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Korean Beauty Trends & Industry News: 24-01-17


Daewoong Pharmaceuticals Ventures into Cosmetics Industry with Acquisition of SD Biotechnologies, Aiming for 1 Trillion KRW in Sales

Daewoong Pharmaceuticals, a prominent South Korean company, has made a significant move by acquiring SD Biotechnologies, marking its entry into the cosmetics business and aiming to reach 1 trillion KRW in sales. Last month, Daewoong acquired 80 million shares (72.9% stake) of SD Biotechnologies, becoming its largest shareholder. This strategic move is seen as diversifying into the cosmetics sector following its food business.

SD Biotechnologies, known for its mask packs and a range of basic and color cosmetics, had seen booming sales due to exports to China, reaching revenues of 150 billion KRW. However, a decline in demand led to deteriorating profitability and eventual delisting last March. Daewoong's acquisition is expected to revitalize SD Biotechnologies and kickstart its cosmetic business performance.

Daewoong's own sales grew to 478.9 billion KRW last year, and it's projected to surpass 500 billion KRW this year for the first time. The success of this new venture into cosmetics, however, remains uncertain. Previously, Daewoong's ventures into hearing aids and health supplements did not yield significant results.

SD Biotechnologies' struggles were attributed to aggressive expansion into health supplements and the Chinese market. With this acquisition, Daewoong plans to improve sales and profitability and restructure SD Biotechnologies' management. This move is seen as a strategic step by Daewoong under the leadership of President Baek In-hwan to accelerate reaching its revenue goal of 1 trillion KRW.

Yet, the success of Daewoong's entry into the cosmetics industry is not guaranteed, with industry insiders noting the challenging market environment for pharmaceutical companies entering the beauty sector. The future of SD Biotechnologies' mask pack business as a core part of Daewoong's cosmetics lineup is particularly in focus. This acquisition presents Daewoong with various challenges, where the success of the cosmetics business will be crucial for its ambition to join the trillion KRW revenue club. The industry is closely watching Daewoong's next moves, starting from next month, which could influence the overall market.



Unauthorized Overseas Food and Cosmetic Purchasing Services Pose Criminal Risks

Last year, a significant number of cases in South Korea involving unauthorized business practices were identified in overseas purchasing services for food and cosmetics. Many were caught selling unregistered imported foods and items, as well as cosmetics brought into the country without proper registration.

According to the Korea Food and Drug Administration's (KFDA) Central Investigation Team, out of 391 cases in the food and pharmaceutical sectors, 123 cases (31.5%) involved unauthorized operations. Major violations included unregistered businesses for importing and selling food products, conducting internet purchasing services, and operating cosmetic responsibility sales without registration.

Many of these cases involved individuals who imported food and household items through direct overseas purchases and then sold them locally without registration. Similarly, cosmetics were imported and sold domestically without registering as a responsible sales business.

The KFDA warns that starting a business in the food and pharmaceutical sectors without adhering to the proper regulations could lead to criminal charges. They urge

businesses to thoroughly review and comply with relevant regulations to avoid legal repercussions. Detailed regulations can be found on the KFDA website, the Food Safety Country website, and the Imported Food Information Maru. This crackdown highlights the Korean government's commitment to regulating and monitoring the import and sale of foreign food and cosmetic products, ensuring consumer safety and market fairness.
Location: 한국

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