South Korean biotechnology firm Hugel in €762 mn acquisition deal

By Natasha Spencer

- Last updated on GMT

South Korean biotechnology firm Hugel in €762 mn acquisition deal

Related tags: South korea

The global private investment firm, Bain Capital, agrees to purchase almost half of South Korean biopharmaceutical firm Hugel.

Merging biotechnology with cosmetics

The deal, which is worth 927.2 bn won (€762 mn), is set to see Bain Capital become Hugel’s largest stakeholder with approximately a 45% stake.

Hailed as the biotechnology hub of Asia-Pacific — where beauty ingredient development and formulation places considerable emphasis on comprehensive R&D efforts — Korea is investing in education to raise awareness among its consumer base.

Hugel manufactures botulinum toxin and dermal facial fillers, which are used for beauty and cosmetic applications including surgery injections to reduce wrinkles.

Recent supportive acquisitions

US-based Bain Capital aims to support Hugel in its overseas expansion plans. In April 2017, Bain Capital and Cinven also acquired German pharmaceutical company, Stada Arzneimittel, and hopes to build a strong relationship with Hugel to strengthen product development in Europe.

In 2016, Bain Capital and multinational investment company, Goldman Sachs Group, bought Korean cosmetics company, Carver Korea, to support its advancement in the beauty industry.

Biotechnology landscape

Market intelligence provider, Euromonitor International, anticipates that APAC’s R&D industry will grow by over $200 bn (€186.5 bn) in the period 2016-2025. This expansion is expected to see South Korea become the world's second-largest business service provider.

The country has placed significant investment in higher education, with the education industry’s turnover up by 12% in the period up to 2016. In addition, over 66% of young adults between 25-34-year-olds attend a tertiary-level education.

Overall, the country is devoting its investment opportunities to building South Korea's R&D sector. As a result, research personnel in the pharmaceuticals industry increased by 30% between 2011-2016, fuelling the spike in biotechnology led product launches.

Between 2011-2016, spending in the R&D industry increased by up to 40%, amid predictions that it will rise at a constant CAGR of 5% over 2016-2021.

Regulatory reassurance

The cosmetics and personal care sectors are backed by the South Korean Government as it actively seeks out new growth engines. It has committed to pledging $9 bn (€8.4 bn) to support the development of 20 drugs.

As the country has eased regulations relating to high-tech items, South Korea moves towards becoming one of the world’s top seven pharmaceutical-producing countries by 2020 to answer consumers’ preferences for multifunctional products that utilise active ingredient development.

In 2017, the country’s Ministry of Science created a $101 mn (€94.2 mn) fund to aid venture firms and biotechnology start-ups. This year, South Korea was named as Bloomberg’s most innovative country.

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