Seo Jung-jin, the founder and chairman of Celltrion Group, clarified on Wednesday that the company’s plan to cancel treasury shares and purchase additional shares after the proposed merger of Celltrion and Celltrion Healthcare is not related to any succession work. He further added that he has no intentions of acquiring shares through any unfair means.
“The decision to buy back shares is unrelated to the issue of succession,” Seo said during a press conference held at the NH Investment & Securities headquarters in Yeouido, Seoul. He emphasized that he has “no intention of utilizing any deceptive or unlawful tactics” in handing over his management rights to his two sons.
Celltrion Group announced on Monday that it will cancel and repurchase treasury shares to enhance shareholder value following the merger of Celltrion and Celltrion Healthcare.
The group plans to cancel 2,309,813 treasury shares worth approximately 359.9 billion won. Additionally, they will repurchase approximately 500 billion won worth of treasury shares. Celltrion will acquire a total of 2,426,161 shares that are valued at approximately 345 billion won. Meanwhile, Celltrion Healthcare will acquire a total of 244,000 shares valued at approximately 155 billion won.
After the announcement, Seo has faced questions regarding whether the decision to cancel and buy back shares was made with succession in mind.
During the conference, Seo was also non-committal about merging Celltrion Holdings and Celltrion Skincure, stating simply, “We don’t intend to increase our affiliates.”
In October 2021, Celltrion Group proposed a plan to restructure group ownership. The plan was to merge three privately held affiliates - Celltrion Holdings, Celltrion Healthcare Holdings, and Celltrion Skincure, into a single holding company called Celltrion Holdings. However, more minority shareholders of Celltrion Skincure exercised their appraisal rights than expected, leading to the cancellation of the merger.
“Running a company with multiple affiliates is challenging,” said Seo, the majority shareholder of both companies. “Therefore, the goal is to make strategic choices and concentrate on the merger, which will ultimately transform Celltrion Group into a global pharmaceutical company.”
Celltrion plans to increase global drug sales to 5 trillion won by 2030 with biosimilar Zymfentra, recently approved as a new drug in the U.S. The company aims to achieve this by introducing new drugs and expanding sales of existing biosimilars. The group’s earlier target was to achieve 12 trillion won in total sales by 2030.
─ Why did you decide to acquire treasury stock?
“During mergers and acquisitions (M&A), it is possible to carry out stock swaps. Besides, when prices are low, it is a good idea to invest in the company you are most confident in.”
─ What are Celltrion Group’s plans after the merger is complete?
“By the end of this year, we will merge Celltrion and Celltrion Healthcare and then merge the resulting entity with Celltrion Pharmaceuticals to establish Celltrion Holdings, an investment company that will focus on bio/healthcare investments. Our ultimate goal is to create a bio/healthcare fund that will be supported by our own funds as well as institutional investors to help Korea become a leader in the bio-industry.”
─ Could you provide an update on your plans to pursue M&As?
“We are exploring opportunities with Japanese and European companies. In Japan, penetrating the Japanese market is a challenge despite having a local direct sales network. For this reason, we are considering acquiring a local pharmaceutical company, although we have not made any concrete decisions yet.”
─ What does it mean to launch ZimPentra in the U.S. and other global markets?
“In Europe, Zymfentra was approved as a new biosimilar, and now in the U.S., it’s a new drug. Because it is licensed as a new drug, it can be sold at a higher price than a traditional biosimilar. This means that we expect to generate more profit in the US market compared to Europe.
We expect to achieve global sales of 3 trillion won with Zymfentra alone within three years.”
─ The goal is to achieve 5 trillion won in global drug sales by 2030. Is it achievable?
“In addition to Zymfentra, we have four new drug platforms and a pipeline of 20. We expect to easily generate 5 trillion won in global drug sales with Zymfentra by 2030.”
─ What are your plans for investing in future research and development (R&D)?
“If a pharmaceutical or biotech company does not invest in R&D, it will not be able to expand. As the company grows, so too will its spending on R&D.
We will continue to invest one-third of our EBITDA in R&D and increase it as we grow. We will focus on mRNA, bispecific antibodies, ADCs, and oral biologics for future growth.”
This article was originally published on Oct. 26, 2023.
