[헤럴드경제=손인규 기자]Due to difficult financial circumstances, including payment of model fees for the company’s celebrity advertisements, employee salaries were delayed by approximately 15 days. This is what recently happened at Dongseong Pharmaceutical, a mid-sized domestic pharmaceutical company.
According to the industry, Dongsung Pharmaceutical reportedly paid its employees’ September salaries on October 24th. Dongseong Pharmaceutical’s payday is originally the 10th of every month. The salary was delayed by about 15 days.
Former CEO Lee Yang-gu is known to have asked for understanding at an employee meeting on the 10th, which was pay day, as he will likely have to pay salaries later due to various expenses, including advertising fees.
An industry insider said, “If salary payment is delayed due to financial conditions, it means that the company’s situation is not that good.”
In fact, Dongseong Pharmaceutical’s recent performance is not good. Operating losses have continued over the past few years. From 2018 to 2022, it recorded a cumulative deficit of over 20 billion won. Although it succeeded in turning a profit with 600 million won last year, it again recorded an operating loss of 1.9 billion won in the first half of this year. Debt also continued to increase, with the cumulative deficit exceeding 85 billion won as of the first half of the year. On the other hand, advertising costs are steadily increasing. Dongseong Pharmaceutical, which spent 3.9 billion won on advertising expenses in 2019, has increased its expenses every year, reaching 6.9 billion won in 2022. The advertising expenses spent by Dongsung Pharmaceutical over the past five years amount to 20 billion won. The cost spent in the first half of this year was close to 2 billion won.
Dongseong Pharmaceutical’s main advertising model is actor Namgoong Min. Namgoong Min is advertising a number of over-the-counter drugs from Dongseong Pharmaceutical. Painkiller and anti-inflammatory drug ‘Loxo&Gel’, hair loss treatment drug ‘Minoxidil’, and hair dye ‘Herb’ are all Dongseong Pharmaceutical products that Namgoong Min appeared on.
Namgoong Min’s advertisement appearance fee is not exactly known, but as most of the dramas in which Namgoong Min appears are box office successes, the advertisement appearance fee is expected to reach hundreds of millions of won.
In addition to Namgoong Min, Dongsung Pharmaceutical also hired singer Taeyeon as the model for its brand ‘EZN’ in 2022. Since Taeyeon is a well-known celebrity, it seems likely that she would have paid a considerable amount of modeling fee.
Meanwhile, CEO Lee Yang-gu, who announced the salary delay, resigned on the 14th. Former CEO Lee is being tried on charges of providing illegal kickbacks to doctors in exchange for drug prescriptions, and was sentenced to one year in prison and two years probation in the first trial last March. When he was reappointed to the position of representative at the regular shareholders’ meeting held later, shareholders voiced concerns.
After leading the company for seven months, CEO Lee eventually resigned, and Na Won-gyun, who had been vice president, took over as CEO. The new CEO is the nephew of former CEO Lee. Former CEO Lee is currently the company’s largest shareholder with a 17.05% stake.
ikson@heraldcorp.com
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