[Edaily YU JIN-HEE Reporter] #HEM Pharma Inc., a company specializing in microbiome healthcare, is accelerating the establishment of a key production hub targeting advanced global markets, including the U.S., after raising substantial funds. This move is seen as a preemptive expansion of production capacity in response to a steady stream of large orders from its global partner, Amway.

HEM Pharma Inc. announced on the 18th that it will construct a new Sejong Plant No. 2 following the completion of the subscription for its second series of private convertible bonds (CB), totaling 54 billion won, with participation from major domestic institutional investors, including the National Growth Fund. Following the completion of Sejong Plant No. 1 in 2023, the company plans to invest 27 billion won to build Plant No. 2.

This investment is a measure to meet the demand from large-scale orders already secured. HEM Pharma Inc. has secured approximately 9.3 billion won in pre-orders from Japan this year for “MyLab,” a customized healthcare solution with no refund policy. Combined with the first official order of approximately 4.6 billion won for its global new product “Nutrilite Probiotics,” confirmed orders alone have already exceeded last year’s total annual revenue (approximately 13 billion won).

Last June, the company received a formal purchase order (PO) for the new probiotic product from “Access Business Group,” Amway’s global supply chain subsidiary. The order, valued at approximately 4.6 billion won, represents the initial supply volume for the product’s launch in the Korean market. The product will be launched in the domestic market this September through Amway Korea, and full-scale production has already begun.

HEM Pharma Inc. brought forward the construction schedule to prevent potential supply bottlenecks that could arise upon entering the U.S. dietary supplement market (valued at approximately 95 trillion won), which is projected to grow at an average annual rate of 5.8% through 2031. Following approximately three years of technical due diligence and quality verification, the Sejong plant—which has obtained Good Manufacturing Practice (GMP) certification—will be exclusively responsible for producing volumes for the existing global supply chain.

Joseph Ji, CEO of HEM Pharma Inc., explained, “We confirmed through pre-orders from Japan that demand for customized probiotics increases in markets with higher income levels and greater willingness to pay for health services,” adding, “Since our structure ensures that supply increases in tandem with the expansion of sales regions, regional expansion directly translates into sales growth.”

He continued, “We are in discussions to expand our launch regions to the U.S. and Japan starting in 2027, and we are also coordinating additional orders within this year,” adding, “This is part of our strategy to proactively respond to requests from global partners for increased supply and secure a core production base.”

This convertible bond (CB) issuance was led by GVA Asset Management (12 billion won), which specializes in mezzanine investments. The National Growth Fund also contributed 5 billion won through a sub-fund managed by MIRAE ASSET SECURITIES. Timefolio Asset Management (5.5 billion won), Korea Investment & Securities (5 billion won), and A-One Asset Management (5 billion won) also participated.

Notably, all participating institutions accepted a fixed conversion price (43,912 won) without the “downward refixing” clause (adjustment of the conversion price due to a decline in the stock price), which is typically required. The number of new shares issued was finalized at 1,229,732 shares (representing a 14.55% stake). Conversion rights can be exercised one year after payment, and early redemption rights (put options) can be exercised two years after payment, thereby reducing the burden of short-term selling pressure (overhang). Since the repricing clause for the first series of convertible bonds was also removed by unanimous agreement last June, the risk of gains or losses from derivative instrument valuation has been eliminated from the financial statements.

None of the 54 billion won raised will be used to repay existing debt. The funds will be allocated to facility investments at the Sejong plant (27 billion won), expansion of analytical production capacity (CAPA) and automation (7.5 billion won), and working capital (15.5 billion won). The remaining 4 billion won will be set aside to exercise the call option on the first series of convertible bonds to stabilize management control.

The 7.5 billion won allocated to the analytics division will be used to build automated equipment for the entire microbial analysis process. The “MyLab Plus” analytics service, launched in Japan last May, achieved 90,000 cumulative contracts (approximately 9.3 billion won) in its first year. Following 70,000 orders (approximately 7.2 billion won) in February, an additional 20,000 orders (approximately 2.1 billion won) were received in May.

Since the Gwanggyo Research Institute in South Korea is solely responsible for handling analysis demand from Japan, the company plans to significantly expand its processing capacity through these automated facilities. The company aims to more than double its processing capacity by the end of 2027 compared to current levels and increase it more than fivefold by the end of 2028 in line with its expansion into global markets, including the United States. The strategy is to reduce the per-test analysis cost and maximize operating leverage through these measures.

Of the operating funds, 7.5 billion won will be invested in the enhancement of “BiGNAL,” an AI-based autonomous health management platform that serves as a new growth engine. This service uses AI to analyze biosignals from a toilet-mounted DEVICE to provide personalized solutions. The company recently signed a pilot agreement with the Celltrion(068270)and has begun a demonstration project targeting its employees.

CEO Ji stated, “The massive participation of high-quality institutional investors, combined with funding from policy funds, is clear evidence that the company’s fundamentals and global growth potential have earned the trust of both the public and private sectors.” He added, “We will break ground on our second Sejong factory within this year, aiming to begin operations in the second half of 2027, and achieve solid performance in the global market.”