[THE INVESTOR] German pharmaceutical giant Boehringer Ingelheim is emerging as the favorite candidate to acquire Korea’s 10th largest drug maker CJ Healthcare, bankers with direct knowledge of related developments told The Investor on Nov. 14.

“This is very much a possibility, given Boerhringer Ingelheim’s growing interest in Asia,” said one of the sources, declining to be identified. 

In response, Boehringer Ingelheim denied it is planning to buy the Korean company. “I confirm that there is no interest from Boehringer Ingelheim in purchasing CJ Healthcare,” Reinhard Malin, a PR official at the German pharma firm told The Investor via email.

The German firm expanded its biologics contract manufacturing business in China by opening a US$77 million facility in Shanghai in May. It also entered into a collaboration and licensing agreement with MiNA Therapeutics, part of the Japanese Sosei Group, this month for the development of novel treatment approaches for fibrotic liver diseases.

The CJ Healthcare acquisition deal is valued at over 1 trillion won (US$892 million), based on estimates of investment banks when the firm pursued an initial public offering last year. It recorded an operating income of 67.9 billion won and 520 billion won in sales last year.

Intravenous solutions including saline account for the lion’s share of CJ Healthcare’s revenues. It currently dominates the domestic pharma market with rivals like JW Pharmaceutical, and is also well-known for hangover cures.

According to market watchers, however, investor appetite may not last long for the firm, despite plans to launch its first novel drug Tegoprazan, a treatment for gastroesophageal reflux disease, next year.

“Major pharma firms are already equipped with the necessary infrastructure for novel drugs. They won’t be interested in buying CJ Healthcare which heavily relies on generic products rather than new therapies,” a source said.

As regards tangible assets, CJ has three production sites in Osong and Daeso in North Chungcheong Province, as well as in Icheon, Gyeonggi Province. Its Osong plant, which was completed in 2010, manufactures drug products including oncology treatments. The Daeso plant produces intravenous solutions, while the Icheon site makes biologic therapies.

Meanwhile, in a letter to shareholders on Nov. 13, CJ Healthcare CEO Kang Seok-hee confirmed that the company’s sale process is underway.

“We plan to select preferred bidders by early December to begin due diligence and start negotiations in January, but there is a possibility that the schedule could change,” Kang wrote.

Even if the sale is decided, the company’s current and future business operations will continue, and all employees will be retained, he added.

CJ Cheiljedang, food business of CJ Group, had launched the pharmaceutical affiliate in 1984 through acquisition of local companies. CJ Healthcare was split-off in 2014.

By Park Han-na (hnpark@heraldcorp.com)