Lotte Fine Chemical, Colorcon sign $740 mn distribution agreement

Lotte Fine Chemical Co., a subsidiary of South Korea's Lotte Chemical Corp., said on Monday that it signed a global distribution agreement with the US-based Colorcon, the world’s top pharmaceutical cellulose distributor.

Under this agreement, Lotte Fine Chemical will sell its high-value specialty product, pharmaceutical cellulose, to the global pharmaceutical market through Colorcon for the next 10 years.

Through this agreement, Lotte Fine Chemical expects to generate additional sales of 1 trillion won ($741 million) over the next decade from pharmaceutical cellulose and related pharmaceutical materials.

Pharmaceutical cellulose is a plant-based material made from wood pulp, used as a coating for tablets and as a raw material for capsules.

Colorcon, the world’s top distributor of pharmaceutical cellulose and a leading supplier of tablet coating materials, has provided pharmaceutical materials to global drug companies for over 60 years through its 27 locations worldwide.

Colorcon will exclusively distribute Lotte Fine Chemical's products to its pharmaceutical cellulose customers for 10 years.

Pharmaceutical cellulose is a high-value, specialty market with significant technical barriers, requiring about two years of product testing and certification before supplying to pharmaceutical companies.

Lotte Fine Chemical explained that this agreement lays the foundation for selling more output and increasing production.

The company is expanding its pharmaceutical cellulose plant with an investment of 79 billion won ($58.6 million), with completion expected next year.

Once the expansion is finished, Lotte Fine Chemical will become the world's largest pharmaceutical cellulose manufacturer, rising from its current position as the second-largest.

Write to Hyung-Kyu Kim at khk@hankyung.com