Endless Hanmi Pharm Management Dispute... Business Competitiveness Also Shaken [AK Radio]

Dispute Continuing for Over 9 Months
Shin Dong-guk Chairman Emerges as Largest Shareholder

The management dispute within Hanmi Pharmaceutical Group has been ongoing since early this year and continues through September. After Chairman Song Young-sook and her daughter, President Lim Joo-hyun, announced the group's integration, conflict arose as Chairman Song's two sons, Lim Jong-yoon and Lim Jong-hoon, clashed over control of the management rights. This dispute, which erupted in January, remains unresolved after nine months, with dramatic reversals in the first and second rounds, but ending in failure for the brothers in the third round.

The first round began at the regular shareholders' meeting of Hanmi Science, the holding company of Hanmi Pharmaceutical Group, at the end of March this year. Chairman Song and her daughter Lim Joo-hyun sought to consolidate management control through the group integration, but the two brothers, Lim Jong-yoon and Lim Jong-hoon, opposed this and engaged in a battle over shares. At the time, many expected Chairman Song and Lim Joo-hyun to win, but the brothers overturned expectations by gaining support from minority shareholders and key shareholder Shin Dong-guk, chairman of Hanyang Precision, securing victory.

Building on this victory, the brothers secured a majority on Hanmi Science's board of directors, gaining management control, and dismissed their mother, Chairman Song, from her position as chairwoman of Hanmi Science. The younger brother, Lim Jong-hoon, was appointed CEO of Hanmi Science, effectively taking control of the group's management.

However, the situation changed again in early July. Chairman Shin Dong-guk suddenly switched his position to support the mother and daughter side, leading to the formation of a three-party alliance. Chairman Shin purchased the shares held by Chairman Song and Lim Joo-hyun, becoming the largest shareholder of Hanmi Science. This development ushered in a new phase in the battle for management control of Hanmi Science.

[Image source=Yonhap News]

At that time, the three-party alliance announced plans to introduce a professional management system, aiming to limit the brothers' management rights. However, the brothers resisted by demoting Park Jae-hyun, CEO of Hanmi Pharmaceutical, a key affiliate within the group. This move could be seen as a loyalist coup within the family, but Hanmi Pharmaceutical dismissed the attempt as lacking legal grounds. Ultimately, the second round ended with the victory of the three-party alliance.

The third round took place at the end of August. The brothers attempted to replace Hanmi Pharmaceutical's CEO from the younger brother Lim Jong-hoon to the elder brother Lim Jong-yoon, but this proposal was rejected by Hanmi Pharmaceutical's board of directors. Since the three-party alliance held the majority on the board, the brothers' attempt ended in failure.

This third round is evaluated as a result of the brothers taking reckless actions. They requested an extraordinary shareholders' meeting to adjust the composition of the holding company Hanmi Science's board, but the brothers refused to convene the board. Consequently, the three-party alliance plans to apply to the court for permission to hold an extraordinary shareholders' meeting, and it is expected that the court's hearing and decision will take at least one to two months.

As such, the management dispute at Hanmi Pharmaceutical has gone beyond a simple family conflict and is negatively impacting the entire group's management. As the dispute prolongs, signs of research and development personnel leaving have emerged, and the internal atmosphere has become unsettled. Despite strong performance in the second quarter this year, Hanmi Pharmaceutical's stock price has continued to decline due to the family dispute.

Investors hope for a swift resolution to this dispute, but it is likely to continue until the end of the year. Since the three-party alliance needs court approval to hold an extraordinary shareholders' meeting, and the court's decision is expected to take several months, concerns are growing that the management dispute may extend until the regular shareholders' meeting in March next year.

How the management dispute at Hanmi Pharmaceutical concludes will significantly affect the company's future performance and stock price. Rapid reconciliation and resolution are urgently needed to prevent the family conflict from weakening the competitiveness of the entire group.

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