Shifting Focus to Cell and Gene Therapies
SK Inc.’s pharmaceutical and bio business is growing fast through a steady localization strategy. The company plans to expand its contract development and manufacturing organization (CDMO) business to cover cell and gene therapies (CGTs).
SK Pharmteco, a CDMO subsidiary of SK Inc., is expected to rack up sales of 1 trillion won this year.
Unlike Samsung Biologics and Celltrion, SK Pharmteco is basically a CDMO company focused on synthetic drugs rather than biotech products. But in recent year, it sought to change its business structure. Having established itself as one of the global top five synthetic drug CDMO players, it is shifting the focus to the CGT CDMO business.
SK Inc. established production bases in the United States and Europe in a short period of time by acquiring Bristol-Myers Squibb (BMS)’s Irish plant (now SK Biotech Ireland) in 2017 and Ampac in the United States in 2018. It established SK Pharmteco in 2019 to integrate its CDMO business in Korea, the United States and Europe, and reorganized SK Biopharmaceuticals and SK Biotech as subsidiaries of SK Pharmteco.
A salient feature of SK Inc.’s pharmaceutical CDMO business is that it has its headquarters and production facilities in the United States and Europe, the world’s largest pharmaceutical markets, and implemented a localization strategy. SK Pharmteco has eight business sites and five R&D centers in the United States, Europe and Asia. It is the only Korean CDMO company capable of producing everything from synthetic drugs to biopharmaceuticals in the U.S. and Europe.
U.S. companies account for 65 percent of SK Pharmteco’s customers, while European companies 30 percent. The headquarters of SK Pharmteco is located in Sacramento, California of the United States. Among Korean CDMO companies, SK Pharmteco is the only company to have its headquarters in the United States. Its production facility localization strategy is expected to pay off, as the U.S. government recently implemented a policy to support biotech companies in the United States.
CGTs are personalized treatments that cure rare diseases caused by genetic defects with one gene injection or two. Although their prices are very high, their therapeutic effect is superior, which explains why pharmaceutical companies are concentrating their development resources on them. Currently, about 50 percent of biopharmaceuticals under clinical development are CGTs in the United States and Europe.
In January last year, SK Pharmteco acquired French CGT CDMO firm Yposkesi to expand its business into biopharmaceuticals. When the second factory under construction is completed in 2023, Yposkesi's plant size will be doubled. In January, SK Inc. became the second-largest shareholder of the Center for Breakthrough Medicines (CBM), the world’s largest CGT CDMO player, by investing US$350 million in it. CBM plans to build a CGT production base of 700,000 square feet, the world’s largest single facility, by 2025.