Lotte Biologics Bets Drugmakers Will Shift Orders Out of China

The drugmaking unit of South Korea’s Lotte Group is betting on growth from a global shift in pharmaceutical production away from Chinese players amid rising geopolitical tension and tariff uncertainties.

Lotte Biologics made a foray into drugmaking in 2022 by acquiring a facility in Syracuse, New York, from Bristol-Myers Squibb Co. — a move that now allows the contract manufacturer to position itself as an alternative for pharmaceutical companies looking to de-risk their supply chains, Lotte Biologics Chief Executive James Park said in an interview with Bloomberg TV.

The acquisition, finalized just before President Donald Trump threatened tariffs on patented drugs unless drugmakers moved production to the US, helped Lotte win early orders despite being a latecomer to the contract development and manufacturing organizations (CDMO) community. This supply chain shift could bring more US orders and support the company as it aims for an initial public offering in Korea in a few years, Park said.

Lotte Biologics has seen an increasing number of clients who previously used China-based CDMOs now turning to the company for US manufacturing, he said. “From that perspective we are getting some traction and also from European pharmaceutical companies.”

In January, Lotte clinched a deal with Japan’s Rakuten Medical Inc. for its cancer therapy, following partnerships last year with London-based Ottimo Pharma and Boston-based Asimov.

The food-to-hotel conglomerate’s expansion into contract drug manufacturing — which Jefferies estimates will grow from $185 billion in 2025 to $323 billion by 2033 — mirrors moves by other Korean conglomerates including Samsung, Celltrion Inc. and SK Biopharmaceuticals Co. Many of them rushed to secure a US production base last year, with Samsung taking over a $280 million Maryland site from GSK Plc, while Celltrion bought a New Jersey factory from Eli Lilly & Co. for 460 billion won ($318 million).

Lotte’s Syracuse site currently specializes in making antibody-drug conjugates (ADC) — a type of therapy that targets cancer cells without harming healthy ones nearby and one increasingly developed and marketed by global pharma giants as new blockbuster drugs.

Still, undercutting the dominance of Chinese CDMOs will be a tall order for newcomers like Lotte. Despite early fears about the Biosecure Act, which threatened to restrict Chinese CDMOs’ business in the US, overseas demand for their services proved resilient. Top player WuXi Biologics Cayman Inc. continued to gain new orders and saw a 46.3% profit jump and a 16.7% revenue growth in 2025, while expanding in the US, Singapore and Qatar to mitigate geopolitical risks.

In the long term, key structural shifts will depend on the execution of global delivery, Linda Shu, head of China healthcare research at HSBC Qianhai Securities, wrote in a January note.

Back in South Korea, Lotte is now building a $1 billion “megahub” in Songdo, the country’s emerging drug manufacturing hub. Set to open in April 2027 with a 120,000 liter capacity, the company plans to use the new production base to churn out biosimilar versions of several blockbuster drugs with looming patent expirations.

Potential production deals, according to Park, could include copycat versions of blockbuster drugs for Alzheimer’s and Merck & Co.’s high-flying cancer drug Keytruda, whose key patents begin to expire in 2028, opening the door for generic rivals that could cost up to 50% less.

“It’s kind of presale mode this year, but we certainly are attracting a few clients who need a bigger volume,” Park said.

(Bloomberg) Lotte Biologics Bets Drugmakers Will Shift Orders Out of China

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