BMS Completes Acquisition of Syracuse Plant
Commercial Production Begins 8 Months After Establishment
Considering Syracuse Expansion and Domestic 'Mega Plant' Establishment
[Asia Economy Reporter Lee Chun-hee] Lotte Group's foray into the bioindustry, identified as its next-generation growth engine, is finally taking off in earnest. Lotte Biologics, a contract development and manufacturing organization (CDMO) for biopharmaceuticals, has completed the acquisition of the Syracuse plant in New York State, USA, previously owned by Bristol-Myers Squibb (BMS). Not stopping there, the company has expressed its intention to expand production capacity, drawing industry attention to where the domestic plant will be established.
On the 3rd, Lotte Biologics announced that it completed all acquisition procedures for the Syracuse plant as of the 31st of last month and officially started operations as Lotte Biologics Syracuse Plant from the 1st of this month. This marks the successful completion of the $160 million (approximately 203.7 billion KRW) contract signed with BMS in May last year.
Eight months after officially launching Lotte Biologics, the company has completed the plant acquisition and is now at the starting line for full-scale operations. Typically, building a new plant and entering the CDMO market takes at least one year to reach commercial production, but Lotte Biologics has significantly shortened the entry time by acquiring an existing production plant with a capacity of 35,000 liters. Considering that cross-border asset transactions usually take more than a year, this achievement also represents a significant acceleration.
In particular, the company can expect stable revenue from orders, which is a key factor distinguishing the initial stage of CDMO companies. This is because BMS has agreed to entrust its existing production volume to Lotte Biologics. It is reported that a contract worth at least $220 million over three years has been signed. Starting this month, with about 80% utilization rate secured, the company can generate stable revenue immediately upon market entry. They are also continuously seeking additional orders by attending major pharmaceutical and bio events such as Bio USA and CPHI.
By retaining 99.2% of the Syracuse plant's employees, Lotte Biologics has also succeeded in securing human resources. The company plans to leverage the human resources who have gone through biopharmaceutical development, approval, and commercial production at BMS to strengthen competitiveness. Dr. Michael Hausladen, a former BMS employee and head of Lotte Biologics' US subsidiary, said, “The Syracuse employees welcome Lotte’s acquisition of the Syracuse plant and are excited about the opportunity to grow together with Lotte Biologics. We will do our best with the employees to achieve the goal of becoming a global top 10 CDMO company.”
Lee Won-jik, CEO of Lotte Biologics, also stated, “Based on the successful acquisition of the Syracuse plant, we will grow into a global CDMO company capable of providing innovative medicines to patients and achieving KRW 1.5 trillion in sales, a 30% operating profit margin, and a corporate value of KRW 20 trillion by 2030.”
With the acquisition completed, Lotte Biologics plans to expand the plant. Currently, the Syracuse plant’s production capacity is 35,000 liters, but only about 30% of the total site is in use. In addition to the existing drug substance (DS) production facilities, the company plans to invest an additional $70 million (approximately 89.1 billion KRW) to expand DS facilities and enter new fields such as drug product (DP) and antibody-drug conjugates (ADC), while also recruiting about 70 new employees.
Furthermore, CEO Lee mentioned that Korea is the most attractive location for the next production base after the Syracuse plant, and it is known that the company is considering investing about KRW 1 trillion domestically to promote a 'mega plant' (large-scale factory). Candidate sites under consideration include domestic bio clusters such as Songdo in Incheon and Osong in Chungbuk.
CEO Lee is scheduled to present the detailed vision related to this at the JP Morgan Healthcare Conference held in San Francisco, USA, from the 9th to the 12th (local time), where he will deliver a presentation on the Asia-Pacific (APAC) track. This will be the first time since the company's founding that they have been officially invited to present at the conference. On the afternoon of the 10th, he plans to introduce Lotte Biologics' CDMO business vision and mid-to-long-term business strategy.
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