IMM secures 2x return on Korea pharma investments

Financial details of the transactions have not been disclosed, but Hae-Joon Joseph Lee, a partner at IMM, told AVCJ that the firm realized a more than 2x return in both deals. Both companies were sold on the public market: Genexine was exited in December, while the Handok exit was completed this month.

Handok was founded in 1954 by Shin-Kwon Kim as Union Drugs, but changed its name to Handok a few years later after it entered a partnership with German pharmaceutical player Hoechst. Hoechst, later renamed Aventis, took a 50% stake in Handok, while the Kim family's 50% interest was diluted to 25% in 1976 following an IPO.

IMM invested in Handok in 2012 when Sanofi, a European pharmaceutical company which had acquired Aventis, decided to sell its stake back to Handok's management. From Sanofi's holding, the Kim family took a 20% stake to raise its holding to 45%, while IMM acquired the remaining 30% for $49 million.

IMM's plan upon investing in Handok was to provide the company with financial and operational support to pursue a consolidation strategy in Korea's highly fragmented pharmaceutical market. The investment in Genexine in 2014 was an outgrowth of this plan: IMM identified the company as an opportunity to strengthen Handok's research and development capabilities and took a minority stake for $19 million, with Handok acquiring a 30% stake.  

Handok produces drugs focused on high-priority therapeutic areas including oncology, diabetes and metabolic disorders, while Genexine's pipeline includes treatments for immune disorders, cancer and anemia. The two companies are currently collaborating on a treatment for growth hormone deficiency.

For the year ended December 2016, Handok reported revenue of KRW396 billion ($369 million), up from KRW358 million the year before. Over the same period, Genexine's revenue fell from KRW33 billion to KRW11 billion. Handok's net profit grew from KRW2.2 billion to KRW 3.9 billion while Genexine's net loss widened from KRW1.4 billion to KRW25 billion.

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• Topics
• North Asia
• Healthcare
• Open market
• South Korea
• Pharmaceuticals
• IMM Investment
• Exit