SK’s new unit in U.S. to bring synergy to CMO biz

SK Group is launching a new pharmaceutical entity in the United States to help better manage its contract manufacturing organization (CMO) business.

SK Holdings announced in a statement Monday that it has approved a plan to establish SK Pharmteco in Sacramento, Calif., by January, which will serve as a sub-holding company managing overseas business for the conglomerate’s three CMO business affiliates: SK Biotek, SK Biotek Ireland and AMPAC Fine Chemicals.

SK Holdings said the move will streamline SK Group’s CMO business and create synergy between the affiliates. AMPAC Fine Chemicals CEO Aslam Malik will be named as the head of the new entity, which owns 100 percent of all three affiliates.

“Through global merger and acquisition (M&A) activities, we have secured a competitive [research and development] (R&D) capability on top of production facilities in Korea, the United States and Europe,” a SK Holdings spokesperson said in a statement.

“By establishing the combined entity, it is now possible to increase the synergy from co-operating the three CMO affiliates. By launching additional growth strategies like an initial public offering for the combined entity and more global M&As, we will work to become the top 10 global CMO group.”

As the global CMO industry grows, SK believes that its new entity will help the group reach a step closer to its goal of enlarging the value of its CMO business up to 10 trillion won ($8.25 billion) by 2025 and start leading the field by production capacity after 2020.

Due to aging populations and increasing presences of chronic illnesses, SK said the global CMO market is projected to increase 7 percent on average until 2023.

The conglomerate acquired Bristol-Myers Squibb’s manufacturing facility in Ireland in 2017 and named it SK Biotek Ireland, while additionally acquiring AMPAC Fine Chemicals in 2018 to currently produce around 1 million liters (260,000 gallons) of contracted pharmaceutical products. It has grown more than 20 percent annually on average and reached 480 billion won in total sales last year, more than three times what the group made before acquiring the two entities in 2016.

BY KO JUN-TAE [ko.juntae@joongang.co.kr]