The business holding company model is gaining attention as a strategy for improving management efficiency and securing new growth drivers. This approach goes beyond simple governance and management functions, allowing holding companies to engage directly in business operations to ensure stable cash flow and investment capacity.
According to industry sources, Dong-A Socio Holdings held a board meeting last month and resolved to absorb its 100% subsidiary, Dong-A Pharmaceutical, in a merger set for October 1. The merger will be conducted as a small-scale absorption without issuing new shares, meaning there will be no changes to the shareholder composition or ownership stakes of Dong-A Socio Holdings.
The purpose of this merger is to enable the holding company to directly secure stable cash flow from the group. By reintegrating Dong-A Pharmaceutical, which was separated during the transition to a holding company structure in 2013, the group plans to utilize the generated profits as investment resources. This move is part of a broader strategy to transition into a business holding company model that manages direct operations, new investments, and the acquisition of new growth drivers.
Dong-A Pharmaceutical is a key revenue source for the group. Last year, its sales reached 726.3 billion won, accounting for 50.8% of Dong-A Socio Holdings' consolidated revenue. In the second quarter of this year, sales were 228.2 billion won, with operating profit at 30.2 billion won, reflecting increases of 25.7% and 26.6%, respectively, compared to the same period last year.
To leverage the brand recognition and business infrastructure of Dong-A Pharmaceutical, the name of the surviving entity will be changed from Dong-A Socio Holdings to Dong-A Pharmaceutical. The company plans to expand investments across its existing businesses, including consumer healthcare, new drug development, and biotechnology.
Hanmi Science has taken the lead in establishing a business holding company structure. Since the appointment of CEO Kim Jae-kyu, the company has strengthened its new business development capabilities by creating a planning and strategy division and an innovation division, while also expanding its medical device and consumer health businesses based on synergies with its subsidiaries.
The company's performance supports its expansion efforts. Hanmi Science reported cumulative sales of 721.6 billion won in the first half of the year, a 7.6% increase from the same period last year, driven by balanced growth in its online pharmacy and healthcare businesses. Recently, it has broadened its portfolio by launching health supplements and dermocosmetic brands.
Industry experts believe the role of holding companies is evolving. While they previously focused on strengthening governance and managing affiliates, they are now expanding their functions to lead investments through direct business operations. In a pure holding company structure, reliance on dividends limits resource utilization, making the transition to a business holding company a strategic move to accelerate growth.
Although changes in drug pricing and increased government regulations may have some impact, the industry views these as strategic choices aimed at enhancing profitability, management efficiency, and new growth drivers rather than direct causes. An industry insider noted, "In the past, the focus was heavily on defending management rights, but now strengthening business competitiveness has become a more important goal. There is a possibility of increased organizational restructuring in various forms depending on individual company circumstances in the future."
* This article has been translated by AI.
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