SEOUL - Five months after entering the healthcare industry, South Korea's Samsung Electronics is moving forward by signing a letter of intent to take over domestic medical equipment firm Medison Co.

Medison is a leading producer of diagnostic ultrasound systems, with a roughly 33 percent market share.

"We recently submitted a letter to take over Medison because it is seeking a new owner," Samsung Electronics spokesman James Jung told PharmAsia News, noting that the semiconductor giant is targeting a 40.94 percent stake put on the market by a private equity fund.

Samsung Electronics, a key affiliate of South Korea's leading business conglomerate Samsung Group, is a leading blue-chip stock on Korea's main KOSPI stock market. Samsung Electronics is one of the leading global producers of semiconductors and mobile telephones.

Samsung Among A Half Dozen Companies Bidding For Medison

The spokesman refused to give other details, but industry sources and local media are reporting that five or six companies including Samsung Electronics, KT&G and Japan's Olympus have filed letters with underwriter JP Morgan and a local Korean investment securities company.

Leading bidders are expected to be announced in early November.

Although Medison is known as South Korea's leading medical equipment maker, it has suffered financial difficulties over the last decade.

Medison official Steve Won confirmed that "several companies have submitted the letters," but said he doesn't have "any more information beyond press reports."

An expansion beyond Samsung Electronics' traditional stronghold of semiconductors and electronics products was first unveiled in May, when Samsung Group said it was set to enter the healthcare sector, particularly biosimilars and medical devices, with an initial investment of roughly $4.1 billion (Also see "Samsung Group Set To Enter Biosimilars Market With $1.9 Billion Investment" - Scrip, 17 May, 2010.).

Before that official announcement, though, Samsung Electronics had already launched a talent search for research and development experts, making South Korea's leading biosimilar companies, including LG Life Sciences, Celltrion and others increasingly wary (Also see "Korea's Samsung Electronics On Manhunt For Biosimilar Talent As Local Companies Keep Wary Eye On Competition" - Scrip, 26 March, 2010.).

Devices Safer Bet Than Biosimilars?

"It seems like the Samsung Group is trying to make Samsung Electronics a company similar to GE Healthcare [providing various kinds of healthcare services]," Chung Bo-Ra, a healthcare analyst at Daishin Securities, told PharmAsia News. "At this point, Samsung Electronics seems to be focusing more attention on the medical equipment sector than on biosimilars because it thinks medical devices will generate profits faster than biosimilars."

Chung expects Samsung to achieve its goals in the healthcare industry much easier than competitors because "it is already armed with hospital infrastructure."

Through its Samsung Medical Center, Samsung Group also has been gearing up to get a stronger foothold in the pharmaceutical industry through establishing connections with global players including Pfizer in a "whole genome" research partnership (Also see "Korea's Samsung And Pfizer In Genome Research Partnership To Fight Liver Cancer" - Scrip, 19 July, 2010.).

Samsung Medical Center, which operates two hospitals in Seoul and one more outside the capital, is one of the leading general hospitals in Korea.

- Peter Chang (p.chang@elsevier.com)

Korea's Samsung Electronics Hopes To Expand Healthcare Footprint By Taking Over Device Firm

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