Tariff Risk Expected to Be Resolved for Future Product Lineup in the U.S.
Production Capacity Can Be Expanded to 1.5 Times That of Songdo Plant 2
The plant that Celltrion is seeking to acquire is a large-scale drug substance (DS) cGMP manufacturing facility owned by an undisclosed global pharmaceutical company. Detailed information regarding the target company, including its name, will remain confidential until the signing of the main contract, which is expected to take place in early October, in accordance with mutual agreement.
The plant is reportedly located within a major pharmaceutical industry cluster in the United States. It is also known to have produced key biopharmaceuticals such as anticancer drugs and treatments for autoimmune diseases for several years.
Once the acquisition is finalized following confirmatory due diligence, Celltrion is expected to resolve the risk of U.S. pharmaceutical tariffs. This move is part of the comprehensive tariff response plan presented by Celltrion Group Chairman Seo Jungjin during a meeting in May. In the short term, Celltrion has already transferred two years’ worth of inventory to the United States and expanded contracts with local contract manufacturing organizations (CMOs) as part of its short- and mid-term strategies to address tariffs. With the completion of the local plant acquisition, which is the fundamental solution to tariff risk hedging, Celltrion anticipates being free from all potential future tariff risks.
If the final acquisition process is completed, Celltrion will be able to produce its main products sold in the United States directly at the local facility. Currently, 50% of the cGMP facility’s capacity is under CMO contracts, allowing for exclusive production of the target company’s biopharmaceuticals for five years, which means immediate revenue generation after the acquisition?a significant advantage. As a result, investment recovery is expected to proceed rapidly. The remaining 50% of the facility will be used to manufacture Celltrion’s major products currently sold in the U.S. market.
Celltrion also plans to immediately begin additional expansion, taking into account trends in U.S. pharmaceutical sales and the timeline for new product launches. Once the expansion is complete, production capacity can be increased to 1.5 times that of Celltrion’s Songdo Plant 2. By expanding local production capacity, Celltrion aims to strengthen its responsiveness to the local market and ensure that its upcoming new product lineup for the U.S. market is also shielded from tariff exposure at an early stage.
Once facility expansion is completed, it is expected that the local plant will be able to handle the entire production cycle for pharmaceuticals supplied within the United States, including not only DS but also drug product (DP) manufacturing and packaging logistics. Celltrion has already established a local sales network, and by manufacturing directly, the company expects to improve cost efficiency and reduce logistics expenses, thereby strengthening its competitiveness through lower cost ratios.
Additionally, Celltrion anticipates that acquiring the local cGMP facility will significantly reduce both the time and investment required compared to new construction. The company’s strategy is to efficiently establish a local business ecosystem encompassing research, production, and sales in the United States, which is the center of the global pharmaceutical market.
A Celltrion representative stated, “Upon completing this plant acquisition, Celltrion will secure an optimal facility in the U.S. with both economic and business viability, and we expect to completely resolve U.S. tariff risks in the shortest possible time. As this will provide an opportunity to accelerate market share growth for our major products in the U.S., we will do our utmost to seize this chance and achieve a quantum leap.”
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