Hanwha to offload pharmaceuticals

Hanwha Chemical, a major chemical company under Hanwha Group, is set to sell pharmaceutical subsidiary Dream Pharma in a bid to improve its financial health and focus on its core businesses of chemical materials and solar power.

The affiliate of the nation’s 10th-largest conglomerate said in a regulatory filing after stock market closed Wednesday that it is considering selling its stake in Dream Pharma. According to industry sources, Hanwha Chemical already picked Citigroup Global Markets Korea Securities as a manager of the sale and is preparing to offload the generic drug producer.

Industry insiders say the sale is part of Hanwha Chemical’s effort to improve its finances and focus on its core business portfolio. Hanwha Chemical bought a 100 percent stake of Dream Pharma from its mother company for 332.1 billion won ($308 million) in 2009.

Hanwha Chemical has been expanding in recent years particularly in the solar energy business, acquiring Hanwha SolarOne and Hanwha Q Cells. But with the slump in the economy, the company has been in the red since 2012. Last year, it had operating losses of 83.9 billion won and a debt-to-equity ratio of 187.3 percent.

Dream Pharma hasn’t been a big help, and has even tarnished the group’s image. The company, which was founded in 1995 as Hanwha Corporation’s pharmaceutical unit, had sales of more than 170 billion won in 2009, but after a tax investigation and a corruption scandal regarding rebates on medicine supplies, the company has been deteriorating. In 2012, its sales were cut in half to 85.5 billion won and last year it had net losses.

Some analysts suspect that the sale of Dream Pharma is Hanwha Chemicals’ attempt to prepare some cash before it enters bidding for Dow?Chemical’s chlor-alkali business. The United States-based chemical giant in December said it would sell its chlorine operations as part of a restructuring of commodity chemical assets. Hanwha Chemical already picked Credit Suisse to look into its acquisition.

Hanwha Chemical recently has been focusing on its basics, the chemical materials business. Earlier this week, Hanwha L&C, an affiliate of Hanwha Chemical, announced it is planning to sell a construction materials division.

BY JOO KYUNG-DON [kjoo@joongang.co.kr]