SK bioscience to acquire German CDMO to boost global vaccine production

SK bioscience said it would acquire a controlling stake in IDT Biologika, a German contract manufacturing and development organization (CDMO), for 339 billion won ($243.9 million).

IDT Biologika, founded in 1921, operates extensively in Germany and the U.S. It specializes in developing and producing vaccines and biologics from clinical to commercial stages, serving as a crucial manufacturing partner for leading pharmaceutical and biotech firms worldwide. The company employs around 1,800 professionals.

The acquisition deal was finalized through an agreement with the Klocke Group, the parent company of IDT Biologika. This strategic move will allow SK bioscience to secure 60 percent of IDT Biologika's shares, including new shares worth $80 million (111.4 billion won) through a capital increase, for a total of 339 billion won.

Upon completion of the acquisition, SK bioscience will become the largest shareholder of IDT Biologika, while Klocke Group retains a 40 percent stake.

Klocke Group also plans to invest 76 billion won to acquire a 1.9 percent share in SK bioscience, fostering a robust partnership based on mutual trust and growth potential.

According to SK bioscience, the transaction is a historic milestone for Korea's pharmaceutical and biotechnology industry, representing the largest investment in the nation's vaccine sector to date.

The company expects that the acquisition will yield immediate benefits, including a potential doubling of revenue and establishing a comprehensive manufacturing network meeting the high standards of the U.S. and European markets.

Thanks to the acquisition news, SK bioscience's shares sharply increased on Thursday. As of 10:00 a.m., the company's shares stood at 56,300 won, up 14.08 percent from the previous trading day.

SK bioscience CEO explains the synergy of the deal

SK bioscience held a press conference on Thursday and stressed that the acquisition will leverage IDT Biologika's advanced large-scale cGMP facilities and extensive experience with regulatory bodies to enhance SK bioscience's financial performance.

"With our Andong plant operating at full capacity, the acquisition of IDT Biologika comes at a crucial time," SK bioscience CEO Ahn Jae-yong said. "This acquisition provides us with top-tier facilities and personnel, effectively giving us a five-year advantage."

As a result, Ahn outlined a bolstered business performance as a result of the acquisition.

IDT Biologika reported a record revenue of $466 million in 2022, largely driven by Covid-19 vaccine production, and maintained stable revenues of $410 million in 2023.

"Our goal is to double IDT Biologika's sales and achieve an operating profit structure of over 20 percent of sales," he said. "We plan to actively pursue new projects and customers, optimize costs, and enhance factory utilization while improving the overall management environment."

Ahn also stressed that the synergy between IDT Biologika's technological expertise and SK bioscience's resources is expected to be significant.

The acquisition provides SK bioscience with a stronger foothold in major markets such as Europe and the U.S.

"Utilizing IDT Biologika's superior facilities, SK bioscience plans to advance the global process development of its diverse pipeline," Ahn said. "SK bioscience has been pioneering new markets with our recently developed vaccines through global approvals."

The state-of-the-art production facilities of IDT Biologika offer immediate advantages in expanding our production capacity, Ahn added.

Ahn stressed that the acquisition will also allow SK bioscience to diversify its product offerings by expanding from finished products to bulk raw materials.

"This will enable the company to enhance its existing partnerships with global enterprises, directly benefiting from IDT Biologika's business expansion," the CEO said. "The company also aims to enter new markets, including the CGT and other biopharmaceutical sectors beyond vaccines."

Ahn concluded, "This equity acquisition establishes a new growth axis for our company, facilitating the entry of our core businesses and products into advanced and global markets."

SK bioscience is thrilled about the significant business value this acquisition brings, including immediate revenue generation, establishment of global bases, and efficient production facilities, he added.