South Korea’s SK Group Makes Biotech Push With $1.3 Billion IPO Of Covid Vaccine Unit

SK Group, one of South Korea’s massive, family-controlled businesses known as chaebol, is expected to list its vaccine making unit, SK Bioscience, this week on the Korea Stock Exchange. SK Bioscience, which produces Covid-19 vaccines in Korea, could raise up to $1.33 billion, which would be the biggest Korea IPO since 2017.

“We have strengthened our leadership in the domestic market and built up our capacity to advance into the global market, while continuously pursuing a premium vaccine development strategy based on innovative technology,” an SK Group spokesperson said in an emailed statement.

The IPO of SK Bioscience is the latest push by Korean billionaire Chey Tae-won’s SK Group—which is known for its telecom, chemicals, memory chip and electric vehicle battery businesses—to expand into another hot market: Biotech.

SK Group’s biotech expansion has been fueled mainly acquisitions, investments in R&D and IPOs. The 2001 acquisition of South Korea-based Dongshin Pharmaceuticals, a vaccine R&D joint venture launched four years later and the 2012 construction of a vaccine center were the “foundations” for SK Bioscience’s growth, the SK Group spokesperson said.

SK Group, South Korea’s third-largest conglomerate by sales after Samsung and Hyundai, added to its weight in the medical field when it took biotech subsidiary SK Biopharmaceuticals public in July last year. The company raised $800 million and its shares soared 30% on its debut.

The listing of SK Bioscience, SK Group’s latest biotech push, comes as the company agreed to produce Covid-19 vaccines for AstraZeneca and Novavax in Korea. In November, SK Bioscience received regulatory approval to begin human clinical trials of its own coronavirus vaccine.

“Investors have been waiting for this IPO, as SK Bioscience has reached a series of Covid-19 vaccine manufacturing deals with global pharmaceuticals,” says Jung Won Shin, senior reporter based in Seoul focused on pharmaceuticals for research firm Informa. Shin calls SK Bioscience a “key distributor” of Covid-19 vaccines in the home market and calls that status “a positive factor” ahead of the IPO.

Conglomerates of SK Group’s scale can nurture new subsidiaries, including pharmaceutical companies, by sharing management talent, distribution channels and promotions across business units, says Timothy Hwang, CEO of Washington-based data and media company FiscalNote.

The global pharmaceutical manufacturing market was worth $324 billion in 2019 and is expected to grow at a 13.74% compound annual growth rate from 2020 to 2027, market analysis firm Grand View Research forecasts.

Samsung, South Korea’s largest conglomerate, had called biopharmaceuticals one of its five future engines of growth more than a decade ago. Its contract drug-manufacturing arm Samsung BioLogics went public on the domestic exchange in 2016.