‘Biden’s biomanufacturing initiative could benefit Korean biotech firms’

U.S. President Joe Biden on Monday signed an executive order implementing a new initiative aiming to boost biomanufacturing in pharmaceuticals.

The initiative aims to help expand U.S. biomanufacturing capabilities and reduce reliance on China.

According to people familiar with the matter, the order lays out a strategy to bolster U.S. manufacturing that harnesses biological systems ranging from new medicines to biofuels and food.

While the U.S. government has yet to announce the details, industry officials expressed high expectations that the new initiative may be beneficial to the Korean biotech industry.

“In my opinion, except for some items such as vaccines, there are not many cases in which Korean companies produce U.S. pharmaceutical companies’ drugs on consignment, so the impact will be limited,” said an industry official, asking to remain anonymous due to the sensitivity of the issue. “While we will have to wait and see how much of an impact the initiative will have on the local industry, as specific regulations have not been announced, there are many companies that want to start a contract manufacturing organization (CMO) or contract development and manufacturing organization (CDMO) business in the U.S.”

CDMO companies may find it easier to enter the U.S. market if the U.S. government includes support measures, such as tax reduction for establishing manufacturing facilities in the U.S., he added.

He stressed that as the initiative's purpose seems to be aimed at China, it seems unnecessary to worry too much about how much it will affect the Korean biotech industry.

Another official at a local biotech firm agreed.

“The new initiative will have a positive effect on Korean CDMO companies,” an official from a Korean CDMO company said. “When global U.S. pharmaceutical companies entrust their production on consignment, they prefer to manage the contract by giving and receiving feedback from a nearby production facility.”

If this initiative provides some institutional support from the U.S. government, it will be easier for CDMO companies with ample capacity to sign new agreements, he added.

The official stressed that if Korean CDMO companies can meet the requests of .U.S. pharmaceutical companies, factories established in the U.S. may have a real advantage.

However, a local analyst said the U.S. biomanufacturing initiative could have a negative impact on some companies such as Samsung Biologics and SK Bioscience.

“Some Korean biopharmaceutical companies are in charge of contract manufacturing of pharmaceuticals from U.S. pharmaceutical companies,” said Lee Jun-soo, an analyst for Prophet Asset Management. “Such companies include Samsung Biologics, which is producing Moderna’s Covid-19 vaccine, and SK Bioscience, which is manufacturing Novavax’s vaccine in Korea.”

Even if Korean biopharmaceutical companies can receive benefits from establishing a manufacturing facility in the U.S., it will take a considerable amount of time before they can become operational and generate profit, Lee added.