Rights Offering Briefing Held on the 31st
"40-Year-Old Factory Is a Growth Hindrance"
Lee Jae-young, CEO of Bukwang Pharmaceutical, announced a goal to leap into the top 20 pharmaceutical companies by 2030 through a 100 billion KRW capital raise.
At a briefing on the 100 billion KRW rights offering held online on the 31st, CEO Lee said, "Last year, we achieved sales of 160 billion KRW and an operating profit margin of about 1%. By 2030, we will strive to record an operating profit margin of over 10% through growth in existing products, distribution, and new products." Bukwang Pharmaceutical had previously announced on the 28th that it would proceed with a rights offering followed by a general public subscription for forfeited shares. Since the number of issued shares increases with a rights offering, it is generally interpreted in the stock market as a measure that dilutes shareholder value.
He continued, "Although we will raise 100 billion KRW through the rights offering, the actual funds required for factory facility investment, acquisition of manufacturing sites, and research and development (R&D) will be about 200 billion KRW." He cited the following as factors hindering Bukwang Pharmaceutical's growth: ▲ outdated production facilities ▲ high proportion of essential medicines in total production volume ▲ lack of new products and new business ventures ▲ relative concentration of investment in overseas pipelines.
Bukwang Pharmaceutical plans to expand production capacity through the rights offering. CEO Lee explained, "Bukwang Pharmaceutical has several chronic growth-hindering factors, causing the corporate value to decline or stagnate. We judged that the only way is to rebuild production and R&D capabilities to have the corporate value re-evaluated." He added, "The current factory is over 40 years old, which is problematic," and said, "Outdated production facilities are the biggest factor hindering the company's growth."
Bukwang Pharmaceutical plans to use about 50 billion KRW of the rights offering funds for factory facility investment. The production capacity of the Ansan plant will be increased by about 40%, from the current 950 million tablets to 1.35 billion tablets. Additionally, 35 billion KRW will be invested in acquiring manufacturing sites, and 30 billion KRW will be sequentially invested in strengthening R&D capabilities.
CEO Lee stated, "In addition to the Ansan plant, we will acquire a contract manufacturing organization (CMO) plant," and explained, "Pharmaceutical factories have licensed product items, so acquiring a factory means acquiring the products as well, which can also expand the product portfolio."
They also plan to increase R&D investment to accelerate securing new drug pipelines. He said, "R&D includes not only clinical trials and new drug development but also introducing products that the company can sell," adding, "We will also strengthen our own R&D capabilities."
Regarding OCI Holdings, the largest shareholder of Bukwang Pharmaceutical, participating in the rights offering, CEO Lee emphasized that they will fulfill their responsibilities as the largest shareholder. When asked about OCI Holdings' participation, he replied, "I believe OCI Holdings will fulfill its duties and rights as the largest shareholder of Bukwang Pharmaceutical."
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