Seoul: Celltrion Inc., a leading South Korean biopharmaceutical company, has announced its selection as the preferred bidder to acquire a biopharmaceutical manufacturing facility in the United States. This strategic move aims to mitigate the potential impact of the U.S.' evolving tariff scheme, which includes a 25 percent tariff on South Korean imports set to take effect soon.
According to Yonhap News Agency, the U.S. government is poised to implement reciprocal tariffs on major trade partners starting Friday, with several countries reportedly attempting last-minute negotiations for lower rates. Celltrion's decision to invest in an existing U.S. production facility, rather than constructing a new one, is seen as a strategic response to these impending tariff changes. During an online press conference, Celltrion Chairman Seo Jung-jin described the acquisition as a "fundamental solution for hedging tariff risks."
Seo highlighted previous steps taken by the company, such as preemptively shipping two years' worth of inventory to the U.S. and expanding local contract manufacturing organization (CMOM) contracts. The company plans to conduct due diligence on the facility before proceeding with a final agreement, aiming to finalize the deal within the year.
The targeted facility is a large-scale, FDA-approved drug substance manufacturing site located in a major U.S. pharmaceutical hub. It complies with current good manufacturing practice (cGMP) regulations and has a proven track record in producing treatments for cancer and autoimmune diseases. However, Celltrion has not disclosed the name of the U.S. company operating the plant or the exact value of the acquisition.
Seo mentioned that Celltrion plans an initial investment of 700 billion won (approximately US$503 million) for the acquisition. Depending on market demand, the company is considering an additional investment ranging from 300 billion won for a small-scale expansion to 700 billion won for a large-scale expansion.
In the context of U.S. drug pricing reforms, Seo noted that high prices are not primarily due to pharmaceutical companies but are driven by inefficiencies in the distribution system. While Celltrion is not directly affected by the recent executive order signed by U.S. President Donald Trump, which benchmarks domestic drug prices against international counterparts, the risk of potential tariffs remains a significant concern influencing the company's investment decision.
Celltrion has been actively expanding its global biosimilar portfolio, with plans to commercialize 22 biosimilars by 2030 and initiate clinical trials for 13 original drugs by 2035. The company has revised its financial targets for the year, adjusting its operating profit goal to 1.5 trillion won and sales to between 4.5 trillion and 4.6 trillion won, in light of costs associated with its upcoming merger with Celltrion Healthcare in 2024.