[CEONEWS = Bae Jun-cheol] In the pharmaceutical and bio industry, Boryung (formerly Boryung Pharmaceutical) CEO Kim Jung-kyun holds a unique position. While most third-generation owners focus on new drug development, biosimilars, or digital healthcare, he lifted his head to look at the sky—or rather, "space." The "CIS (Care In Space)" project he championed has been both a fresh shock to the conservative pharmaceutical industry and a source of concern.
Despite the symbolic achievement of joining the "1 Trillion Won Revenue Club" last year, when operating profits fell short of expectations, the market’s criticism was immediately directed at his space business. The critique was, "Is it right to bet on an uncertain future while damaging the profitability of the core business?"
However, in the third quarter of 2024, Boryung answered with numbers. Combining this earnings report with recent management moves, it becomes clear that CEO Kim Jung-kyun’s strategy is evolving from a simple "Space All-in" to a thorough "Ambidextrous Management" approach. Will his voyage toward space be able to sail smoothly? We analyze this through three key observation points.
■ The Rediscovery of the 'Cash Cow': The Dual-Engine Strategy of LBA and Kanarb
Paradoxically, the source of confidence that allows CEO Kim to dream of space comes from the robustness of the most realistic "core pharmaceutical business." Boryung’s Q3 report card, disclosed on the 14th, proves this. The operating profit of 29.4 billion KRW, a 51.3% surge compared to the same period last year, is not merely a "recession-type surplus" created by cutting costs.
The point to note here is the successful settlement of the LBA (Legacy Brand Acquisition) strategy. This strategy, which involves acquiring domestic rights for off-patent original medicines from global pharmaceutical companies to manufacture and sell them, was CEO Kim’s winning move. The anticancer drug 'Gemzar', the schizophrenia treatment 'Zyprexa', and 'Alimta', all acquired from Eli Lilly, have seen rapid revenue growth post-acquisition. The fact that Gemzar’s prescription sales jumped more than twofold compared to pre-acquisition levels is a stark example of how powerful Boryung’s sales capabilities are.
On top of this, the hypertension treatment 'Kanarb Family', the pride of domestic new drugs, recorded quarterly sales of 42.5 billion KRW, growing 20% year-on-year. With two powerful engines running—self-developed new drugs and acquired original masterpieces—Boryung maintains its cash-generating ability despite external concerns. This serves as the "gravity of Earth" and a pillar that enables long-term future investment.
■ Space Business: From 'Reckless All-in' to 'Pacing Strategy'
The market's biggest concern was the excessive capital outflow into the space business. However, CEO Kim has shown a flexible change in attitude since early this year. His declaration to "hold off on additional space business investments this year" and the statement to "switch from passive capital investment to a project-led approach" suggest that he is listening to the market's voice.
Some question whether this signifies a downsizing of the space business, but from an analyst's perspective, it is interpreted as an "advancement of R&D." If the initial phase was simply investing in space-related startups, the direction has now shifted to practical projects that research physiological changes occurring in the human body in space and find healthcare solutions to address them.
Space medicine is not just for astronauts. Research on muscle loss, bone density reduction, and accelerated aging in microgravity is directly linked to the healthcare market on Earth, which faces an aging society. The point CEO Kim is targeting is precisely this "Spin-off" technology. The strategy correction to solidify internal stability while reducing immediate large-scale capital injection demonstrates that he is a CEO who knows how to balance dreams with reality.
■ Structural Efficiency: Introduction of CSO and Global Expansion
A bold decision to introduce a CSO (Contract Sales Organization) system also played a part in improving Boryung’s profitability this year. By entrusting about 50 prescription drug items to its subsidiary, Boryung Consumer Healthcare, the headquarters' core sales workforce was made to focus on high-margin products like Kanarb and LBA items. This played a decisive role in streamlining SG&A expenses and pulling the operating profit margin up to 8.5%.
Furthermore, turning eyes to the Southeast Asian market to overcome the limits of the domestic market is also positive. The CDMO contract for Alimta with Zuellig Pharma is expected to become a lucrative business that earns foreign currency by utilizing Boryung’s Yesan production facility. It effectively creates a structure where drugs acquired through LBA are not just sold domestically but exported back overseas. This can be called a smart play showing the scalability of the LBA strategy.
■ The Path from '3rd Gen Owner' to 'Visionary'
In conclusion, to the question of whether CEO Kim Jung-kyun’s space business strategy will yield results in the long term, I cast a vote of "conditional optimism."
There are three reasons. First, the core business is unshaken. Unlike past cases where some companies put the entire group at risk with unreasonable new business expansions, Boryung is building up its stamina by delivering record-breaking performance in its main pharmaceutical business. Second, the flexibility of strategy correction. The crisis management capability shown by adjusting the speed of space investment and reorganizing the portfolio around profitability in an era of high interest rates and high exchange rates deserves high praise. Third, a clear roadmap is visible. The scenario of securing cash through LBA, opening global sales channels through CDMO, and then using that capital and technology to preoccupy the "super-gap" market of space healthcare is logical.
However, risk factors still exist. The space business is an ultra-long-term project that may take 10 or 20 years to show tangible results. Shareholders want immediate dividends and stock price increases. CEO Kim’s task is to consistently prove strong results like those in Q3 to dispel the perception that "the company is struggling because of the space business."
Boryung’s spaceship has just paused its countdown and refueled. The industry is watching with bated breath to see if his bold experiment of buying "Space (Future)" with money earned on "Earth (Pharma)" will remain as a success story of a "First Penguin" expanding the horizon of the Korean pharmaceutical industry beyond Earth, or end as a mere pipe dream. But at least for now, it is hopeful in that CEO Kim Jung-kyun is standing firmly on the ground of reality.
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