Celltrion said on the 23rd that it signed a deal to acquire for 460 billion won Eli Lilly's bio drug substance (DS) manufacturing site in Branchburg, New Jersey.
The company said the acquisition completely removed the risk of U.S.-origin tariff and secured a localized, integrated supply chain from production to sales for its flagship products. Earlier in Jul., Celltrion was selected as Lilly's preferred bidder.
Seo Jeong-jin, Celltrion Group chairman, said at an online briefing that morning, "We finalized the main contract for the U.S. plant with Eli Lilly," adding, "With this, Celltrion has completely removed tariff uncertainty." The acquiring entity is CelltrionUSA, a U.S. corporation. Seo said this was "based on considerations of local work efficiency and geographic factors."
The campus spans about 45,000 pyeong and includes four buildings: cGMP (current good manufacturing practice) production facilities, a logistics warehouse, a technical support building, and an operations building. There is also an idle site of about 11,000 pyeong.
Seo said, "Because the plant is already in operation, we can run it immediately upon acquisition," adding, "Building a new plant takes more than about five years and requires construction costs in the trillion-won range, so acquiring this facility allows us to move up our own product production timeline significantly, with lower input expense compared with plant construction costs."
Celltrion expects that producing products locally will significantly reduce expenses compared with contract manufacturing (CMO), including logistics costs previously incurred for shipments to the United States.
Seo said, "We plan to quickly begin expanding facilities on the idle site within the acquired plant to produce key products," adding, "To that end, we plan to make at least 700 billion won in additional investment." The company projected that once the plant expansion on the idle site is completed, it will be able to secure production capacity at about 1.5 times that of Incheon Songdo Plant 2.
Notably, the deal includes full employment succession for local staff. Celltrion will hire all local employees who have been working at the existing plant. This was cited as a key reason Eli Lilly chose Celltrion among multiple bidding companies.
Seo said, "Judging only by the work experience of the local staff, it is longer than that of Celltrion's domestic employees," adding, "We can immediately deploy personnel with both plant operation experience and expertise, allowing us to run the plant without a staffing gap and to maintain operational stability and productivity."
The issue is labor costs. Celltrion appears likely to reflect this in U.S. drug prices. Asked about wage levels, Seo said, "The United States has very high prices, so it's about twice the salaries of Korean employees," adding, "However, labor does not take up a high share of manufacturing costs in the United States, and the increase will be absorbed as a pricing factor within the country."
Seo also said that the recent visa issue for Korean corporations' staff dispatched to the United States will not have a significant impact on Celltrion. On the 19th (local time), the Trump administration in the United States said it would sharply raise the H-1B visa fee for skilled workers to $100,000 (about 1.4 billion won).
Seo said, "Celltrion is not significantly related to the visa issue," adding, "We will hire local staff in the United States, and some resident employees to be dispatched later in manufacturing will receive E-2 visas, which are different from H-1 visas." The E-2 visa is a nonimmigrant visa that citizens of countries with which the United States has a treaty of commerce and navigation can obtain to operate or invest in an enterprise in the United States.
Celltrion also signed a drug substance CMO contract with Eli Lilly. Accordingly, the drug substances produced at the plant will be supplied to Eli Lilly. Seo said, "We have secured a powerful growth engine while establishing a U.S. production base," adding, "We also expect sales growth and early recovery of our investment."
Celltrion and Eli Lilly agreed to maintain a cooperative framework until the acquired plant establishes a new operating system to ensure a smooth handover. Seo said, "Even after the acquisition, we will continue to invest in research and development (R&D) of artificial intelligence (AI) technologies and more to expand our production capabilities and do our best to cement our global competitive edge as a global leading corporation."