Lotte builds US antibody-drug conjugate plant with $82 mn

South Korea’s Lotte Biologics Co. is establishing an antibody-drug conjugate (ADC) factory in Syracuse, New York, with an investment of 110 billion won ($81.6 million) to diversify its product portfolios, CEO Richard Lee said. It plans to take the company public within five years.

The contract drugmaker founded in June 2022 by Korea’s sixth-largest conglomerate Lotte Group aims to ramp up its sales to 1.5 trillion won, with an operating profit margin of 35%, in 10 years, Lee said.

“We are building an ADC production facility next to our Syracuse plant,” Lee told reporters on the sidelines of CPHI Worldwide 2023, a global bio and pharmaceuticals conference, in Barcelona, last week. “The facility is likely to start operations in the first quarter of 2025 as we are scheduled to complete construction next year.”

In 2022, Lotte Group agreed to buy Bristol Myers Squibb's (BMS) biologics plant in Syracuse for $160 million.

ADCs are a drug class designed as targeted therapy for treating various cancers. ADCs are in the spotlight as a next-generation treatment as they're intended to kill tumor cells while sparing healthy cells, unlike chemotherapy.

The move is expected to accelerate the diversification of drug modalities of Korean contract development and manufacturing organizations (CDMOs), which range from personalized medicines such as specific compounding to cell and gene therapies based on the patient’s unique genome.

“The antibody and protein sectors make up 74% of the 40 billion won global bio market,” Lee said. “We aim to generate 90% of our sales target (1.5 trillion won) from antibody drugs, and the rest from ADCs.”

The outlook for the antibody-drug market remains bullish, given the robust growth in the preventive medicine and beauty industries, he stressed.

ONLY CDMO, NO BIOSIMILAR

Lotte Biologics’ larger rival Samsung Biologics Co., the leading global CDMO by capacity, has decided to establish an ADC plant by the end of 2024 at its bio campus within the Songdo free economic zone in Incheon, west of Seoul.

Lotte Biologics aims to focus on the CDMO business without making inroads into the biosimilar sector to differentiate its strategy from Samsung's, Lee said.

Lotte Biologics plans to spend 3.2 trillion won to build three antibody drug factories in Korea with annual capacities of 120,000 liters each by 2030 to become one of the world’s top 10 CDMOs.

“We aim to build the No. 1 and No. 2 plants with our own money while raising money through a listing for the No. 3 factory,” Lee said, adding that the company is mulling an initial public offering in 2027 or 2028.

Lotte Biologics has been in legal duels with Samsung, which admonished the latecomer to stop poaching talent amid disputes over whether former Samsung employees leaked trade secrets to Lotte Biologics.

“We eliminated applicants from Samsung but staff from the company kept applying for a job,” Lee said. “The freedom of making a career change is important, I think, as a court recently ruled.”

Write to Dae-Kyu Ahn at powerzanic@hankyung.com
 
Jongwoo Cheon edited this article.