Korean drugmakers unimpressed with Biden’s order to beef up US bio sector

U.S. President Joe Biden’s executive order on bolstering the country’s biotech and biomanufacturing sectors with more than $2 billion in spending won’t dim the outlook for South Korea’s bio-industry, say insiders and analysts. industry analysts. The first U.S. move could instead serve as an opportunity for Korean companies, they said.

“The U.S. move appears to be another attempt to solidify “made in America” efforts, similar to the electric vehicle and semiconductor sectors. But in the case of biomanufacturing, big multinational pharmaceutical companies prefer to have (contract development and manufacturing organizations) in different countries for better distribution,” said an official of a CDMO company.

The official, who spoke on condition of anonymity, said it would be difficult for major drugmakers to rely solely on biomanufacturing capabilities in the United States as big pharma seeks to secure a stable supply of substances. drugs and drugs.

Another industry official working at a biotech firm told the Korea Herald that it could be a chance for Korean companies to set up factories in the United States.

For example, Samsung Biologics – the world’s largest CDMO by production capacity – could accelerate its long-standing plan to build an overseas manufacturing plant in the United States, if the Biden order offers incentives. tax or financial support to the company, the official said.

Celltrion announced in a shareholder notice Thursday that the Biden order will have limited impact on the company. He explained that Celltrion’s share of business in the CMO sector is very low because the company is focused on selling self-developed antibody treatments.

“While the Celltrion Group has numerous sites capable of producing various drug substances and drug products around the world, including domestic production facilities, we will closely examine investment incentive policies in the United States to If deemed advantageous, we will actively consider securing production facilities in the United States,” he said in the notice.

For companies that have already secured a biomanufacturing facility in the United States, such as Lotte Biologics, which acquired Bristol Myers Squibb’s manufacturing facility in East Syracuse, New York, in May, they could take advantage of the Biden order. to advance the U.S. organic industry, officials say.

A local securities analyst said the amount of spending announced by the White House indicates the likelihood of negligible impact on Korea’s organic industry as a whole.

“The part that is considered to have a big impact on the drug industry is the support of $1 billion – the equivalent of 1.4 trillion won – for the construction of biological infrastructure over the next five years. But given that the cost to build Samsung Biologics Plant 4 is about 1.7 trillion won, (the Biden order) is not the size that can affect the entire industry. (Korean bio),” said Park Jae-kyung, an analyst at Hana Securities.

The analyst explained that global pharmaceutical companies outsource the manufacturing of their products to global CDMOs to stabilize supply, adding that sudden relocation is not easy as the pharmaceutical industry requires a regulatory authorization period to change manufacturing site.

The Korea Biotech Industry Organization, which represents more than 500 biotech members nationwide, on Thursday called on the government to come up with plans to boost the competitiveness of the country’s bioindustry in response to the protectionist move. the United States.

“As the ‘bioeconomy’, which was mentioned in the US executive order, means not only biopharma but also the biofuels and bioenergy industries, it expressed the US desire to strengthen its competitiveness in biotechnology and biomanufacturing” , KoreaBIO said in a statement.

For the reason of Washington’s first U.S. announcement, KoreaBIO highlighted Beijing’s five-year bio-economy plan which was declared by China’s National Development and Reform Commission in May.

“Once the United States and China increase their investment in the entire biotechnology sector, this will translate into an accelerated expansion of investment from other countries such as Europe and Japan and will lead to fiercer competition between countries,” he said.

“We urge our government to develop medium and long-term plans to protect the (Korean) organic industry and respond to expanding investment and innovation.”

By Kan Hyeong-woo (hwkan@heraldcorp.com)