Hanmi Pharmaceutical Management Dispute Ends... Mother and Daughter Take Control of the Board

Hanmi Science and Hanmi Pharm Secure Board Majority
Dominance in Shareholding Structure... Dispute Effectively Ends
Resolution to Be Finalized Soon Through Board Meeting
Potential for Future Collaborations
with Other Groups, as Seen in the Previous OCI Merger Attempt

The management dispute within the Hanmi Pharm Group, which has lasted for over a year since early last year, has effectively ended with the 'mother and daughter faction' gaining control of the management rights. They have seized control of the board of directors of the holding company Hanmi Science and secured a dominant position in the shareholding structure, thereby clinching management control.

According to the pharmaceutical industry on the 12th, Hanmi Science announced that outside director Sabong Kwan voluntarily resigned for personal reasons the day before. It is also known that non-executive director Kwon Kyu-chan resigned. Both directors are classified as personnel from the 'brothers faction,' including internal director Lim Jong-yoon of Hanmi Science and CEO Lim Jong-hoon. With the resignation of these two directors, the number of registered directors decreased from 10 to 8. The mother and daughter faction and the brothers faction had been evenly matched 5 to 5 on the board, but with the resignation of the two directors, the balance shifted to 5 to 3.

The management dispute within the Hanmi Pharm Group was triggered in January last year when they attempted to merge with the OCI Group. The mother and daughter faction, including Song Young-sook, chairwoman of Hanmi Pharm Group and spouse of founder Lim Sung-ki, and daughter Vice Chairman Lim Joo-hyun, sought to resolve inheritance tax issues and pursue business cooperation through the merger, but the brothers faction, Lim Jong-hoon and Lim Jong-yoon, opposed it. Ultimately, at the Hanmi Science regular shareholders' meeting at that time, the brothers faction secured a majority on the board, causing the merger to fail. The conflict continued thereafter, and the mother and daughter faction allied with Shin Dong-guk, chairman of Hanyang Precision, and the private equity firm La D?fense Partners, which holds significant shares in Hanmi Science. Recently, the mother and daughter faction secured approximately 54.42% of Hanmi Science shares, overwhelmingly surpassing the brothers faction's 21.86% stake.

The mother and daughter faction also gained a favorable position on the Hanmi Pharm board in December last year. At the Hanmi Pharm extraordinary shareholders' meeting, the board composition was decided as six members from the four-person alliance and four from the brothers faction, maintaining the alliance's advantage. The brothers faction attempted to dismiss Hanmi Pharm CEO Park Jae-hyun and non-executive director Shin Dong-guk (chairman of Hanyang Precision), who are part of the four-person alliance, and to bring two internal directors classified as brothers faction members onto the board, but failed due to insufficient friendly shares.

The Hanmi Pharm Group is expected to hold a board meeting soon to finalize the management dispute. There is also speculation that the mother and daughter faction may secure seven or more directors at the upcoming Hanmi Science shareholders' meeting next month. The position of Hanmi Science CEO Lim Jong-hoon is also considered precarious. A Hanmi Pharm Group official stated, "This is the concrete first step toward ending the management dispute and normalizing the management of Hanmi Pharm Group," adding, "We plan to hold a board meeting soon to gradually implement follow-up measures related to this."

After management normalization, there is also speculation that Hanmi Pharm Group may swiftly pursue mergers or collaborations with external parties, as there is a significant need for cash flow to support continuous new drug development and commercialization. This rationale was also behind the previous attempt to merge with OCI. At the time of the merger attempt, Hanmi Pharm Vice Chairman Lim Joo-hyun said, "Having overseen new drug development processes for over ten years, I felt the financial limitations and practical barriers of Hanmi," adding, "(Cooperation with OCI) will strengthen Hanmi's new drug development foundation and provide a solid base to boldly invest and expand business like big pharma (global major pharmaceutical companies)."