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Myungin Pharm Owner’s Second-Generation Heir Lee Sun-young Appointed CEO of Advertising Agency Amid 'Unfair Support' Controversy

[비즈한국] It has been confirmed that Lee Sun-young (48), the eldest daughter of Myungin Pharm Chairman Lee Haeng-myung (76), has been appointed as the CEO of Medi Communication. Myungin Pharm is a pharmaceutical company famous for its product 'Igatan'. Medi Communication is 100% owned by CEO Lee Sun-young and her younger sister, Lee Ja-young (44). Medi Communication previously faced controversy for securing a large volume of work from Myungin Pharm. Since the controversy emerged, the transaction volume between Medi Communication and Myungin Pharm has decreased significantly, and as a result, its performance has not been as strong as it once was. Attention in the business world is focused on whether CEO Lee Sun-young can lead a turnaround in Medi Communication's performance.

CEO Lee Sun-young began her formal management career in March 2023 when she was appointed as an internal director of Myungin Pharm. However, she suddenly resigned from her position as an internal director in March 2024 and has not appeared in the public eye since.

CEO Lee Sun-young had been listed as an internal director at Medi Communication since its founding in 2005. Having served as an internal director for approximately 20 years, she has now been appointed as its CEO. Her younger sister, Lee Ja-young, also served as an internal director at the time of Medi Communication's founding but resigned in March 2019.

Medi Communication is an advertising agency with CEO Lee Sun-young and Lee Ja-young holding 52% and 48% stakes, respectively. It is reported that the company boosted its performance by winning advertisements for Myungin Pharm. However, specific transaction details between the two companies were not disclosed in their audit reports.

In response to the controversy over the advertising contracts, Myungin Pharm established a subsidiary, 'Myung AdCom', in 2019. Most of Myungin Pharm’s advertising volume was transferred to Myung AdCom. Consequently, although Medi Communication recorded 3.84659 billion KRW in revenue from its advertising business in 2018, it generated no advertising revenue between 2019 and 2020. While advertising revenue resumed in 2021, the amount has remained under 1 billion KRW.

Medi Communication also operates a real estate leasing business. In August 2015, it purchased Myungin Tower (formerly the Health Insurance Review and Assessment Service building) in Seocho-gu, Seoul, for 93.8 billion KRW. As of the end of 2014, Medi Communication's cash and cash equivalents were only 70.73 million KRW. To help with the acquisition, Myungin Pharm provided payment guarantees to banks, and Chairman Lee Haeng-myung lent funds to Medi Communication.

In 2016, Medi Communication sold a 48% stake in Myungin Tower to Myungin Pharm. The proceeds were reportedly used to repay debt. This led to criticism that Myungin Pharm engaged in unfair transactions to support Chairman Lee Haeng-myung's children. The National Tax Service investigated these allegations in 2022, but no further announcements were made regarding the tax audit of Myungin Pharm.

Although its advertising revenue has dropped significantly, Medi Communication continues to generate annual revenue in the 6 billion KRW range thanks to its leasing business. However, it is considered to have low growth potential. Medi Communication is not a real estate specialist, and the leasing business does not require research and development. Furthermore, it does not hold a prominent position in the advertising industry. Its revenue and capital scale are also relatively small compared to Myungin Pharm.

A business industry official remarked, "Because of past controversies, it will be difficult to grow the company through excessive internal trading. To improve performance, they would need to strengthen their core business or pursue new ventures, but given the size of the company, it does not seem easy to pursue large-scale new businesses."

As CEO Lee Sun-young takes the helm, some analysts suggest there may be changes in the direction of Medi Communication. One potential strategy mentioned is strengthening the core advertising business by attracting clients other than Myungin Pharm to diversify its client portfolio. BizHankook contacted Myungin Pharm to obtain their position on this matter but received no response.