Hanmi Pharm Group Ends Dispute, Focuses on Professional Management and Value-Up

Professional Managers to Be Appointed as Internal Directors
at the Shareholders' Meeting on the 26th of This Month

Hanmipharm Headquarters in Bangi-dong, Songpa-gu, Seoul. Photo by Hanmipharm

Hanmi Pharmaceutical Group, which ended a year-long management rights dispute, is set to reform its structure into a professional management system. The group plans to improve its governance to ensure checks and balances between major shareholders and professional managers, while focusing on its core business of new drug development to boost the undervalued stock prices of its affiliated companies.

According to Hanmi Pharmaceutical Group on the 7th, the board of directors of Hanmi Science, the group's holding company, decided to submit the appointment of four internal director candidates?Lim Joo-hyun, Vice Chairman of Hanmi Science and Hanmi Pharmaceutical; Kim Jae-kyo, former Vice President of Meritz Securities; Shim Byung-hwa, former Executive Director of Samsung Biologics; and Kim Sung-hoon, former Executive Director of Hanmi Science?to the regular general shareholders' meeting. The candidates for outside directors include Choi Hyun-man, former CEO of Mirae Asset Securities; Kim Young-hoon, former judge of the Seoul High Court; and Shin Yong-sam, professor at Catholic University Seoul St. Mary's Hospital. At the Hanmi Pharmaceutical board meeting held on the same day, it was decided to submit the appointment of Choi In-young, head of Hanmi Pharmaceutical R&D Center, as an internal director candidate; Kim Jae-kyo, former Vice President, as a non-executive director candidate; and Lee Young-gu, representative lawyer of the law firm Daeryuk Aju, as an outside director candidate to the regular general shareholders' meeting. The Hanmi Science and Hanmi Pharmaceutical shareholders' meetings will be held on the 26th of this month.

With this, the introduction of a professional management system at Hanmi Pharmaceutical Group has officially begun. In November last year, amid ongoing management disputes, the 'triumvirate' consisting of Song Young-sook, Chairwoman of Hanmi Pharmaceutical Group; Lim Joo-hyun, Vice Chairman of Hanmi Science; and Shin Dong-guk, Chairman of Hanyang Precision and the largest individual shareholder, promised to adopt a professional management system modeled after the German pharmaceutical company 'Merck.' Merck, a family-owned company, operates through professional managers appointed by a family committee and a partner committee at the top of its governance structure.

Song Young-sook, Chairwoman of Hanmi Pharmaceutical Group (from the left in the photo), Lim Ju-hyun, Vice Chairman of Hanmi Science, and Shin Dong-guk, Chairman of Hanyang Precision and the largest individual shareholder, have agreed to jointly exercise voting rights of Hanmi Pharmaceutical Group shares. Photo by Hanmi Pharmaceutical

A representative of Hanmi Pharmaceutical Group said, "After overcoming various issues over the past year, we are firmly establishing an advanced governance system and making a fresh start with a new image," adding, "Through performance-based innovation, we will show that we are a company growing together with customers and shareholders."

Kim Jae-kyo, former Vice President of Meritz Securities, is expected to hold the key role in the professional management system. He recently assumed the position of Vice Chairman at Hanmi Science. Kim, who comes from Yuhan Corporation, has led investment tasks such as mergers and acquisitions and technology exports for 30 years. In 2018, he spearheaded the technology export of Yuhan Corporation's lung cancer drug 'Lazertinib' to Janssen Biotech, a subsidiary of Johnson & Johnson. Afterward, in 2021, he joined Meritz Securities and led the IND division, which discovers and nurtures bio ventures.

Shim Byung-hwa, former Executive Director of Samsung Biologics, who became Vice Chairman of Hanmi Science, is known as a 'financial expert.' He served as head of the finance team, executive director of the management innovation team, and executive director of the social contribution task force at Samsung Biologics. He is expected to serve as Chief Financial Officer (CFO) of Hanmi Science. Kim Sung-hoon, former Executive Director, is from Samsung Electronics. He worked as a manager in the telecommunications division and DMC division management, as well as a manager in the medical device business management department at Samsung Electronics.

Value-up (corporate value enhancement) is also expected through governance improvements. Despite recording its highest-ever sales last year (1.4955 trillion KRW), Hanmi Pharmaceutical's stock price could not avoid a decline. The stock price, which was in the 350,000 KRW range at the beginning of last year, fell about 28% to 255,000 KRW as of the previous day's closing price. Although the company expanded its scale, the management dispute within the owner family weighed on the stock price. The dispute caused concerns over weakened R&D (research and development) competitiveness and a decline in investor confidence. Seung-yeon Han, a researcher at NH Investment & Securities, explained, "Due to the management rights dispute that has lasted for more than a year, Hanmi Pharmaceutical has been trading at a 30-40% discount compared to its intrinsic value (operating value + new drug value)."