Two months after Celltrion bought a U.S. manufacturing facility from Eli Lilly for roughly $330 million, the South Korean biosimilar specialist said it will throw down up to 700 billion Korean won ($478 million) more to upgrade the plant.
Celltrion left no doubt about why it is investing in the active pharmaceutical ingredient (API) facility in Branchburg, New Jersey, explaining that the move comes in “response to U.S. pharmaceutical tariff policies.” The outlay also will “address growing demand stemming from the expansion of the company’s product pipeline,” Celltrion added in a regulatory filing this week.
Celltrion announced the deal to purchase the former Lilly facility in late September, just a few days after President Donald Trump unveiled a plan to levy a 100% tax on pharmaceutical imports into the U.S.
The Trump administration's sectoral tariffs on pharmaceuticals—which are on pause as the industry engages in pricing negotiations with the government—are designed to exclude companies that are actively building U.S. manufacturing facilities.
For its part, Celltrion laid out its tariff mitigation plan in July, telling investors that it was closing in on a domestic plant purchase from a then-unidentified seller.
“The regulatory filing means that we will take steps to meet the requirements for tariff-free businesses even if tariffs are imposed on medicines,” Celltrion chairman Seo Jung-jin said of the investment project during an online press conference Wednesday, as quoted by The Korea Herald. “Regarding the expansion in the future, we will speed it up depending on how the U.S. government approaches medicine-related tariff policies.”
The expansion will occur in two phases, with each adding a trio of 11,000-liter bioreactors to the plant, according to Celltrion's regulatory filing. Collectively, the project will bring the facility’s total production capacity to 132,000 liters. Celltrion said it expects the first phase of the expansion to be completed in three years.
Meanwhile, Celltrion is also weighing whether to build an additional manufacturing facility on available land at the Branchburg site. The current drug factory is spread across 37 acres, with another 10 acres available for future expansion, Celltrion noted when it acquired the plant in September.
The Branchburg outlay forms part of Celltrion’s overall plan to spend 5.4 trillion Korean won ($3.7 billion) to expand its U.S. and South Korea production facilities, the company added during the online conference Wednesday.
Celltrion's U.S. investment comes as many other companies are doing the same to head off potential tariff issues. Merck is spending $70 billion to bolster its R&D and production capabilities in the U.S., Johnson & Johnson has unveiled a $55 billion plan that includes bolstering its medtech business and Roche has pledged to spend $50 billion in the U.S., to name just a few examples from this year.