Seo Jeong-jin, chairman of Celltrion Group, said on the 29th that "Celltrion has been selected as the preferred negotiation partner, surpassing two global corporations in the bidding for the acquisition of a biopharmaceutical manufacturing plant in the U.S."
Celltrion announced that it has signed an exclusive negotiation commitment for the acquisition of a corporation with active pharmaceutical ingredient production facilities in the U.S.
Chairman Seo said during an online briefing immediately after the announcement that "Once this plant acquisition is completed, Celltrion will secure an optimal facility with economic and business viability in the U.S., completely eliminating tariff risk in the shortest time possible."
Celltrion stated that it will decide on the conclusion of the main contract after conducting a definitive due diligence on the local plant in the U.S. Chairman Seo anticipated that the main contract would be concluded in early October.
Celltrion's move to secure production facilities in the U.S. is due to the pharmaceutical tariff policy. The U.S. government has announced plans to impose tariffs on pharmaceuticals and semiconductors based on an investigation under Section 232 of the Trade Expansion Act. Currently, U.S. President Donald Trump is increasing pressure by putting tariffs on pharmaceuticals and semiconductors, major export items to the U.S. for Korea, as a negotiation card against the Korean government.
If tariffs are imposed on pharmaceuticals, products exported to the U.S., including Celltrion's autoimmune disease treatment "Jimpenetra," will be affected. Producing products sold in the U.S. locally can fundamentally eliminate tariff risks.
Celltrion revealed that the plant it is pursuing for acquisition is a cGMP (current Good Manufacturing Practice) production facility for active pharmaceutical ingredients owned by a global corporation. Chairman Seo explained that "Major biopharmaceuticals, including anticancer drugs and autoimmune disease treatments, have been produced at this facility for several years," and stated that "Once the plant acquisition is completed, we will completely eliminate the tariff risk on U.S. pharmaceuticals."
Prior to this contract, Celltrion implemented a strategy to address U.S. pharmaceutical tariffs by transferring two years' worth of inventory ahead of time to the U.S. and signing a contract manufacturing organization (CMO) agreement with a local company.
Chairman Seo mentioned, "There could be an additional cost of 300 to 700 billion won when expanding according to U.S. tariff regulations." He added, "50% of the equipment in the cGMP facility being pursued for acquisition will produce Celltrion's main products sold in the U.S., and the remaining 50% can exclusively manufacture the acquired company's biopharmaceuticals for five years through the CMO contract, allowing for revenue generation," and noted that "This will enable a quicker recovery of the investment."
Celltrion also has plans for additional expansion of its U.S. local plant, considering the sales trends of U.S. pharmaceuticals and the schedule for the launch of new products. The strategy aims to eliminate tariff risks for upcoming new products to be sold in the U.S. Once the expansion is completed, production capacity can be increased to 1.5 times that of the Incheon Songdo Plant No. 2, according to Chairman Seo.
Chairman Seo stated, "By 2030, the number of products sold by Celltrion in the U.S. is expected to expand to 22, and by 2033 it will reach 41," adding that "This acquisition is a step to secure future production capabilities."
Celltrion stated that when the facility expansion is completed at the local plant, it will be able to handle the entire production cycle of both active pharmaceutical ingredients and finished pharmaceuticals, including packaging and logistics, supplying pharmaceuticals to the U.S. Celltrion has already established a local sales network.
Chairman Seo said, "With the acquisition of the local cGMP production facility, Celltrion will become the first domestic bio corporation to most swiftly eliminate pharmaceutical tariff risks." He predicted, "The U.S., which is at the center of the global pharmaceutical market, is a market that cannot be abandoned," and added, "If tariffs are implemented, it could actually provide an opportunity for companies that have secured local bases at an early stage."
Chairman Seo projected that Celltrion's revenue this year will range between 4.5 trillion won and 4.6 trillion won, with an operating profit of around 1.5 trillion won. He noted, "Due to inventory adjustments after the merger, the cost of sales ratio is expected to improve to 31% in the fourth quarter," adding that "With the effect of new products including Jimpenetra, the operating rate of the Songdo Plant No. 2 will maintain 100%."