Celltrion to merge with Celltrion Healthcare, Celltrion Pharm in 2 phases

Seo Jung-jin, chairman of Celltrion Group, speaks during an online press conference, Thursday. Captured from conference

By Baek Byung-yeul

Celltrion, a biosimilar producer, will merge with Celltrion Healthcare, a group subsidiary responsible for marketing biosimilar and other medicines, this year to create business synergy, Celltrion Group Chairman Seo Jung-jin said Thursday. He also said that the merged unit will later absorb Celltrion Pharm, the group's chemical pharmaceuticals maker.

The term biosimilar means a biologic medical product that is almost an identical copy of an original product that is manufactured by a different company.

"Celltrion is expected to complete the merger of Celltrion Healthcare by the end of the year, followed by the next merger with Celltrion Pharm in the next six months,” the chairman said during an online conference.

Seo holds a 95 percent stake in Celltrion Holdings, which has a 20.02 percent stake in Celltrion and a 35.54 percent stake in Celltrion Healthcare, respectively. Celltrion has a 54.96 percent stake in Celltrion Pharm.

Celltrion announced its decision to acquire Celltrion Healthcare in a regulatory filing. The merger will consist of the issuance of new shares of Celltrion stock to Celltrion Healthcare shareholders with the merger ratio standing at 1:0.4492620.

The merger plan needs to be approved at a shareholders' meeting on October 23. Upon completion of the merger, the combined company will be called Celltrion and Celltrion Healthcare will be dissolved.

Celltrion Group had said it would merge its three stock market-listed companies ― Celltrion, Celltrion Healthcare and Celltrion Pharm ― by the end of the year, but the chairman said the merger would be done in two phases because of the challenges of combining the three companies.

“In the case of a three-company merger, we expected there would be a lot of procedural difficulties,” Seo said. “Also, the interests of shareholders would also be complicated, so we decided to proceed with a two-phase merger.”

The chairman also said that the decision to merge was made in order to develop, produce, sell and market the drug in-house.

“Celltrion first started as a CMO (contract manufacturing organization that produces drugs of other companies) business, then entered the bio industry, and then developed new drugs. However, the competition in the drug market is becoming increasingly fierce. We decided to merge because only companies that can develop, produce and sell their own drugs can survive,” the chairman said.

The chairman said he expects Celltrion Group will be able to generate 12 trillion won ($8.94 billion) in revenue by 2030 after completing its merger process.

Revealing the group's future plans, Seo said the combined company will implement a large-sized investment such as new drug development, acquiring license and M&A.

“Future investments will be focused on new drug development, but we will also invest in license, digital healthcare and M&A,” Seo said.