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Lotte Group, a South Korean conglomerate that sells everything from gum to hotel rooms, is doubling down on drug manufacturing at home and abroad after the launch of its pharmaceutical arm.

The planned expansion of Lotte Biologics will build on the $160 million purchase of a Bristol-Myers Squibb plant in upstate New York expected to close later this year. The company also intends to spend $1 billion in South Korea to build a facility that’s five-to-six times larger, while looking for acquisition opportunities in Europe and Boston, Lotte Biologics’ Chief Executive Richard Lee said in an interview.

The new direction comes after a number of prominent South Korean family-run businesses — so-called chaebols that include Samsung Biologics and SK Bioscience — turned to the highly-profitable contract manufacturing sector of the $1.3 trillion global biopharma business. Lee plans to focus on infused medicines for ailments like cancer that are in high demand, sidestepping the rollercoaster of production that’s been driven by the COVID-19 pandemic in recent years.

“The market is blue ocean right now,” he said, referring to the soaring demand for contract manufacturing from global pharmaceutical companies. “There are enough fish in the water,” he said.

Fast follower

The Biologics unit is treading the path perfected by its parent.

Lotte Group, the country’s fifth-largest conglomerate, is known as a “strong second follower,” moving quickly after its competitors to take advantage of growth opportunities. It’s positioned well to do it again in drug production, based on Lee’s experience spearheading Samsung Biologics’ drug product business unit.

He is setting an initial 20% profit goal for his group, conservative in the industry that can generate twice that level and a sign that the parent company plans to give Lotte Biologics time to get established. It could file for an initial public offering in the next five to seven years, if all goes well, Lee said.

In addition to producing established drugs for cancer and other conditions, the business will focus on medicines for emerging areas like Alzheimer’s and Parkinson’s disease, he said, citing companies including Eisai, Daiichi Sankyo, and AstraZeneca. It’s also open to novel approaches, including taking shares as part of the payment from promising smaller companies that are just starting development efforts, he said.

Eventually, Lotte Biologics may look to jointly develop some medicines, Lee said. The company is currently tracking a drug that’s completed the second of three steps needed to get to the market, Lee said.

“We are seeing more new players, game changers coming in, and I think we will continue to have growth,” he said.