SK Group integrates medical production affiliates into new U.S.-based entity

By Lim Chang-won Posted : September 2, 2019, 11:03 Updated : September 2, 2019, 11:03

[Gettyimages Bank]

SEOUL -- As part of a strategy to enhance the competitive power of its biotech and pharmaceutical business in the global market, South Korea's third-largest conglomerate SK Group integrated medical production affiliates into a new U.S.-based corporation that will be launched in January next year.

The merged entity, SK Pharmteco, based in Sacramento, California, will serve as an integrated contract manufacturing organization (CMO), which serves other companies in the pharmaceutical industry to provide comprehensive services from development through manufacturing. The popularity of pharmaceutical outsourcing has grown and companies are increasingly outsourcing to CMOs.

The move is aimed at enhancing synergy and efficiency by simplifying the governance structure of SK's drug production business. It would increase cost efficiency in global markets by promoting integrated marketing as a single brand.

SK Holdings, the group's holding company, has controlled SK Biopharmaceuticals, SK Biotek, SK Biotek Ireland, SK Biotek USA and AMPAC. In 2017, SK Biotek, a pharmaceutical CMO, acquired SK Biotek Ireland which produces raw material medicines. SK Biotek USA is a sales and marketing subsidiary. SK Holdings acquired AMPAC, a U.S. contract manufacturer of active pharmaceutical ingredients, in July 2018.

In a regulatory filing on Monday, SK Holdings said that SK Biotech's stocks and assets would be invested in SK Pharmteco in a deal aimed at creating "an integrated synergy by unifying equity and management capabilities" in the group's CMO business. AMPAC CEO Aslam Malik was nominated as SK Pharmteco CEO.

As global competition intensifies, many pharmaceutical companies rely on professional CMOs. SK Group hopes to nurture its CMO business as a major player in the global market.
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