Lotte Biologics to invest $3 billion in three new plants in Korea

Lotte Biologics CEO Richard Lee delivers a presentation during the annual J.P. Morgan Healthcare Conference on Jan. 10. [LOTTE BIOLOGICS]

SAN FRANCISCO - Lotte Biologics will invest $3 billion to build three new plants in Korea by 2030, a major expansion plan in the contract manufacturing and development of bio products following the purchase of a plant in the United States.

The announcement was made during the annual J.P. Morgan Healthcare Conference at which Lotte Biologics CEO Richard Lee gave a presentation. The committed funding is larger than the previous investment proposal of 2.5 trillion won ($2 billion) over 10 years.

“Each [plant] will require approximately $1 billion in investment for a total of $3 billion invested by 2030,” Lee said during the presentation.

Each will have a 120,000-liter capacity, for a combined 360,000 liters. While the locations have not been announced, the bio company plans to start the construction of the first plant in the second half of this year. The first plant is set to start commercial manufacturing in 2027 after completing the facility in the second half of 2025. It aims to run all of three factories by 2034 and generate $3 billion in sales annually with a profit margin of 35 percent.

Local media outlets suspect the plants could be built in Songdo, Incheon, where Samsung Biologics, the country’s largest contract manufacturer, is headquartered, or in Osong, North Chungcheong. Chae Han-seung, manager of the strategic planning team at Lotte Biologics, told reporters Tuesday that Songdo is one of the candidate cities, adding that multiple other locations are under consideration.

When asked how the company will secure the funding required for expansion, Lee said that Lotte, the largest stakeholder of the bio company, will raise capital through rights issuance.

In the long term, the company will gain its own proceeds through an initial public offering, Lee said, by the time the first factory becomes fully operational.

The plan comes after the company completed its acquisition earlier this month of a $160 million manufacturing facility from Bristol-Myers Squibb (BMS) in Syracuse, New York.

Since the purchase, the plant has been running at full capacity, mainly dealing with bio products for BMS.

At the plant, the company has been working on producing a highly-anticipated class of anticancer drugs called Antibody Drug Conjugate (ADC), alongside general antibody production.

ADCs are designed as targeted therapies to treat cancer and differ from chemotherapy by sparing healthy cells in the treated areas, a feature that makes some specialists hail them as a next-level technology in cancer treatment.

“Another expansion plan we are considering is to expand our competency specifically for ADC conjugation services as we plan to partner with ADC development and commercial firms, hire more personnel, and build a dedicated conjugation suite this year,” Lee said.

An ADC-focused production line will be added to the Syracuse plant by the second quarter of next year, according to Lee.

The plant will deal with both single-use clinical products and commercialized ones.

Besides the contract manufacturing, it will offer contract development services in its planned centers in Boston and potentially in San Francisco.

"In the future, we’ll be looking at getting involved in new areas when the time is right, such as in viral vector manufacturing, mRNA-driven modalities, and cell and gene therapies, including CAR-T," Lee said.

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

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

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]