Lotte considering crucial portfolio change to focus on biopharmaceutical arm

Industry

Published: 15 Jun. 2022, 11:37 Updated: 15 Jun. 2022, 13:33

Lotte considering crucial portfolio change to focus on biopharmaceutical arm

Richard Lee, left, CEO of Lotte Biologics, and Lee Hun-ki, executive vice president at Lotte's corporate strategy division, speak on the sidelines of the BIO USA on Tuesday [LOTTE]

SAN DIEGO — Lotte is considering a crucial portfolio change in a bid to focus on its biopharmaceutical arm, Lotte Biologics.

“We are aiming to foster the healthcare and wellness business as one of the portfolios that can match our four major businesses,” Lee Hun-ki, executive vice president at Lotte, said during a press conference on the sidelines of the BIO International Convention (BIO USA) Tuesday.

“In order to make that happen, we must consider selling one of our existing businesses that are incompetent or futureless.”

No decisions have been made and specific plans are not yet available at the moment, Lee added.

The decision is in line with Lotte’s recent purchase of a Bristol-Myers Squibb (BMS) bio plant in Syracuse, New York for $160 million, in a move to enter the fast-growing contract development and manufacturing organization (CDMO) business.

The plant will be owned by Lotte Biologics, which was established on June 7 as a biopharmaceutical subsidiary of Lotte. It opened its own booth at the BIO USA 2022, which is being held in San Diego, from June 13 to 16. It marks the first international event for CEO Richard Lee, who was appointed last week.

The acquisition includes the Syracuse manufacturing plant and equipment, and the existing 450 employees. Lotte is aiming to close the deal in October.

Visitors take a look at Lotte Biologics' booth at the BIO International Convention in San Diego [LOTTE]

“The deal also includes the condition that we maintain the contracts of manufacturing four products that BMS has won for the Syracuse plant,” CEO Lee told the reporters. “This means we already have secured around $250 billion worth of deals.”

The plant’s capacity stands at around 35,000 liters, which Lee said is a little larger than Samsung Biologics’ first plant in Songdo, Incheon.

Lee also said he plans to use an additional 100 billion won ($77 million) to renovate the plant in order to make it available for CDMO business. The Syracuse plant is only for contact manufacturing organization at the moment.

Lotte Biologics will establish a subsidiary in the United States, Lotte Biologics U.S.A, to handle future orders.

Lee also said he is currently in talks with many local governments to build a mega plant in Korea, including those of Songdo and Osong, North Chungcheong.

“We are currently receiving many calls from many local governments, including Incheon, and are open to all possibilities,” Lee said. “Korea is a very suitable country to have a CDMO plant considering expenses such as labor cost and raw materials.”

Earlier in the year, Lotte announced that it will spend a total of 2.5 trillion over the next 10 years to make Lotte Biologics a top 10 CDMO company in the world.

CEO Lee, who studied molecular and cell biology at UC Berkeley, has over two decades of experience in biologics and the pharmaceuticals industry, including at BMS and the U.S. Department of Health and Human Services.

Before joining Lotte in August, Lee served as the head of the drug product business unit at Samsung Biologics.

BY SARAH CHEA [chea.sarah@joongang.co.kr]