Merck to build new Asia Pacific bioprocessing center in South Korea

Ministry of Trade, Industry and Energy and Daejeon City signs a memorandum of understanding with Merck on May 3. From left, Lee Chang-yang, the minister of Trade, Industry, and Energy, Matthias Heinzel, the chief executive officer of the Life Science business of Merck and Lee Jang-woo, the mayor of Daejeon city. [Photo provided by Merck Life Science]

Merck Life Science, a global pharmaceutical company headquartered in Germany, is set to invest hundreds of billions of won to build a biopharmaceutical production base in Daejeon, some 140 kilometers south of Seoul.

South Korea’s Ministry of Trade, Industry and Energy and Daejeon City signed a memorandum of understanding (MoU) with Merck on Wednesday to build a new Asia-Pacific bioprocessing center in Daejeon. The planned bioprocessing facility would support commercial manufacturing for biotech and pharmaceutical customers across Asia Pacific and is expected to stabilize the supply chain of raw and subsidiary materials for local biopharmaceuticals, which are highly dependent on imports, as well as helping revitalize the local economy.

“South Korea is an emerging global leader in the biotech industry, and the planned facility would play a vital role in further developing the biopharma industry in Korea,” said Matthias Heinzel, a member of the executive board and chief executive officer of the Life Science business of Merck.

The scale of Merck’s investment has not been disclosed in detail, but industry insiders expect it to reach hundreds of billions of won. The German-based pharmaceutical company plans to finalize the investment within the year and if construction starts immediately, the facility is expected to be operational as early as 2025. It is the second time after China that Merck is building such a production facility in the Asia-Pacific region.

Merck also unveiled plans to work with Daejeon City to support biotech companies based in the Daedeok Special Zone for Research and Development in Daejeon and expand bio-research cooperation with leading Korean universities.

“Daejeon is a city that spares no effort to support science and technology-related research institutes, universities and companies, so we judged that it would provide a sufficient foundation for developing new technologies in the field of biotechnology,” an unnamed official from Merck.

Daejeon receives 40 percent of the country’s R&D budget for the domestic science field. It is also home to various universities, research institutes and talents, including the Korea Advanced Institute of Science and Technology (KAIST), Korea Reseach Institute of Bioscience & BioTechnology (KRIBB), and Korea Atomic Energy Research Institute (KAERI).

“Daejeon is the birthplace of the Korean biotech industry, where companies with excellent technology and growth potential are gathered,” said Lee Jang-woo, mayor of Daejeon. “This planned investment by Merck will help Daejeon grow into a world-class biotech hub.”

Industry insiders expect that this investment will strengthen the local supply chain of biopharmaceutical raw materials. According to the Korea Pharmaceutical and Bio-Pharma Manufacturers Association, the self-sufficiency rate of biopharmaceutical raw materials in Korea is declining every year from 31.8 percent in 2014 to 26.4 percent in 2018 and 24.4 percent in 2021 as a significant amount of local biopharmaceutical raw materials are imported from China and India due to the lack of price competitiveness.

Currently, 90 percent of acetaminophen used in Korea comes from China. Furthermore, the supply of such raw materials could be disrupted depending on the international situation, given the intensifying competition for hegemony between the U.S. and China.

Industry insiders also expect Merck’s large-scale investment to have a positive impact on balanced regional development in the country. According to the trade ministry, the number of companies moving their production facilities out of the Seoul area decreased to 5 in 2022 from 36 in 2013. The proportion of manufacturers in the capital area, on the other hand, has been increasing since it surpassed that of the non-capital areas for the first time in 2020. Non-capital areas are also in danger of extinction as local industries are disappearing due to low birth rates and an aging population.