Handok said in a regulatory filing late Tuesday it was in preliminary negotiations to possibly establish a joint venture with Teva Pharmaceutical Industries Ltd, but nothing has been decided yet. Rumor ran that Teva was planning to merge a Korean medium-sized pharmaceutical firm worth 100 billion won.
Investors who bought in Hadok's stock after belatedly heard the M&A rumor are likely to incur loss since the effect of establishing a joint venture, not conferring management rights to Teva, is less powerful than that of M&A.
Industry observers analyze that the backdrop against Handok's drive to establish a joint venture is Handok's intention of breaking through current financial impasse. In the wake of joint venture establishment, Teva is expected to expand the sphere of influence with its domestically-produced generic drugs in Korean market while Handok is expected to distribute Teva's generic drugs.
As a matter of fact, since drug price reduction last April, a majority of domestic pharmaceutical companies have been plagued by profit deterioration. Handok, which had enjoyed high revenue making through the partnership of Sanofi, has been one of the severelt affected firms by the drug price reduction.
Handok, founded by President Kim's father in 1954, has been keeping honeymoon relationship for nearly 50 years with Sanofi, former Hoechst since 1964. Hoechst was a German chemicals then life-sciences company that became Aventis Deutschland after its merger with France's Rhône-Poulenc S.A. in 1999. With the new company's 2004 merger with Sanofi-Synthélabo, it became a subsidiary of the resulting Sanofi-Aventis pharmaceuticals group.
Handok has been palying the role of sales agent for the multinational pharmaceutical company, rather than researching and developing its own new drugs. Handok has been functioning as a 'loyal' mediator that handed over domestic market to multinational pharmaceutical companies. besides, Handok once gave a crushing blow to domestic wholesale maket by taking in Zuellig Pharma, Switzerland-based multinational healthcare services provider.
But handok's move eventually came as a boomerang. Goverment's drug price reduction policy specifically hit the firms such as Handok, heavily dependent on imported drugs without its own new drugs. As the price of staple imported drugs such as Sanofi's Amaryl, diabetes treatment, plummeted, Handok's performance freefell.
Industri observers agree that Handok's drive to establish a joint venture with foreign company is triggered by recent financial crisis. In other words, Handok appears to need another multinational drug company to turn to as in the case of Sanofi.
German Hoechst, biggest shareholder of Handok, announced Tuesday that it had sold over the counter all of its shares of Handok. 3,479,999 of 5,800,000 shares held by Hoechst was handed over to IMM Private Equity. IMM Private Equity became the second biggest shareholder of Handok, occupying 29.99%.
President Kim of Handok also additionally acquired 596,001 shares from Hoechst shares, occupying 47.19%(5,473,601 shares) as No.1 shareholder. Industry observers expect that the process of the joint venture establishment between Handok and Teva and its future management will be done by IMM Private equity to a considerable proportion.
Industry officials are casting critical eyes to the establishment of the joint venture.
Handok announced 27th Sep that it officially severed the tie with Sanofi. It was accepted as the move to stand alone after more than 50 years.
President Kim, then, said, "I've been worring about the change in a drastically changing drug market. Though pharmaceutical industry is going through hard times, Handok got to have the opportunity to be reborn as a total health firm and to grow to be a global firm equipped with global standards." He clarified his position that Handok would get out of the umbrella of multinational pharmaceutical companies.
But in less than two month since 'indepedence declaration', Handok's intention to get under the umbrella of foreign company that produces generic drugs again was uncovered. Industry officials show the response that they knew it.
An executive member from B pharmaceutical company said, "If a giant multinational generic drug company comes into domestic market at this juncture of domestic drug companies crisis due to drug price reduction, the whole pharmaceutical industry may falter." He ponited out, "The gateway to global market is new drugs, not generic drugs."
Meanwhile, Handok's stock price skyrocketed almost double in six days Tuesday as the rumor of M&A with Teva spread.
The stock price before M&A rumor was 12,850 won as of 26th Oct. But as Ahn Do-geol, health industry policy commissioner of Ministry of Health and welfare, said at parliamentary discussion 29th Oct, "Teva is progressing to merge a Korean pharmaceutical firm worth 100 billion won.", the stock price began to rise to hit upper limit price as mamy as four times. Handok's stock price Tuesday recorded 24,650 won, 3,150 won, 14.65%, raised as compared with the day before.
-대한민국 의학전문지 헬스코리아뉴스-
