Unlisted subsidiary to launch in January next year; 42 products to be added by 2030

R&D, space life science and commercial operations to be separated; company eyes 10% domestic market share

Articles of incorporation to bar split listing; appraisal rights capped at 50 billion won

Boryeong headquarters. [Provided by Boryeong]
Boryeong headquarters. [Provided by Boryeong]

Boryeong plans to spin off its prescription drug sales and marketing operations into a dedicated commercial subsidiary. The move marks a departure from the traditional pharmaceutical business structure, separating research and development and production infrastructure from sales and retail operations, as the company aims to capture more than 10 percent of the domestic market and become the top player in South Korea's pharmaceutical and biotech industry.

Boryeong held a board meeting Tuesday and resolved to carry out a simple physical spin-off of its prescription drug sales and marketing division, creating a new entity called Boryeong Pharma Solution Co. The split is set to be completed on Jan. 4, 2027, following an extraordinary shareholders' meeting on Oct. 28. The new subsidiary will be established as a wholly owned, unlisted entity with Boryeong holding a 100 percent stake, while the parent company will retain its KOSPI listing.

The restructuring follows a "Life Science Infrastructure Company" vision drawn up ahead of the company's 70th founding anniversary next year. Under the plan, Boryeong will reorganize its capabilities into three specialized infrastructure pillars: production and R&D, space life science, and commercial operations.

Each pillar will serve as a distinct business axis. The production and R&D infrastructure will form the foundation for global operations, with the company positioning itself as an "Essential Pharma Company" responsible for the full lifecycle of globally essential medicines. The space life science infrastructure will target strategic business, aiming to become an indispensable gateway for domestic and international companies pursuing space life science R&D. The commercial infrastructure will anchor domestic operations, with the goal of becoming the undisputed leader in South Korea's pharmaceutical industry.

The parent company, Boryeong, will focus on strengthening its R&D pipeline, upgrading products through combination formulations and dosage-form improvements, managing its own production, quality and regulatory affairs, acquiring and operating original brands, and providing global contract development and manufacturing services for essential medicines. The new subsidiary, Boryeong Pharma Solution, will independently operate as a domestic commercial platform — handling prescription drug marketing strategy, specialized sales execution, business development and retail functions.

Boryeong said structural constraints had long stemmed from its company-wide integrated operating model. Because investment needs across research, production and sales were coordinated at the corporate level, it was difficult to allocate resources independently around commercial priorities. The company also said its tendency to prioritize its own pipeline had limited its ability to select products based purely on market potential and sales competitiveness.

The new Boryeong Pharma Solution will have independent business planning and budget allocation authority, with unified accountability for the performance of deployed resources. The subsidiary plans to flexibly select an optimized product lineup driven by market demand, drawing on the expertise of specialized teams organized by disease area — including chronic conditions and oncology — and evidence-based marketing grounded in accumulated clinical data.

Through this approach, Boryeong Pharma Solution aims to add 42 new products to its sales portfolio by 2030 — 26 proprietary products and 16 externally sourced ones. The company envisions a virtuous cycle in which strong commercial capability combining Boryeong products and in-licensed items expands the portfolio, and the broader portfolio in turn strengthens sales competitiveness. The subsidiary will also feed post-launch sales performance and market demand data back to the parent company to inform product development and supply improvements.

The organizational and compensation structure will also be overhauled. Previously, sales staff were subject to the same company-wide human resources standards as research and production employees, limiting the ability to develop and reward talent in ways suited to sales roles. The new subsidiary will build a sales-specific HR system that deepens disease-area expertise and introduce what it described as an "industry-leading compensation structure" reflecting each employee's contribution by product. All employees in the sales, marketing and management support divisions subject to the spin-off will have their employment, length of service and legal status transferred in full to the new entity. Boryeong said it would hold on-site briefings and continue internal communication and feedback sessions to ensure a smooth transition.

Institutional safeguards have also been put in place to head off concerns about harm to ordinary shareholders from the physical spin-off and to prevent any controversy over a so-called split listing. Chief Executive Officer Kim Jeong-gyun said the launch of a specialized commercial entity was "about focusing on what each side does best in order to grow bigger," adding that the company had "absolutely no plans" for a future sale or separate listing of the subsidiary, whether raised internally or externally. Kim said Boryeong would "grow it together as a core growth engine, as a wholly owned subsidiary in which Boryeong holds a 100 percent stake."

Boryeong Pharma Solution made clear it has no plans to apply for a preliminary listing review within the next five years. Furthermore, Article 15 of the new subsidiary's articles of incorporation explicitly codifies the principle of remaining unlisted and the procedures for protecting parent company shareholders. Even after five years have elapsed, the listing process may only proceed if the parent company notifies its approval following procedures in accordance with relevant laws and financial authority guidelines.

The process also requires application of the "3 percent rule," which caps the voting rights of the largest shareholder and related parties at 3 percent at an ordinary shareholders' meeting of the parent company. Applying the rule based on the shareholder register as of the end of June 2026, the largest shareholder's effective voting stake would fall from 64.9 percent (55.69 million shares) to 8.4 percent (2.52 million shares), while the voting weight of ordinary shareholders — foreign investors, institutional investors and individuals — would surge from 33.2 percent (28.44 million shares) to 91.6 percent (27.39 million shares), making it impossible for the largest shareholder to pursue a listing unilaterally.

Under the key schedule for the spin-off process, the shareholder record date falls on Sept. 30, followed by an extraordinary shareholders' meeting on Oct. 28 to approve the spin-off plan. Shareholders opposed to the split may exercise appraisal rights. Eligible shareholders are those registered in the shareholder register as of Sept. 30 who meet the statutory acquisition requirements by Wednesday and vote against, abstain or are absent at the shareholders' meeting.

The planned purchase price per share is 8,924 won. It was calculated as the simple arithmetic average of the volume-weighted average share prices over the two months (8,668 won), one month (9,011 won) and one week (9,092 won) preceding the day before the board resolution date, in accordance with the Capital Markets Act. The advance notice of opposition period runs from Oct. 13 to Oct. 27, and the appraisal rights exercise period runs from Oct. 28 to Nov. 17. Purchase proceeds are expected to be paid by Dec. 17. However, if the total amount of appraisal rights exercised exceeds 50 billion won ($37.2 million), the board may resolve to withdraw the spin-off.

CEO Kim Jeong-gyun said the launch of Boryeong Pharma Solution as a specialized commercial entity was "about focusing on what each side does best in order to grow bigger," and that the company had "absolutely no plans" for a future sale or separate listing of the subsidiary, whether raised internally or externally.

Kim added that the company would "grow it together as a core growth engine of Boryeong, as a wholly owned subsidiary in which Boryeong holds a 100 percent stake," and said he intended to "compete on the strength of sales and marketing expertise, build a company that attracts the best sales and marketing talent, and make it the driving force for becoming the undisputed No. 1 in South Korea's pharmaceutical industry."


silverpaper@heraldcorp.com