Eli Lilly and Company, the world's No. 1 drugmaker by market capitalization in the United States, will establish a production base in Korea for its glucagon-like peptide-1 (GLP-1) obesity treatment Mounjaro.
SK will produce active pharmaceutical ingredients, and the manufacturing of finished goods will be entrusted to a separate partner under a contract development and manufacturing organization (CDMO) system. This is the first time a GLP-1 obesity drug will be produced in Korea.
According to the pharmaceutical industry on the 28th, Lilly is pushing a plan to build an integrated production system in the North Chungcheong region that connects pharmaceutical intermediates–active pharmaceutical ingredients (API)–finished goods in one. SK will produce the peptide, the API for Mounjaro, and send it to the finished goods manufacturer. Lilly is expected to officially announce this plan within the year.
◇SK Sejong plants 5 and 6, Korea's first obesity drug production base
SK Pharmteco, through its subsidiary SK Biotek, is building plants 5 and 6 (M5·6), large-scale peptide API production facilities, in the Myeonghak Industrial Complex in Sejong. The plan for Plant 5, disclosed in Dec. last year, called for about 340 billion won to build one basement level and five above-ground floors, with a total floor area of 12,600 square meters. In practice, Plant 6 right next door also broke ground simultaneously, bringing the combined total floor area of the two plants to 26,410 square meters, roughly double the original plan.
The two plants, connected as one, include a raw material manufacturing building, a utility building equipped with production process infrastructure, and other facilities such as quality control (QC) and a U.S. current good manufacturing practice (cGMP) pilot production facility.
They aim to complete construction in June next year and begin full-scale operations by the end of the year, immediately moving into annual peptide production on the order of tens of tons. SK is also reviewing production for Lilly supply at Plant 4 (M4) in anticipation of expanded orders.
According to multiple officials at SK and the North Chungcheong Provincial Government, three to four employees from Lilly headquarters recently stayed at the plant for nearly two weeks to conduct an equipment audit.
SK Pharmteco said it "cannot confirm," but multiple officials said, "A partnership with Lilly has been discussed since the plant design stage, and the CDMO contract is proceeding without a hitch."
Based in California, SK Pharmteco was established in 2015 by partitioning the API business of SK Biopharmaceuticals, and has since grown into a global bio CDMO by successively acquiring global CDMO corporations including the Ireland plant of Bristol-Myers Squibb (now SK Biotek Ireland), U.S. CDMO Ampac, France's cell and gene therapy (CGT) CDMO Yposkesi, and the world's No. 1 CGT CDMO, U.S.-based CBM. It currently operates a total of five production bases in Korea, the United States, and Europe under a single corporate entity.
◇Who will handle finished goods? Peptron, with "long-acting" technology, is a strong candidate
Under the CDMO system, after SK produces the raw materials, the finished goods production stage remains. Pharmaceutical manufacturing consists of raw materials (including intermediates) and finished goods. At the finished goods stage, Peptron, which has long-acting peptide injectable technology, is being strongly discussed.
Peptron plans to build a new cGMP plant with three above-ground floors and a total floor area of 8,000 square meters on an idle site within the Osong Advanced Medical Complex in Cheongju. Once completed, it will be able to produce up to 10 million vials (bottles) of long-acting injectables per year. The North Chungcheong Free Economic Zone Authority is currently conducting a building permit review, with results expected as early as early next month.
Long-acting formulations release the drug slowly so that the effect can last up to several months, greatly reducing the number of doses. Lilly has been conducting joint research with Peptron since Oct. last year to evaluate the technology of "SmartDepot," Peptron's long-acting platform. After completing the study on the 7th of next month, they plan to decide whether to sign a main contract.
Peptron said it "cannot confirm," but added, "The technical evaluation with Lilly is proceeding smoothly, and it is a core technology that will determine competitiveness at the commercialization stage," maintaining its official stance.
Behind Lilly's consideration of Peptron following SK is not only technological capability but also the fact that the two plants are adjacent to each other in Sejong and Osong, making it easy to transport peptides that require cold storage. As for the company that will manufacture intermediates needed for raw material production, a client of SK Biotek is being reviewed.
◇Why did Lilly choose Korea? Price cuts and the biosecurity law
As global demand for GLP-1-based obesity drugs surges, Lilly expanded its plants in the United States, Ireland, and China last year and has recently focused on securing external CDMOs. Analysts say that stable supply chains and production cost competitiveness factored into the decision to choose Korea as a next-generation production base.
Earlier this month, the U.S. Trump administration announced agreements with Novo Nordisk and Lilly to cut obesity drug prices in the United States by 70% to 80%. With price cuts set to take effect in Jan. next year, global drugmakers face greater pressure on cost savings and unit price competitiveness, and there is speculation that production in Korea could reduce the expense burden.
In Korea, obesity drugs are not covered by national health insurance and are sold from the high-200,000 won range to the 700,000 won range per month depending on dosage. Novo and Lilly in Korea are also reviewing domestic pricing policies. An industry official said, "If Lilly incorporates Sejong and Osong into its global production belt, the domestic ecosystem for raw material and finished drug production will rise a notch, and if Mounjaro is domestically produced, there is room to significantly lower unit prices compared with now."
There is also analysis that the biosecurity law, passed by the United States to keep Chinese biotech corporations in check, played a role. Lilly, which had entrusted GLP-1 API CDMO work to WuXi AppTec in China, signed raw material production contracts with National Resilience in the United States and BSP Pharmaceuticals in Italy as the bill moved forward in earnest.
In this situation, observers say there would have been less burden in choosing SK Pharmteco, which is headquartered in the United States, as a CDMO partner.
Market speculation about SK Pharmteco's chances of winning orders from Lilly has been circulating since late last year, after news emerged of an obesity drug API production contract with a global drugmaker worth up to 2 trillion won. At the time, the market viewed Lilly as more likely than Novo Nordisk, which has its own production system and is less likely to use external CDMOs. SK Pharmteco also said at the time that it "cannot confirm."