Celltrion Acquires Eli Lilly's US Manufacturing Plant for 460 Billion Won

"1.4 Trillion Won Investment in Acquisition and Expansion... Resolving 'Tariff Risks' "

"Immediate Revenue Secured Through CMO Contracts... Supply Chain Integration"

Celltrion [Provided by Celltrion. Resale and DB prohibited]

Celltrion [068270] announced on the 23rd that it has signed an agreement to acquire a biopharmaceutical manufacturing plant located in Branchburg, New Jersey, USA, from global big pharma Eli Lilly, valued at approximately 460 billion won.

Celltrion plans to invest a total of 700 billion won, including the acquisition cost of the plant and initial operating expenses. Subsequently, it plans to pursue expansion of production facilities on the unused land within the acquired plant, with an additional investment of at least 700 billion won.

Consequently, Celltrion stated that a minimum investment of 1.4 trillion won will be made solely for the plant acquisition and expansion.

The acquiring entity is Celltrion's US subsidiary, decided upon to optimize local operations and considering geographical factors. Both parties plan to cooperate to complete the plant acquisition process by the end of the year.

The plant slated for acquisition is a large-scale campus situated on approximately 45,000 pyeong of land, comprising a total of four buildings, including production facilities, a logistics warehouse, a technical support building, and an operations building.

Celltrion explained that the campus possesses approximately 11,000 pyeong of unused land for capacity expansion, allowing for proactive response to future market demand increases through expansion.

Celltrion emphasized the significance of this definitive agreement, stating it completes the comprehensive tariff response plan presented by Celltrion Group Chairman Seo Jung-jin at a press conference in May.

The company stated, "In addition to mid-to-short-term strategies such as proactively relocating two years' worth of inventory to the US and expanding contracts with local contract manufacturing organizations (CMOs) for tariff response, a fundamental solution in the form of securing a local production plant has now been established."

Furthermore, Celltrion highlighted that the plant is already an operational cGMP production facility for biopharmaceutical raw materials and can be operated immediately upon acquisition.

This approach significantly accelerates the production timeline for its products and reduces investment costs compared to building a new plant, which would typically take over five years and cost over a trillion won.

Celltrion plans to quickly commence facility expansion for key product manufacturing on the acquired plant's unused land, with an additional investment of at least 700 billion won. Once the expansion is complete, the production capacity is expected to be approximately 1.5 times that of Celltrion's Songdo Plant 2 in Incheon.

The agreement also includes the full employment and retention of local personnel with extensive plant operation experience and expertise. This allows for the plant to be operated without workforce gaps, ensuring continuity in operational stability and productivity.

The company analyzes that its growth drivers have been strengthened through the CMO contract with Lilly.

Celltrion stated, "By signing a CMO contract with Lilly, we have secured a strong growth engine simultaneously with establishing a local production base in the United States." The company added, "According to the contract, Celltrion will consistently supply the raw materials produced at the plant to Lilly, which is expected to lead to increased sales and early recovery of investment funds."

It further commented, "By securing a local production base, we have established a one-stop supply chain within the market covering the entire drug production process, from product manufacturing to sales." The company anticipates that local production will significantly reduce logistics costs to the US and production costs compared to external CMOs, thereby greatly enhancing product competitiveness within the US market.

Celltrion and Lilly will maintain a cooperative framework until the acquired plant adopts its new operational system to ensure a smooth handover of operations. Yonhap News