"The contract manufacturing (CMO) business requires strict client confidentiality, so there is a difficulty in holding investor relations (IR) sessions while disclosing detailed contract status. But in the second half, we will be able to deliver meaningful results to the market."
Lee Hyun-min of BTGEN met with Korean reporters at Bio USA in San Diego, California, on the 24th (local time) and emphasized that the company will focus on reducing reliance on the captive market (internal volume) within the Dong-A Socio Group and securing external clients.
To that end, the plan is to secure order capacity by expanding facilities, broaden the target market globally, and diversify the portfolio with next-generation modalities (therapeutic approaches) to build an independent business structure.
◇ Targeting 50% external orders next year… expanding capacity with a 110 billion won investment
BTGEN's main production items now are group-internal volumes such as Dong-A ST's Stelara biosimilar (IMULDOSA). According to the company's audit report, BTGEN generated 77.7 billion won in revenue from Dong-A ST last year, accounting for 75% of total revenue (103.7 billion won).
Lee judged that diversifying orders is essential for mid- to long-term growth and set a goal to rebalance the share of group-internal volume and external client volume to 50-50 by the end of next year.
This external order expansion strategy is showing tangible results. BTGEN secured contracts worth about 14 billion won last year, and this year added three new orders (including 7.1 billion won), bringing cumulative orders to about 21.2 billion won.
Lee said, "Existing production lines are effectively running at full capacity through next year," adding, "All contracts under discussion with global clients are proceeding on the premise of operating expanded facilities."
BTGEN is currently expanding Songdo Plant 1 by investing a total of 110 billion won, including 25 billion won in self-procured funds and 85 billion won secured through the Public Growth Fund. When the expansion is complete, total culture capacity will increase from 9,000 L to 14,000 L.
The focus is advancing the drug product (DP) process. Thirty-five percent of the total investment is allocated to building isolator systems optimized for aseptic environment control. Lee explained, "Compared with traditional production methods that were highly dependent on labor, aseptic control and production efficiency will be dramatically improved," adding, "Through this, we expect DP production capacity to improve by about 170% compared with the current level."
Construction and equipment installation are planned to be completed by the end of next year. After validation procedures, operations will begin in the first quarter of 2028. Lee said, "Between 2032 and 2034, patents for many blockbuster biopharmaceuticals will expire, and the biosimilar market will grow explosively," adding, "This investment is intended to secure production bases preemptively ahead of that."
◇ BTGEN targets niche markets… "Focusing on next-generation modalities instead of an IPO"
BTGEN chose a differentiated strategy of focusing on "process efficiency" and "middle scale" production instead of engaging in a direct "size race" with first movers leveraging massive production capacity such as Samsung Biologics.
Leveraging high-titer process technology, the company is pursuing orders from mid-sized European and Japanese pharmaceutical firms seeking fast market entry.
This strategy is reflected in production facility operations planning. While the currently expanding Plant 1 will focus on drug substance (DS), drug product (DP), and biosimilar production, the future Plant 2 will be developed as a production base for next-generation modalities (therapeutic approaches) such as Antibody-Drug Conjugate (ADC) and antibody-oligonucleotide conjugate (AOC).
Lee said, "We are reviewing specialized CDMO services linked to the group's ADC and AOC business models with the goal of starting operations in early 2028," adding, "Considering investment capacity and synergy, we plan to select and focus on the one field with higher competitiveness between ADC and AOC, and will finalize the direction after in-depth discussions within the group over the next two years."
An initial public offering (IPO) that the market had initially raised will not be pursued for the time being. The decision reflects the government's negative stance on dual listings of subsidiaries and concerns about damage to the holding company's corporate value. Currently, 80.4% of BTGEN's equity is owned by the holding company Dong-A Socio Holdings.
Lee said, "From a subsidiary's standpoint, we determined it is appropriate to follow the government's policy restricting dual listings, so we deprioritized the IPO," adding, "As we were selected as an investment target for the Public Growth Fund and successfully raised capital, investment can proceed smoothly even without a listing."