Yuhan Corporation and ST Pharm are securing a string of supply contracts on the back of expanded active pharmaceutical ingredient (API) manufacturing capacity, drawing market attention. Industry observers say the API business is emerging as a new growth driver as the drugmakers' preemptive capacity expansions translate into actual order wins.
According to the Financial Supervisory Service's electronic disclosure system on Wednesday, Yuhan announced it had signed an API supply contract worth $139.81 million (approximately 210.2 billion won) with U.S.-based Gilead Sciences. The product being supplied was not disclosed, citing business confidentiality. The deal comes just two weeks after Yuhan signed an approximately 56 billion won API supply contract with U.S.-based BridgeBio Pharma for a cardiomyopathy treatment earlier this month. Yuhan has secured more than 260 billion won in API orders in this month alone.
ST Pharm, the contract development and manufacturing organization (CDMO) subsidiary of Dong-A Socio Holdings, is also expanding its order base, leveraging its production of oligonucleotides — a key ingredient for ribonucleic acid (RNA) therapeutics. In January, ST Pharm signed an oligonucleotide therapeutic API supply contract worth approximately 82.5 billion won with a U.S.-based global biotech firm. In March, the company added another contract worth around 89.7 billion won with a European pharmaceutical company, building up its order backlog.
The wave of new orders is underpinned by capacity expansion. Yuhan's API business is structured so that its subsidiary Yuhan Chemical handles production while Yuhan Corporation manages global sales and orders. Yuhan Chemical completed the expansion of the HB Building at its Hwaseong plant in April last year, securing production capacity of approximately 995,000 liters. The company is also pursuing an additional expansion of the HC Building at the Hwaseong plant, with capacity of 292,000 liters. Construction is set to begin this year, with operations targeted for the first half of 2028.
ST Pharm completed its second oligonucleotide building at its Banwol Campus in Ansan in September last year, raising its oligonucleotide production capacity from 6.4 moles per year to 14 moles. The plant's current average utilization rate stands at 40 to 50 percent, with the company targeting 60 to 80 percent this year. The firm also plans to decide on further expansion within this year as RNA therapeutic development continues to grow.
As global pharmaceutical companies ramp up new drug development and seek to secure supply chain stability through API outsourcing, Korean drugmakers are expected to see growing manufacturing order opportunities. "API CDMO is a business that simultaneously requires large-scale facility investment and quality reliability," an industry official said. "As the effects of preemptive large-scale expansion are translating into orders from global pharmaceutical companies, APIs will establish themselves as a growth pillar enhancing earnings stability."
