After being hit by a fake herb scandal last year, Naturalendo Tech aims to rebuild its reputation from scratch.

The Kosdaq-listed firm lost more than 1 trillion won ($904 million) in market capitalization last year, when the Korea Consumer Agency claimed it had detected fake ingredients in the firm’s best-selling product, EstroG-100. The product was selling in countries including the United States, Canada and Australia. The agency claimed nearly 90 percent of similar products in the domestic market do not contain ingredients extracted from Cynanchum wilfordii, a medical herb proven to be helpful in relieving menopausal symptoms, including insomnia, dizziness and depression. Instead, they had ingredients from Cynanchum auriculatum royle, an herb unauthorized for medical use. 


A prosecutorial investigation followed which in April 2015 concluded with dropping the charges against the company, saying that there was no evidence that the firm intended to cheat consumers. A supplier of the ingredients who disguised some of them grown in China as homegrown was prosecuted without detention.

“Consumers are still positive about the efficacy of Cynanchum wilfordii,” a company spokeswoman said. “After the scandal, management of the ingredient has been stricter and we will regain market trust. The newly issued bonds will be used to rebuild the company’s reputation and consumer trust toward the product.”

The company last week also named Jang Hyun-woo as the new CEO to lead the firm. Jang joined the firm as legal chief in 2013.

“Based on the proven effectiveness of the ingredient and patent competitiveness, I will pay more attention to marketing genuine Cynanchum wilfordii,” Jang said in a statement. “I will also normalize the global reputation of the ingredient, fulfilling a goal to win approval from the EU within the year.”

Established in 2001, Naturalendo Tech won approval for sales of EstroG-100 from the Korean Food and Drug Administration and the US Food and Drug Administration in 2010, and from the Canadian Natural Product Number in 2011.

Last week, the Kosdaq-listed herbal medicine-maker issued convertible bonds worth 5 billion won at the maturity interest rate of 3 percent, slated for conversion on Aug. 31, 2017, in private offering to finance its operations last Tuesday.

Naturalendo Tech’s shares were traded at 17,600 won on Monday, up 1.15 percent from last Friday. Its market capitalization stood at 341.8 billion won, the 120th largest on the Kosdaq.

The firm’s market value peaked at 91,200 won last April. After the scandal broke out, the price nosedived to 8,550 won following month. The firm obtained around 25 billion won worth operating profit as of 2014, but faced a loss of around 11 billion won last year. It is narrowing the deficit to 2.3 billion as of June.

“The changes made recently would have positive influence on the stock value, we hope,” said a senior manager at the company.

Analysts who track the biomedicine industry dropped Naturalendo Tech from their watch lists last year in the face of the scandal, but some are showing interest again recently as the company takes moves for revival, according to one who declined to be named.

This year will be critical for the company to rebuild its market trust not only at home but also abroad, since it is accelerating moves to expand into foreign markets.

Last month, the company announced it will start supplying its flagship EstroG-100 to Geneian Pharmed, the largest Iranian pharmaceutical provider, making its first inroads into Middle East.

It won approval for the product’s ingredients from Iran’s Ministry of Health in January.

A total of 35,000 sets of EstroG-100 have been shipped out to Iran, which are scheduled to hit the local market in the fourth quarter.

Naturalendo Tech had signed another contract with Mina Pharm, an Egyptian pharmaceutical firm in January to supply the ingredient, raising expectations about its penetration into the North African region.

By Song Su-hyun  (song@heraldcorp.com)

This is the 21st in a series of articles analyzing major companies by market capitalization traded on the tech-heavy Kosdaq market. -- Ed