Celltrion Group officially launched its contract development and manufacturing organization (CDMO) unit, Celltrion Bio Solutions, on the 17th. Jeong-jin Seo, chairman of Celltrion Group, noted that “the company will start operations for contract development (CDO) and clinical trial outsourcing (CRO) by 2025, and will begin construction of CDMO production facilities and laboratories.”
Chairman Seo said during an online press conference that "Celltrion Bio Solutions will provide comprehensive services for drug development from selecting new drug candidates to cell line and process development, clinical trial planning, regulatory document preparation, and commercial production," adding, "We will rapidly increase our market share by providing services based on cost competitiveness and customer-friendly policies."
Celltrion Group aims to advance from a biopharmaceutical (biologic drug) development and manufacturing corporation to a contract research and development manufacturing organization (CRDMO). CRDMO adds research functionality to the contract development and manufacturing organization (CDMO) that develops and produces biopharmaceutical manufacturing processes.
A CDMO is a business that develops and produces biopharmaceuticals on behalf of client companies based on their orders. This concept is similar to semiconductor foundries. Pharmaceutical and biotech corporations contract with CDMO companies to reduce expenses incurred in building production infrastructure and to enhance research and development (R&D) efficiency. CDMO companies also separately receive contracts for contract development (CDO) and contract manufacturing (CMO).
Chairman Seo explained that "Celltrion was the second largest CMO company after Switzerland's Lonza until the mid-2000s," and "even in the early 2000s, it was a CMO company on par with Lonza, and it has continuously engaged in business until now, thus possessing the capabilities and experience necessary to put the CDMO business on track."
Celltrion Bio Solutions was established as a 100% subsidiary of Celltrion. The corporate representative is Lee Hyuk-jae, senior vice president of Celltrion, who has extensive experience in product licensing, clinical trials, and production. The initial capital is 10 billion won. On the same day, Celltrion announced it would acquire 2 million shares of Celltrion Bio Solutions for 10 billion won.
The group plans to deploy large and small bioreactors at new production facilities beginning construction next year, and implement flexible production capabilities according to next-generation modalities such as antibody-drug conjugates (ADC), multi-antibody therapeutics, cell and gene therapies, and peptide new drugs. Chairman Seo stated, "We will increase automation rates and establish systems suitable for multi-product small-scale production."
Chairman Seo commented, "We will invest up to 1.5 trillion won of Celltrion Group's own funds for the initial facility construction and CDO service launch," adding, "We also plan to secure an additional investment of up to 1.5 trillion won from outside sources to expand next-generation modality facilities." He noted that overseas specialized research institutes will also be established in the U.S. and India.
According to market research firm Mordor Intelligence, the global biopharmaceutical CDMO market is projected to grow from approximately 24 trillion won (about $18.2 billion) this year to around 40 trillion won (about $30.5 billion) by 2029, representing an average annual growth rate of 10.9%. Below is a Q&A summary with Chairman Seo.
–What is the background for entering the contract research and development manufacturing (CRDMO) business?
"Until the mid-2000s, Celltrion was the second largest CMO company after Switzerland's Lonza. There were many requests from small biotech companies, both domestically and abroad, asking if we could provide contract services from development to clinical trials and licensing. Celltrion's anticancer drugs are being supplied to large cancer hospitals around the world. There have been continuous demands from these hospitals asking if we could provide specialized services in cell therapy or gene therapy. Thus, it was internally determined that it would be beneficial to advance the service business in this area, leading to the establishment of this new corporation today."
–What will Celltrion Bio Solutions start with?
“We will begin factory construction in the first half of next year. The CDO or CRO businesses can commence even before the factory is built, so we plan to start these services next year. Additionally, we aim to expand our research institutes beyond Korea to the U.S., Europe, and India. We will also hire local R&D personnel. Since there are already Celltrion direct sales subsidiaries in over 40 countries, we plan to open sales offices in connection with those subsidiaries. We anticipate that CMO commercial production will start around 2028.”
–Where will the production facilities that form the basis of the services be established?
"We are currently reviewing detailed site candidates. We plan to initially design a scale of 200,000 liters domestically, starting the construction of the first factory with a capacity of 100,000 liters next year. Subsequently, we will continuously evaluate the optimal location for sustainability in production and supply to expand production capacity."
–What are the expected revenues?
"By starting the operations of CDO or CRO service fields from 2025, we expect to generate service revenues in the range of about 100 billion won by around 2027. For CMO services, an expected revenue of about 500 billion won is anticipated by 2029. By 2031, we expect revenues of about 500 billion won each from CDO or CRO, and around 2 trillion won from the CMO business. We estimate that total expected revenues in 2031 will be about 3 trillion won."
–Many corporations are entering the antibody drug CDMO business, raising concerns about over-supply in the market.
"Yes. There is a concern that the capacity for antibody drug CDMO could lead to oversupply. Initially, I believe there could be over-supply in the CMO sector. Therefore, we plan to expand factories while considering internal demand in the CMO side. CMO alone will not be able to generate revenue exceeding 100 billion won per 10,000 liters. The operating profit margin is also unlikely to be favorable. For this reason, Celltrion Group aims to provide total services."
However, there are still not many companies conducting CDO. I think that currently, only Lonza can provide CRDMO services all at once. Additionally, Celltrion is already specialized in CRO. We have no intention of over-investing. We will execute business strategies while considering risks in advance.
–What opportunities will arise if the U.S. Congress passes the 'Biosecurity Act' to prevent Chinese bio firms?
"First of all, we did not start this business because of the U.S. biosecurity law. CDO and CRO must have experience and know-how in developing, producing, and selling their products. Existing Chinese CDMO companies likely have few contracts in the areas of CDO and CRO. Celltrion Bio Solutions intends to operate a different business than the CMO-centered businesses of existing Chinese companies."
–You revealed plans for large-scale recruitment; when and how many will you recruit?
"I believe that 500 scientists will be necessary to operate the CDO or CRO businesses. For CMO, a large workforce will be needed after factory construction is completed. Considering these factors, we will recruit personnel progressively."
–Many corporations are expanding their CDMO businesses. What are the plans to secure excellent talent?
"This is one of the main reasons we are aiming to establish research institutes in Korea, the U.S., Europe, and India. There are great talents around the world. We will particularly create an Indian research institute to secure outstanding R&D personnel. Furthermore, we plan to hire new employees rather than experienced workers. I am confident that we can train them well to become excellent talents."