LG Chem, which has built solid business portfolios, is accelerating efforts to raise its global standing to a global top-five chemical company.
LG Chem, which is now a top-10 company in the world, is hitting the accelerator to solidify such conventional basic and IT materials as the EV battery segment, which has seen an upsurge of late as well as to nurture new industries, including bio as future new growth engines.
In April, LG Chem acquired Farm Hannong. The company is now in the process of mergering with LG Life Sciences. These steps are in keeping with LG Chem’s strategies to ramp up a competitive edge in the conventional basic materials, EV battery and information electronics sectors, and build a balanced business portfolio comprising of bio, with the goal of raising its global standing to a global top-five chemical company.
In particular, the consolidation of LG Chem and LG Life Sciences is considered as optimal in order to tap the red biotechnology business in a quick and efficient manner.
LG Chem is forecast to see the EV battery business surpass 1 trillion won in sales his year. The figure will likely top 1.2 trillion won, a source with the Korea chemical community said. In that case, it represents a 70 percent jump from 700 billion won in sales the company posted in 2015. It is the first time LG Chem will log 1 trillion won since 2009 when the company began mass production of EV batteries. The company has expanded winning orders riding on the steady growth of the EV car market, sources said.
LG Chem, which has built a production base connecting Ochang, Chungcheongbuk-do, Nanjing, China, and Holland, Michigan, has supplied tens of thousands of batteries. A survey on the competitiveness of global EV battery maekrs by the market survey company Navigant Research showed that LG Chem placed first in 2013 and 2015 in the world.
The company is predicted to see the EV battery business post 3.7 trillion won and 7 trillion won in sales in 2018 and 2020, respectively, thanks to the explosive growth of the global EV car market. The U.S. investment bank Merrill Lynch forecast that the global EV car market will balloon to $32 billion in 2020, about triple surge from $11 billion in 2015. The EV battery business has emerged as one of LG Chem’s mainstay businesses. Announcing its 3rd quarter business performances, Kim Jong-hyun, head of LG Chem EV Battery Business Division, said the EV battery business has changed to one of must-do businesses. He went on to say that EV battery prices will fall due to cheaper material prices, and they will see their capacity rise instead of the downgrading of some functions.
LG Chem strives to expand the bio business through the merger with LG Life Sciences. In particular, the company is targeting the red biotechnology segment, comprising of the prevention of diseases, diagnostic agents, and new drugs. The global red biotechnology market, predicted to grow at an annual average rate of 5 percent is projected to surge to 140 trillion won in 2020.
LG Chem’s merger with LG Life Sciences will likely allow the company to raise funds for massive investments to lead the red biotechnology segment, sources said.
“LG Life Sciences is implementing projects to produce such innovative new drugs as stem cell, diabetes and premium vaccines.” an LG Chem official said. If LG Life Sciences expands a pipeline of new drug candidates to 10 to 20 on top of LG Chem’s massive investments, he said, chances are high the merged company will likely make strides down the road.
LG Life Sciences has maintained steady growth thanks to its solid R&D capabilities in bio drugs and synthetic medicines. The company has a solid profit-earning business portfolio as it saw the cumulative operating profit rate stand at 9.8 percent in the first three quarters of this year.
_lg 화학 배터리.jpg)
LG Chem is in the process of merging with LG Life Sciences to build a balanced business portfolio comprising of bio, with the goal of raising its global standing to a global top-five chemical company. (Photos: LG Chem)
