Celltrion to establish CDMO subsidiary

Celltrion Inc., South Korea’s largest biosimilar maker, said on Friday it plans to establish a contract development and manufacturing organization (CDMO) as a wholly-owned subsidiary by the end of this year.

"The key focus of this plan is to secure a competitive edge over existing CDMO companies," the company emphasized through "Notice to Shareholders" on its homepage. "Fully leveraging Celltrion's expertise in antibody development and production with our higher productivity and lower expansion costs."

"We plan to establish a wholly-owned subsidiary of Celltrion by the end of the year, with full-scale facility expansion and commercial activities set to commence next year," the company added.

Celltrion founder and Chairman Seo Jung-jin and his eldest son, Seo Jin-seok, head of Celltrion’s business division, revealed at the "Morgan Stanley Global Healthcare Conference" in New York last month that they were considering securing production facilities and operating the business as a wholly-owned subsidiary for use in CDMO operations.

Celltrion reported that Zymfentra, its subcutaneous injection (SC) treatment for autoimmune diseases, which was launched in the US in March, has enlisted up to 80% of US pharmacy benefit managers (PBMs).

However, for patients to receive actual reimbursement based on prescriptions, all insurance companies under PBMs within the 80% range must complete the listing process, which is expected to take about two to three months.

Regarding the temporary rise in Celltrion’s cost of sales due to its merger with Celltrion Healthcare last year, the company explained that its high-cost inventory is being quickly depleted.

According to the company, it is improving its sales as planned by producing new active pharmaceutical ingredients (APIs) at lower manufacturing costs.

Write to Dae-Kyu Ahn at powerzanic@hankyung.com