Jaehyung Park, CEO of HLB Pharmaceutical: "We Will Develop the Hyangnam Plant into HLB Group's 'Production Campus'"

Expansion of Production Capacity and In-House Manufacturing
Simultaneous Enhancement of Manufacturing Competitiveness and Profitability
Establishing a Group Production Hub Covering Commercial Production and Supply Chain

Jaehyung Park, CEO of HLB Pharmaceutical.

"We plan to develop the Hyangnam plant into a 'production campus' for the HLB Group."

Jaehyung Park, CEO of HLB Pharmaceutical, stated that the expansion of the Hyangnam plant is not merely an increase in production facilities but a core investment for the future growth of HLB Group.

The Hyangnam plant is regarded as a core foundation for HLB Pharmaceutical to move beyond being a mid-sized pharmaceutical company and become a top-tier pharmaceutical firm in Korea. The company explained that the expansion will significantly boost production capacity, and allow for a phased conversion of outsourced production into in-house manufacturing, thereby substantially enhancing manufacturing competitiveness. By raising production efficiency and cost competitiveness, and establishing a stable supply system, profitability is also expected to improve.

In the long term, HLB Group aims to expand the role of the Hyangnam plant as a key production base responsible for the commercial production of major new drugs and core products. The plan is to organically link the production capabilities currently dispersed among subsidiaries in order to improve the group-wide production efficiency and supply stability, as well as to build a 'production campus' that secures manufacturing competitiveness from drug development to commercialization. Based on this, the strategy is to foster the plant as a core manufacturing infrastructure underpinning the mid- to long-term growth of HLB Group.

The following is a Q&A session with Jaehyung Park, CEO of HLB Pharmaceutical.

Q1. What is the main reason for pursuing the expansion of the Hyangnam plant?

A. The construction of the new Hyangnam plant is driven by three major goals. First is to increase production capacity in response to continuous sales growth. HLB Pharmaceutical has recorded a compound annual growth rate (CAGR) of 38.3% over the past five years, ranking second among Korean pharmaceutical companies in terms of rapid growth. To prepare for future sales expansion and the launch of new products, the company determined that it was necessary to enhance production capacity.

The second reason is to improve profitability by reducing the ratio of outsourced production. Currently, about 45% of total sales come from products manufactured by external contractors. Once the new plant starts operating, these items can be produced in-house, which will strengthen cost competitiveness. Third, it is a strategy to establish a group-level production hub for major new drugs such as Rivoceranib in the future.

Q2. What is the rationale for carrying out a paid-in capital increase at this time, in relation to the plant expansion?

A. This paid-in capital increase is not just for new plant construction, but an investment to secure manufacturing competitiveness ahead of time, aligned with the company's accelerated growth.

HLB Pharmaceutical has enjoyed strong sales growth over the past five years, and with the upcoming launch of new products in mind, expanding production capacity could no longer be delayed. This expansion is a forward-looking investment for both current and future growth.

Q3. When the expansion is complete, what changes are expected in areas such as production capacity, quality, and production efficiency?

A. This expansion goes beyond boosting output; it aims to increase manufacturing competitiveness. The new plant is being designed to reinforce quality control systems in accordance with the latest GMP standards, which will allow for stable response to future regulatory changes.

Additionally, through process automation and larger production scale, we expect to reduce manufacturing costs and enhance both production efficiency and cost competitiveness.

Q4. What new business opportunities does HLB Pharmaceutical seek to secure through the Hyangnam plant expansion?

A. With the Hyangnam plant expansion, we will be able to fully implement growth strategies previously postponed due to limited production capacity.

Currently, HLB Pharmaceutical's production volume is only about 25–30% that of its main competitors, which has limited the expansion of new products and sustained growth. This expansion will make it possible to pursue new product development and a broader product portfolio that was previously constrained by production limits, providing a new growth engine for the company.

Moreover, increased production capacity will enable us to respond stably to market demand, reduce concerns about drug shortages, and establish a stable supply system. In the long term, we plan to utilize idle land at the Hyangnam site to transform it into a production base for new pharmaceuticals under development by HLB Group.

Q5. How does this expansion contribute to Rivoceranib's commercialization strategy and supply chain construction?

A. HLB Pharmaceutical aims to use the Hyangnam plant in the future as a commercial production base for Rivoceranib and other major new drugs developed by the HLB Group. This expansion is a preemptive investment to secure the necessary production infrastructure for that purpose.

Production of Rivoceranib will be decided after FDA approval and the completion of technology transfer procedures, and in the long term, the Hyangnam plant will be developed as a key production base ensuring a stable supply chain for the group's new drugs.

Q6. If the paid-in capital increase does not meet expectations, will there still be no problems with the expansion and investment plan for the Hyangnam plant?

A. The primary purpose of this paid-in capital increase is the construction of the Hyangnam plant. Plant construction costs are expected to be about 50 billion won. Even if the amount raised falls somewhat short of expectations, we believe plant construction will proceed smoothly without issues.

R&D investments will also be executed step by step according to the stage of development. With improved cash generation from business operations and our own resources, we plan to continue making medium- and long-term investments.

Q7. What is HLB Pharmaceutical's vision for five years after the completion of the Hyangnam plant?

A. Our goal is to establish HLB Pharmaceutical as the core manufacturing platform responsible for drug production throughout the HLB Group. The Hyangnam site covers approximately 33,000 square meters, and even after the new plant is built, roughly 23,000 square meters of idle land will remain, making phased expansion possible.

We plan to establish a production base for group flagship new drugs, including Rivoceranib, and develop the Hyangnam plant into the HLB Group's production campus.

Q8. What is the next goal for HLB Pharmaceutical following the expansion of the Hyangnam plant?

A. The expansion is the starting point for HLB Pharmaceutical to leap from being a mid-sized Korean pharmaceutical company to a leading player in the nation's pharmaceutical industry.

To broaden independent cash generation, we will continue to invest in the development of incrementally modified drugs, and also foster the long-acting injectable platform as a core growth axis. Based on this, our goal is to achieve technology export agreements with global pharmaceutical firms within the next five years.

Additionally, we plan to continuously broaden our business portfolio. These efforts cover expanding into fields such as the consumer healthcare division—which achieved sales of over 20 billion won in just three years since inception—as well as the pharmaceutical distribution sector acquired last year, and, in the future, the medical device business. Through such diversification, we aim to build a stable business structure capable of withstanding fluctuations in pharmaceutical industry profitability.

This content was produced with the assistance of AI translation services.