Korean drug makers expand active pharmaceutical ingredient production facility

ST Pharm Co. factory in Banwol, Gyeonggi Province [Courtesy of ST Pharm]

Major pharmaceutical companies in South Korea are aggressively expanding their active pharmaceutical ingredient (API) production facilities as they seek to raise the self-sufficiency rate that fell to the lower 10 percent range during the pandemic. APIs are also becoming key products that drive overall revenue amid global shortage and rapid growth of related new drug markets.

According to industry sources on Wednesday, ST Pharm Co., an affiliate of Dong-A Socio Group, recently started construction of its second oligonucleotide manufacturing plant in Banwol, Gyeonggi Province, aiming for completion in the second quarter of 2026.

The plant will manufacture oligonucleotides, which are APIs for oligonucleotide therapeutics. ST Pharm’s current oligonucleotide production capacity of 6.4 mole (about 1~3.2 tons) per year ranks first in the world, and the company plans to more than double it to 14 mole by adding the second plant.

The new plant will be established in two phases, with the goal of completing the first phase, which will increase capacity to 9.1 mole, in the second quarter of 2025.

Over the past few years, ST Pharm has been improving its business structure while focusing its investment on oligonucleotides as its next growth engine.

In the first quarter of this year alone, the amount of oligonucleotide orders reached 118.3 billion won ($92.78 million), exceeding 80 percent of last year’s annual amount.

Global demand for the active ingredients is expected to surge as the application of oligonucleotide therapeutics, previously centered on rare diseases, has expanded to chronic diseases.

The high dependence on overseas APIs has been a persistent issue in the domestic pharmaceutical industry.

In particular, the issue became a topic of public debate during the pandemic when antibiotics and cold medicines were not supplied smoothly due to a shortage of APIs. In fact, it was pointed out that the country should diversify its import sources, given its reliance on China for 80 percent of the core ingredients for major cold medicines such as Tylenol.

SK biotek plant in Sejong, South Chungcheong Province [Courtesy of SK biotek]

Korea’s self-sufficiency rate for APIs has remained in the average 20 percent range over the past five years. However, the rate plummeted to 11.9 percent last year, raising an alarm, as it is significantly lower than that of major countries such as Japan and Europe which exceeds 30 percent.

In particular, the supply chain for APIs is dominated by China and India, making it vulnerable to global value chain disruptions. The country relies on these two countries for about half of its API supply.

In response, major pharmaceutical companies in the country are seeking to expand their API production facilities.

Yuhan Chemical Inc., a subsidiary of Yuhan Corp., is expanding its API production capacity by constructing a new factory at its plant in Hwaseong, Gyeonggi Province.

The new plant is scheduled for completion in October. The company is focusing on the production of APIs for AIDS and hepatitis B treatments. The APIs produced by Yuhan Chemical are supplied to global pharmaceutical companies through Yuhan Corp.

SK biotek, a contract development and manufacturing organization (CDMO) for APIs of SK pharmteco, completed the expansion of its M3 plant in Sejong, South Chungcheong Province last year, with an investment of about 56 billion won.

The expansion increased the production capacity of the plant by more than 50 percent, from about 190 cubic meters to about 290 cubic meters, which is enough to produce 150 tons of APIs per year.

Currently, the plant produces a variety of APIs, including for drugs for reflux esophagitis, diabetes, and stroke for major global pharmaceutical companies in Japan, the U.S. and Europe.

The company also has plans for further expansion in the second half of this year. With the addition of an M4 plant, its production capacity will increase to approximately 400 cubic meters.