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Lotte Group Chairman Shin Dong-bin (left) presides over an executive meeting Lotte Group is preparing to kickstart its biopharmaceutical business as a contract development and manufacturing company (CDMO) by building a new plant in South Korea and expanding its facility in the US, chief executive of Lotte Biologics Co. said earlier this week.The retail-to-chemical conglomerate made its foray into the biopharmaceutical area last month, after acquiring Bristol Myers Squibb’s (BMS) biologics plant in Syracuse in the state of New York for $160 million.“We're considering building a mega plant at home for up to 1 trillion won ($782 million),” Lotte Biologics CEO Lee Won-jik said during the 2022 BIO International Convention in San Diego.“We’re now in discussions with local governments in Songdo and Osong to build a plant.”Songdo is 40 km west of Seoul. Osong in North Chungcheong Province, 110 km south of Seoul, is home to the country’s only bio-health science complex.The size and timing of the plant construction have not been determined yet. Lotte Biologics CEO Lee Won-jik, also known as Richard Lee SYRACUSE PLANTRegarding the Syracuse facility, Lotte will spend an additional 100 billion won to transform the former BMS production line into a CDMO facility.Lee, also known as his English name Richard Lee, hinted at the expansion in the US plant that has a production capacity of 35,000 liters a year, similar to the 30,000 liters of Samsung Biologics Co.’s first plant in Korea. The former executive of Samsung Biologics, the world’s largest contract manufacturing organization (CMO), took over as CEO of Lotte Biologics, launched last week.“Of the 330,000-square-meter land (of the Syracuse plant), only 66,000 and 99,000 square meters are being used as a production facility. We can expand its production line there.”Specifically, the Syracuse plant might be used for the contract manufacturing production of mRNA, a type that uses a copy of a natural chemical called messenger RNA for protein production, as well as cell and gene therapies. Lotte expects the company will be able to win orders as a CDMO from the second half of next year.PRODUCTION CAPACITYIndustry watchers said that Lotte’s CDMO plant to be built in South Korea will likely have a production capacity of more than 200,000 liters per year, about six times bigger than that of BMS’ plant in Syracuse. The estimate is based on Samsung Biologics’ capacity of 180,000 liters at its third plant in Songdo, South Korea, into which Samsung had injected about 800 billion won.By comparison, Celltrion Inc. one of the country's leading biopharmaceutical CMO, has a 190,000-liter capacity.In total, Samsung is one of the world’s three biopharmaceutical companies with over 300,000-liter capacity, along with Switzerland-based Lonza and Germany’s Boehringer Ingelheim.China's WuXi Biologics is rapidly boosting capacity to catch up to global rivals. Biopharmaceutical products refer to drug products manufactured by using biological sources, or extracted from them. Lotte Group Chairman Shin Dong-bin (left) at Lotte Chemical's exhibition of eco-friendly products on May 24 (Courtesy of Lotte Chemical) The world’s biopharmaceutical market is estimated at $360 billion, or 40% of the total pharmaceutical market. The biopharmaceutical sector is expected to grow by an annual average of 10% through 2026.Lee's remarks, made in his second week as CEO, came shortly after the parent Lotte Group unveiled its largest-ever investment plan of 37 trillion won for the next five years. The group prioritizes biopharmaceutical and mobility areas for the new investment to join Samsung Biologics, Celltrion and SK Bioscience Co. in the country's CMO market.Meanwhile, SK Bioscience, the biopharmaceutical arm of South Korea’s SK Group, is seeking multi-billion-dollar mergers and acquisitions to expand its business from contract manufacturing to gene therapy development, Chief Executive Ahn Jae-yong said last March.By Jae-Young Hanjyhan@hankyung.comYeonhee Kim edited this article
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