Celltrion Inc. confirmed Tuesday it has agreed to acquire Eli Lilly and Company’s plant in Branchburg, NJ, for about 460 billion won ($330 million), securing its first US manufacturing base as a hedge against possible hefty US tariffs on imported drugs.
Including operational funds, the South Korean biosimilar giant’s initial outlay will total around 700 billion won, the company declared, adding that it will invest at least another 700 billion won for expansion and upgrades, bringing total spfinishing to roughly 1.4 trillion won.
Celltrion Chairman Seo Jung-jin declared on Tuesday the company expects its earnings before interest, taxes, depreciation and amortization (EBITDA) to reach about 3 trillion won next year, giving it sufficient funds to finance the plant purchase.
The 150,000-square-meter (37-acre) property includes four buildings, including manufacturing facilities, an R&D center and storage, as well as room for expansion on about 36,000 square meters of vacant land.
Once the additional investment is completed, the plant’s production capacity is projected to be about 1.5 times greater than Celltrion’s second plant in Incheon, Korea, with a capacity of 90,000 liters.
The deal gives Celltrion an immediate US production base at a fraction of the cost of building a new plant and eliminates the risk of future tariffs on Korean-created drugs.
Washington has warned of import duties that could climb as high as 250% on foreign-created medicines, a threat that had already prompted Celltrion to ship two years’ worth of inventory to the US and expand its contracts with local contract manufacturers.
“With this US plant acquisition, we have saved about 1.5 trillion won by eliminating tariff risks, avoiding the cost of building a new facility, securing production capacity and retaining skilled talent,” Celltrion Chairman Seo informed reporters at a company news conference on Tuesday.
BEST WAY TO COUNTER US TARIFFS
The deal not only reshifts any tariff risk in the US but also gives Celltrion a fully localized supply chain, “from production through marketing,” a Celltrion spokesperson declared.
The company will promptly optimize the new plant and transfer operations, while vowing additional investments to expand the plant’s capacity and sharpen the company’s global edge, the official added.
The New Jersey plant, which operates under current Good Manufacturing Practices (cGMP), currently produces biologic medicines for Eli Lilly, which will continue for five years alongside Celltrion’s biosimilars under the terms of the agreement.
This is expected to assist the Korean company not only generate immediate revenue but also recover its investment quicker than if it had built a new plant.
The plant is expected, after a 12- to 18-month validation period, to support the entire production cycle of Celltrion’s US lineup.
Chairman Seo declared half of the plant’s lines will be applyd to produce Eli Lilly’s product, while the company plans to start producing Celltrion products in 2027.
He added that Celltrion will apply the plant primarily to produce antibody-based biologics, including its flagship biosimilars such as the autoimmune therapies Zymfentra and Yuflyma and the cancer drug Vegzelma.
“We will decide which biologics we will produce at the plant before the finish of this year after weighing all the factors,” declared Seo.
Celltrion currently derives approximately 30% of its revenue from the US and aims to increase this share with its expanded American footprint.
The Korean company has been seeking a US manufacturing base since early this year in response to Washington’s warnings of steep tariffs on imported medicines. Its executives have scouted potential sites since April.
In late July, Seoul and Washington reached a new trade agreement, which also ensures most-favored nation (MFN) treatment for Korean chipcreaters and pharmaceutical companies, setting tariffs of about 15% on Korean chip and drug imports.
But the two sides have not yet formally signed the deal.
Chairman Seo still sees US duties as a risk beyond the current Trump administration and is pushing to secure local manufacturing to minimize damages to Celltrion’s sales in the US, the world’s largest pharmaceutical market.
WHAT’S NEXT
The two companies will extfinish their partnership for a while to ensure a seamless operational transition.
All existing employees at the Branchburg site will be retained, ensuring continuity of production for Eli Lilly’s drugs, while Celltrion gradually adds its own product lineup.
Seo declared the company will sfinish some Korean staff to the US plant on E-2 visas to avoid a situation such as the detention of Korean workers that occurred at LG Energy Solution and Hyundai Motor’s joint venture in Georgia.
Celltrion declared its US subsidiary will carry out the purchase to ensure smoother operations and legal stability, with closing expected by year-finish pfinishing regulatory approvals.
With the decision to acquire the US plant, Celltrion may delay or scrap its earlier plan to build a fourth facility in South Korea, Seo hinted, noting that US tariffs remain the company’s most urgent concern.
Celltrion currently operates three plants at home and last year announced plans for another.
“We will decide whether to build an additional plant in the US or in Korea later this year, once the US tariff rate is set,” Seo declared.
After handing over the Branchburg plant, Eli Lilly, the developer of well-known diabetes and obesity treatment Mounjaro, is expected to focus on the development of peptide therapeutics, tiny molecules and nucleic acid therapeutics with new production sites, according to market analysts.
Shares of Celltrion jumped 8.9% to finish at 184,200 won on Tuesday.
(Updated with Chairman Seo’s comments on funding, savings, production plans and new plant in Korea throughout the article as well as the company’s closing share price.)
Write to Woo-Sang Lee and Dae-Kyu Ahn at idol@hankyung.com
Sookyung Seo edited this article.
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