[비즈한국] Kwangdong Health Bio (formerly BL Healthcare) is grappling with the challenge of generating synergy with Kwangdong Pharmaceutical009290 in the health functional food (nutraceutical) business. Despite being acquired by Kwangdong Pharmaceutical about two years ago, the company has seen persistent negative growth, compounded by the stagnation of the domestic health supplement market.
According to the Financial Supervisory Service's Data Analysis, Retrieval and Transfer System (DART) on the 10th, Kwangdong Health Bio secured 3 billion KRW in funding on the 6th, thanks to Kwangdong Pharmaceutical's participation in a third-party paid-in capital increase. Kwangdong Health Bio plans to use these funds for operational capital and investments in the automation of production facilities. Including the 30 billion KRW poured into acquiring a 58.74% stake in Kwangdong Health Bio in December 2023, Kwangdong Pharmaceutical has invested a total of 33 billion KRW to date.
Kwangdong Pharmaceutical acquired Kwangdong Health Bio to diversify its business portfolio by making health functional foods a new growth engine. Kwangdong Health Bio is a company that produces over 300 types of health supplement products through OEM (Original Equipment Manufacturing) and ODM (Original Development Manufacturing). Kwangdong Pharmaceutical, which had previously handled health supplement R&D and investments while distributing and selling products through its subsidiary Kwangdong Life Science, aimed to expand its production base and create synergy by acquiring Kwangdong Health Bio, which possesses manufacturing capabilities.
However, contrary to Kwangdong Pharmaceutical's high expectations, Kwangdong Health Bio has fallen into a performance slump since its acquisition. Last year, it recorded 66.5 billion KRW in revenue and an operating loss of 1 billion KRW, a step back from the previous year's 80.2 billion KRW in revenue and 2.6 billion KRW in operating profit. Revenue for the first half of this year also reached 30.7 billion KRW, a 12.9% decrease compared to the same period last year. During the same period, competitors like Novarex194700 grew by 37.6%, Cosmax NBT by 9.1%, and RP Bio314140 by 7.9%. Kolmar BNH200130 also saw a 7.8% decrease in revenue, but the decline was smaller than that of Kwangdong Health Bio.
The synergy effect between affiliates is also not yet significant. As of last year, the portion of Kwangdong Health Bio's revenue coming from Kwangdong Pharmaceutical and Kwangdong Life Science stood at only about 3%. A representative from Kwangdong Health Bio expressed confidence, stating, "To maintain our competitiveness as a specialized OEM/ODM firm, we plan to increase the proportion of group sales to 30% in the long term. While companies like Kolmar BNH or Novarex specialize in large-scale production, we can meet the demands of companies needing small-scale production based on our capabilities to produce various formulations such as tablets, hard and soft capsules, powders, jellies, and liquids."
Kwangdong Health Bio expects full-scale synergy to emerge starting next year. This is because it typically takes 1 to 2 years to develop and commercialize new ingredients. A product utilizing a complex extract of velvet antler and Angelica gigas (for prostate health) was launched through Kwangdong Pharmaceutical in December 2024, after receiving approval from the Ministry of Food and Drug Safety as an individually recognized functional ingredient in July 2023. Beyond the velvet antler and Angelica gigas complex, Kwangdong Health Bio holds other individually recognized functional ingredients, including Rosemary-Grapefruit complex extract (protection against UV skin damage), Moro orange extract powder (body fat reduction), Andrographis paniculata extract (joint health), and Angelica gigas-velvet antler-Astragalus complex extract (fatigue improvement). A Kwangdong Health Bio representative stated, "We are currently in discussions to select a core distribution partner after receiving a partnership proposal for the Angelica gigas-velvet antler-Astragalus complex extract from a major retail channel next year," adding, "We plan to complete the construction of our production and delivery systems."
Kwangdong Health Bio also stated that it would lay the groundwork for growth by presenting a blueprint for expanding into overseas markets. The goal is not to rely solely on domestic demand by accelerating overseas expansion, focusing on Southeast Asia. Last year, Kwangdong Health Bio's domestic revenue accounted for about 98.5% of its total. A company representative explained, "We opened a booth and participated in 'Vitafoods,' the largest health supplement exhibition in the Asia-Pacific region held in Thailand this year. As inquiries from potential clients are coming in, we plan to enter the Southeast Asian market step by step," adding, "We will raise the proportion of our overseas revenue to over 5% next year, and to over 30% within five years."