Acquisition of Hugel stake bolsters GS's effort to nurture biotech as next growth engine

GS Group's headquarters in southern Seoul / Korea Times file

By Yi Whan-woo

GS Group has established a foothold in the biotech industry after years of searching for new growth engines, with its latest acquisition of a majority stake in Korea's No. 1 botulinum toxin manufacturer, Hugel.

The acquisition is expected to allow the conglomerate to diversify its business portfolio amid the rapidly changing global business landscape.

GS Group, the country's eighth-largest conglomerate, has been reliant on the refinery, construction, retail and other traditional industries. It has been considered relatively slower than other family-owned conglomerates in the transition to next-generation industries.

Korean botulinum toxin (botox) manufacturer Hugel has been selling its product under the brand, Letybo. Korea Times file

GS Group said a consortium led by the company itself bought a 46.9 percent stake in Hugel for 1.7 trillion won ($1.5 billion) from the American private equity firm Bain Capital, Aug. 25.

The consortium includes CBC, Asia's largest investment firm dedicated to healthcare, headquartered in Singapore, as well as Mubadala Investment Company based in Abu Dhab, and Seoul-based private equity fund IMM Investment Corp.

“The acquisition will enable GS to advance into the biotech industry for the first time in its history,” GS Group Chairman Huh Chang-soo said, adding that the acquisition was a part of efforts to bolster next-generation growth engines through business diversification.

Huh expressed hope of linking Hugel with GS's related businesses in its broader strategy of enhancing its global competiveness.

He argued that Hugel is noted for its “highly qualified products and global competiveness” and that these products raise hope for the potential of the botulinum toxin manufacturer in the coming years.

Michael Keyoung, CBC's managing director and head of its North America and Korea regions, said he believes Hugel will “become a leading global aesthetics business by expanding significantly.”

To incubate biotech businesses, GS Group has been running a collaborative program, titled, “The GS Challenge,” for its affiliates and promising biotech startups since early this year.

The manufacturing facilities, research labs and other related sites have been open to the startups so as to be able to realize new business models.

As an overseas project, GS set up a venture capital firm in Silicon Valley last year to find and support startups that can create synergy if partnered with GS affiliates.

Founded in 2001, Hugel has seen growth in the domestic market through aesthetic products such as botulinum toxin and hyaluronic acid fillers.

Its brand, Botulax, holds 40 percent of the market share in Korea, and is exported to 28 countries around the globe.

In 2020, Hugel became the first Korean company to receive the Chinese government's approval to sell its botulinum toxin products in China.

Listed on the tech-heavy Kosdaq, Hugel is worth about 2.6 trillion won ($2.23 billion).

Hugel reported an operating profit of 56 billion won in the first half of this year, up from 29 billion won last year.

Its 2020 revenue rose 3 percent from the previous year to reach 211 billion won.