Lotte buys Bristol-Myers Squibb plant in Syracuse, New York

Lotte is purchasing a Bristol-Myers Squibb bio plant in Syracuse, New York for $160 million.

Bristol-Myers Squibb’s plant in Syracuse [LOTTE CORPORATION]

Lotte is purchasing a Bristol-Myers Squibb bio plant in Syracuse, New York for $160 million.

The acquisition includes the Syracuse manufacturing plant and equipment. The workforce will stay. Lotte is aiming to close the deal this year.

The company's board of directors approved the decision Friday.

Lotte Biologics, a soon-to-be-established biopharmaceutical subsidiary, will undertake the acquisition. According to Korea Intellectual Property Rights Information Service, Lotte registered a trademark for Lotte Biologics on April 27.

"The Syracuse plant has been manufacturing drugs for a long time and can be easily operated by us, and is the perfect opportunity for Lotte to quickly grow in the bio industry, a market with very high barriers," said Lee Won-jik, head of Lotte's second new growth team.

Lotte will renovate the Syracuse plant to fulfill contract development and manufacturing organization (CDMO) orders.

Once the acquisition is completed, Lotte Biologics will use the plant to manufacture $220 million of bio products over three years for Bristol-Myers Squibb.

Lotte Biologics also plans to develop its own drugs in the future.

The plant was built in 1943 and was responsible for manufacturing 70 percent of the world’s total penicillin production until the mid-2000s. It has been since renovated into a facility that focuses on making commercial biopharmaceutical products and can annually make 35,000 liters of drug substances.

Lotte has been planning to enter the biopharmaceutical market for some time. Lotte Group Chairman Shin Dong-bin said bio and health care will be the chaebol's future growth engines at a meeting in January.

Other companies are also getting into the business.

CJ CheilJedang acquired 43.99 percent of Chun Lab in July last year and renamed it CJ Bioscience, focusing on developing drugs and health supplements based on microbiomes, a genetic material used in drugs that treat digestive disorders, obesity and diabetes.

BY LEE TAE-HEE [lee.taehee2@joongang.co.kr]