because most of the company's performance during the pandemic was driven by COVID-19 diagnostic kits. In October last year, SD Biosensor invested 188 billion KRW to complete a factory in the industrial complex in Jeungpyeong, Chungcheongbuk-do, for producing the Standard M10 cartridge product for rapid molecular diagnostic devices. The Standard M10 combines the high accuracy of gene amplification (PCR) tests with the speed and convenience of rapid antigen tests, according to the company. The company plans to launch continuous glucose monitoring systems (CGMS) in major markets such as Korea, the U.S., and Europe starting in 2024.
SD Biosensor's consolidated sales last year were preliminarily estimated at 2.93 trillion KRW, a 0.1% decrease compared to the previous year. Operating profit for the same period fell 9.4% to 1.26 trillion KRW, and net profit decreased 8.8% to 990 billion KRW. Fourth-quarter sales last year recorded 193.8 billion KRW, down 56.3% year-on-year. During this period, the company posted an operating loss of 4.3 billion KRW, turning to a deficit compared to the same period last year. The performance slowdown was a foreseen consequence of reduced demand for COVID-19 diagnostic kits.
An SD Biosensor official explained, "Considering that the COVID-19 pandemic shifted to an endemic (periodic infectious disease outbreak) from the second half of 2022, we achieved excellent performance close to 3 trillion KRW for two consecutive years," adding, "Large orders from the U.S., Taiwan, and Japan, the successful market entry of the rapid molecular diagnostic platform 'Standard M10,' and sales across various regions compared to 2021 helped maintain excellent performance."
Regarding the decrease in operating profit compared to the previous year, the company explained, "In the fourth quarter, operating profit temporarily decreased due to foreign currency valuation losses on foreign currency holdings caused by the decline in the KRW-USD exchange rate compared to the previous quarter and advisory fees incurred from the U.S. Meridian Bioscience M&A."
Meanwhile, SD Biosensor announced on the same day that it decided on a year-end cash dividend of 290 KRW per common share. The total dividend amount is approximately 29.7 billion KRW, with a dividend yield of 0.9%. Including the interim dividend of 70.8 billion KRW paid last August, the total annual dividend is expected to reach 100.5 billion KRW. The dividend payment date will be within one month from the shareholders' meeting resolution date, and the agenda including dividends will be finalized at the shareholders' meeting scheduled for next month.
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