Huons is significantly enhancing its research and development capabilities in biopharmaceuticals by merging with its subsidiary, Huons Lab. This strategic move is seen as a way to secure benefits from government pricing incentives for innovative pharmaceutical companies. Market analysts suggest that this merger may also lay the groundwork for future succession planning.
On May 18, Huons held a board meeting where it approved the merger agreement to absorb Huons Lab, which operates under Huons Global. The surviving entity will be Huons, while Huons Lab will be dissolved, with a share exchange ratio set at 1:0.4256893.
The merger process is expected to be finalized at a special shareholders' meeting in July, with the official merger date scheduled for August 18. Prior to this transaction, Huons Group established a special committee, including external experts, to verify the legitimacy, fairness of conditions, and appropriateness of the procedures in accordance with Ministry of Justice guidelines.
Huons plans to integrate Huons Lab's biopharmaceutical candidates into its existing synthetic drug pipeline to secure high-value growth drivers.
Huons Lab possesses differentiated technologies, such as a formulation change platform utilizing human-derived hyaluronidase, which will enable the company to secure stable funding for the necessary technology transfer stages through the merger.
Additionally, Huons aims to strengthen its R&D capabilities and obtain certification as an innovative pharmaceutical company. This certification is expected to enhance its competitiveness in light of the government's proposed reforms to drug pricing systems.
According to the Ministry of Health and Welfare's 'Improvement Plan for National Health Insurance Drug Pricing System,' innovative and quasi-innovative pharmaceutical companies, which have a high proportion of R&D investment, will receive a maximum price of 49% for new drugs, compared to the original price of 45% for generic drugs, for up to four years. For newly listed generic drugs, innovative pharmaceutical companies will receive a price of 60%, while quasi-innovative companies will receive 50% for the same duration.
Song Soo-young, CEO of Huons, stated, "We have laid the foundation to leap forward as a global company by integrating our capabilities from pharmaceutical and biopharmaceutical R&D to sales. We will strengthen our fundamentals to maximize shareholder value."
Some analysts view this merger as a strategic move to complete the merger before a significant technology export, as the company's valuation is currently low. Huons Lab, which has a platform technology called 'High Diffuse' that converts intravenous (IV) formulations to subcutaneous (SC) injections, is reportedly in discussions with a global pharmaceutical company regarding contracts related to antibody-drug conjugates (ADC) SC conversion.
This is also linked to future succession planning, as the company aims to complete asset restructuring and governance organization within the group to alleviate potential gift and inheritance tax burdens.
* This article has been translated by AI.
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