An Jae-yong, President of SK Bioscience, "2.4 Trillion Won Investment Over 5 Years... Sufficient Financial Capacity"

SK Bioscience will make a large-scale investment of 2.4 trillion KRW over the next five years. This amount, which is five times the investment made in the past five years, will be used for business expansion such as research and development (R&D) and mergers and acquisitions (M&A), with the goal of becoming a top-tier company in the vaccine and bio sectors. The investment funds will be secured through existing cash reserves and external financing.

Ahn Jae-yong, President of SK Bioscience, is making a presentation at a press conference held at the Korea Press Center on the morning of the 28th.
[Photo by SK Bioscience]

On the morning of the 28th, SK Bioscience President Ahn Jae-yong announced this plan at a press conference held at the Korea Press Center in Jung-gu, Seoul. The specific detailed strategies include ▲expanding overseas business ▲strengthening the vaccine business ▲securing new platforms ▲expanding endemic (periodic infectious disease outbreaks) response portfolios and infrastructure.

Of the 2.4 trillion KRW investment, half, or 1.2 trillion KRW, will be allocated to R&D. The remaining 1.2 trillion KRW will be used for facility investment and M&A funds. Specifically, about two-thirds of the R&D expenses will be covered by internal funds, and the rest will be supported by organizations such as the Bill & Melinda Gates Foundation. In the facility sector, approximately 300 billion KRW will be invested in building the Songdo Global R&PD Center, and about 200 billion KRW will be used to expand the Andong plant. Of the remaining funds, 500 to 600 billion KRW will be used for acquisition capital.

Funds needed for future investments will be raised through internal cash reserves and external investments. According to President Ahn, SK Bioscience currently holds about 1.36 trillion KRW in cash, with a debt ratio of around 20%. They also plan to raise funds through external investments. As part of promoting glocalization by establishing production bases by region, investments will be received from the respective countries. President Ahn stated, "Although the current financial market conditions are unfavorable, once the situation improves, we expect to have more than 3 trillion KRW in financing capacity," adding, "Half of the investment cost will be accounted for as R&D expenses on the income statement."

It is expected to take about three years for the investment to yield a certain level of results. President Ahn said, "We anticipate recording losses for about three years due to this investment. After three years, we expect to produce results." He also predicted that this investment would achieve an average annual return of over 14% by 2033.

He also hinted at the possibility of additional funding for future M&A or pipeline expansion. President Ahn said, "Since we have many plans, investments exceeding 2.4 trillion KRW are definitely possible," adding, "We will respond flexibly depending on the situation." He further explained, "SK Bioscience has so little debt that it can be considered debt-free," and "the amount could increase through additional fundraising."

Costs for the glocalization project will also be covered through joint ventures (JV) with local governments and companies. The glocalization project involves transferring SK Bioscience’s vaccine capabilities to overseas governments and partners to establish production infrastructure tailored to each region. President Ahn explained, "Building a vaccine factory costs about 300 to 500 billion KRW, but the local government provides the land or cash, and SK Bioscience is recognized with equity for technology export or invests a certain portion of cash." Regarding the JV’s equity structure, he said the local government will be the major shareholder, and SK Bioscience will hold about 30 to 40% of the shares.

However, given the aggressive scale of SK Bioscience’s investment, there are evaluations that operating profit will be negatively affected for a certain period. Park Byung-guk, a researcher at NH Investment & Securities, commented on the investment plan, saying, "Due to aggressive investment execution for growth, operating expenses are expected to worsen compared to previous levels," and diagnosed, "The company is undergoing growing pains to establish itself as a mid- to long-term global vaccine developer and manufacturer."

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