Bid for botox maker Hugel to kick off in late July, attracts PEFs

The bid to acquire a controlling stake in Hugel Inc., South Korea’s leading maker of botulinum toxin, more commonly known as botox, from US private equity firm Bain Capital is set to kick off at the end of this month, according to the investment banking industry on July 22.

Potential bidders include a consortium led by the energy-focused GS Group, which has offered about 2.4 trillion won ($2.1 billion) for the 44% stake, alongside global PE firms and companies that operate relevant businesses such as Chinese pharmaceutical companies.

The bid has drawn much attention given that Hugel is the only Korean company to have received the nod to sell its botox product, Letybo, in China. 

Currently, Hugel's botox products are sold in Korea and Southeast Asia which account for around 10% to 20% of the global market. This will expand to 30% to 40% once China is included, increasing Hugel's presence in the global botox market.

So far, only four botox products have been approved in China: Hugel’s Letybo, Allergan’s Botox, Lanzhou Institute of Biological Products’ BTX-A and Ipsen’s Dysport.

Among them, Letybo has been noted for its high quality compared to other local botox products and its reasonable price since it's much cheaper than Allergan’s products.

Due to this, major business groups such as Samsung, LG and Shinsegae which already have a strong brand presence in China reviewed the deal as they determined that Hugel's Letybo would quickly dominate the Chinese market.

But most of the major Korean companies that had shown interest decided not to take part in the bid due to Hugel’s expensive price tag despite its growth potential and the possibility of a patent lawsuit.

Since 2016, pharmaceutical companies Medytox Inc. and Daewoong Pharmaceutical Co. have engaged in a legal battle over the source of botox strain used by Daewoong. Industry watchers say once Medytox wraps up the lawsuit against Daewoong, it is likely to file patent infringement lawsuits against other competitors such as Hugel, which could serve as a roadblock for the company's business.

Following the approval to sell botox in China, Hugel has set a goal of achieving revenue of 1 trillion won ($870 million) by 2025. Last year, the company logged revenue of 211 billion won and an operating profit of 78 billion won.
 
Write to Jun-ho Cha at chacha@hankyung.com
Danbee Lee edited this article.