The Direction of the Management Dispute After Hanmi Pharm's General Meeting of Shareholders [AK Radio]

4-Party Alliance Sweeps Victory...All Proposals from Sibling Side Rejected
Minority Shareholders Shift Support to 4-Party Alliance
If Dispute Continues, 'Everyone Loses'

The management dispute within Hanmi Pharmaceutical Group is entering a new phase. At the Hanmi Pharmaceutical extraordinary shareholders' meeting held on the 19th, the proposal to dismiss directors put forward by the brothers' side was rejected, giving the 'four-party alliance'?consisting of Chairman Song Young-sook, the widow of the founder, Vice Chairman Lim Joo-hyun, her daughter, Shin Dong-guk, Chairman of Hanyang Precision, and Ladephance Partners?the upper hand. This signals a new change in the management structure formed since the Hanmi Science regular shareholders' meeting in March.

This extraordinary shareholders' meeting was convened after the board of directors of Hanmi Science, the holding company of Hanmi Pharmaceutical Group, reached a deadlock with a '5 to 5' split, and the brothers, Lim Jong-yoon and Lim Jong-hoon, attempted to seize control of the operating company Hanmi Pharmaceutical. The brothers tried to dismiss two current executives, including CEO Park Jae-hyun, but faced opposition from the National Pension Service and global proxy advisory firms. Notably, the brothers' attempt to secure management control failed as they did not obtain the required two-thirds majority of voting shares for a special resolution at this meeting.

Industry insiders point to the shift in small shareholders' voting intentions as the biggest variable in this vote outcome. Small shareholders who had fully supported the brothers' side at the Hanmi Science regular shareholders' meeting in March showed a dramatic change in position after nine months. Of the total 39% of small shareholders, 28% opposed the brothers' proposal. This represents nearly one-third of all voting shares of Hanmi Pharmaceutical, becoming a key factor determining the vote's direction.

Pharmaceutical industry experts analyzed, "The lack of visible achievements such as stock price increases was the main reason for swaying small shareholders' sentiments." The brothers lost trust as their blueprint for new drug development and investment attraction, proposed after gaining management control in March, failed to materialize. In fact, Shin Dong-guk, the largest individual shareholder, reportedly judged the brothers' plans as unlikely to succeed and early on sided with the mother and daughter faction.

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The internal conflict structure within Hanmi Pharmaceutical Group is also negatively impacting management performance. As Hanmi Science has not properly provided management support services such as finance, public relations, legal affairs, and human resources to Hanmi Pharmaceutical, the entire group's management is facing difficulties. In particular, poor cooperation between the holding company and the operating company has caused delays in new business initiatives and investment decisions, resulting in practical management disruptions.

Just before the extraordinary shareholders' meeting, director Lim Jong-yoon of the brothers' side proposed withdrawing the agenda, and after the meeting, CEO Lim Jong-hoon of Hanmi Science expressed respect for the results. However, the industry expects the conflict will not be easily resolved. Especially with the regular shareholders' meeting of Hanmi Science scheduled for next March, competition to win votes between both sides is expected to intensify.

The mother and daughter faction, especially Chairman Song Young-sook, maintains a hardline stance against the brothers' 'crossing the line' attacks. With the situation already escalating into lawsuits and counter-lawsuits, they have shown a determination to hold the brothers legally accountable, making family reconciliation difficult. An industry insider commented, "Given the deep emotional rift, finding a compromise in the short term will be challenging."

Currently, the Hanmi Science board of directors is evenly split 5 to 5, making important decision-making difficult. The industry likens this to a 'ceasefire line' and expresses concern that significant group-level decisions may be delayed until the regular shareholders' meeting next March. This is expected to hinder long-term growth strategies such as new drug development and overseas expansion.

Hanmi Pharmaceutical's performance this year was relatively weak despite the overall favorable trend in the domestic pharmaceutical industry. Although sales and operating profit showed growth, they did not reach the average of the top tier in the domestic pharmaceutical sector. The management vacuum and decision-making delays caused by the management dispute are cited as major reasons for the poor performance.

Notably, Hanmi Pharmaceutical accounts for more than 90% of the group's total sales. The current management of Hanmi Pharmaceutical consists of professional managers who have been in place since the era of the previous chairman, and they are generally known to support the mother and daughter faction. The brothers' attempt to replace the current management at this extraordinary shareholders' meeting is analyzed to stem from this background.

Industry experts advise, "Like in political elections, after a win or loss, some compromise must be found," and "To protect the interests of the company and shareholders, a prolonged exhausting conflict should be avoided." There are also forecasts that "both sides will avoid extreme confrontations that could threaten the very existence of the company."

As the management dispute is expected to continue for the time being, reaching a consensus between both sides to preserve Hanmi Pharmaceutical's corporate value is urgent. The industry suggests that both sides should refrain from extreme confrontations and maintain at least a minimal management cooperation system until the regular shareholders' meeting next March. This is recognized as an essential task to protect shareholder value and maintain competitiveness of Hanmi Pharmaceutical.

Editor's Note

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