[THE INVESTOR] Korean biotech firm Hugel has solicited the services of global consulting firm McKinsey & Co. on declining profits, according to sources on Jan. 4.
“Hugel has started receiving consulting services for fees of around 1 billion won (US$895,420),” one source told The Investor.
Hugel CEO Son Ji-hoon
The report was confirmed by a Hugel spokesperson, who noted it was “business as usual” and that Bain Capital commonly undertakes such procedures whenever it invests in a new company. When it recently sold off its stake in Carver Korea, it had also received consultation from McKinsey & Co.
The consulting firm, however, declined to disclose any further information, citing firm's policy.
Hugel’s earnings took a hit in the third quarter last year, with operating profit plunging 78.3 percent. It has called the profit plunge temporary, but analysts say that due to China’s crackdown on imports of botulinum toxin -- a primary export item for Hugel -- sales will be stagnant, with most of the demand coming from the domestic market.
Overall, however, market watchers were positive about the firm’s performance this year.
“Hugel is expected to climb out of the doldrums, with annual sales standing at 200.4 billion won and operating profit at 74 billion won,” said Shinhan Investment in a recent report.
Another concern for investors is the fluctuating stock price.
When Bain Capital announced that it would become the largest shareholder of the biotech firm by investing US$816 million to acquire a 40 percent stake last year, its stock price had soared. At the time of the acquisition in July, it hit 491,000 won, however, dropped to 274,400 won in November.
Hugel’s share price closed at 349,500 won on Jan. 4. Today, the stocks closed at 349,600 won.
Founded in 2001, Hugel is one of the leading botulinum toxin makers in Korea along with Medytox and Daewoong Pharmaceutical. The company currently exports its botulinum toxin product Botulax to 24 different countries including Japan and Thailand, while posting sales of 124.2 billion won in 2016.
By Song Seung-hyun (email@example.com