Lotte Biologics doubles down on global contract drugmaker ambitions

Lotte Biologics is gearing up for the construction of three drug manufacturing plants with its recent land purchase in Songdo, Incheon, taking its first step on its decadelong journey to become a global contract development and manufacturing organization.

Lotte Biologics said the company signed a land purchase agreement with the Incheon Free Economic Zone Authority on Wednesday afternoon. Under the agreement, Lotte Biologics will build three biomanufacturing facilities. Each plant is going to have a manufacturing capacity of 120,000 liters, which will bring Lotte Biologics' manufacturing capacity to a total of 400,000 liters, including 360,000 liters in Songdo and 40,000 liters at its Syracuse plant in New York.

Plants one, two and three are expected to be completed in 2025, 2027 and 2030, respectively, and full-scale operations are expected to start in 2034.

The construction site is located on the other side of the street from Samsung Biologics' second campus, where its fifth plant is under construction.

The proximity between Samsung Biologics and Lotte Biologics, and the fact that they are affiliated with the country's largest conglomerates have set up the potential for rivalry in the future. However, it is too early to say whether Lotte Biologics will step itself up as a rival to Samsung Biologics, now the world’s largest contract development manufacturing organization, according to industry sources.

“It took years for Samsung Biologics to sign its first contract manufacturing order, even after the company was first established in 2011. It will also take some time for Lotte Biologics to actually achieve tangible outcomes,” an industry source said.

"Getting good manufacturing practice certifications from the European Medicines Agency and the US Food and Drug Administration may take one or two years. Lotte Biologics may also face difficulties clinching the first order due to the lack of a track record at its new manufacturing facility in Songdo," the industry source added.

The gap between Lotte Biologics and Samsung Biologics may widen further by 2034 when Lotte Biologics starts full operation of its three plants, the source said.

“One of the important factors in the CDMO industry is speed, and Lotte Biologics may experience difficulties in pursuing its larger competitor over the next decade as Samsung Biologics will further speed up its expansion,” the official said.

Samsung Biologics currently has a manufacturing capacity of 604,000 liters, and it will secure 784,000 liters of capacity in 2025 when the construction of its fifth plant is completed.

On the topic of whether Lotte Biologics will be able to successfully establish a foot in the market or not, the company said it is making its best efforts to make a successful entry into the market and that things are going as planned.

“Lotte Group sees the CDMO business as an important future growth engine, and Lotte Biologics will prepare its business step by step,” an official from Lotte Biologics said.

“Although the company’s plants are not constructed yet, we have already embarked on a series of discussions with potential clients. As we are operating a manufacturing facility in Syracuse, the company expects that it can shorten the time needed to sign the first order for its facility in Songdo,” the official added.

On its potential rivalry with Samsung Biologics, Lotte Biologics responded that “Samsung Biologics is the world’s biggest player in the industry, and Lotte Biologics is only a newcomer. Lotte Biologics will focus on increasing its presence in the booming industry, instead of comparing itself to a larger competitor."