CJ Group is comprehensively overhauling its strategy five years after entering the bio business. Batavia Biosciences (Batavia), a Netherlands-based cell and gene therapy (CGT) contract development and manufacturing organization (CDMO) subsidiary into which 300 billion won was invested, is undergoing liquidation, while CJ Bioscience has also halted the clinical trial of its key immuno-oncology drug. The move is seen as shifting the center of gravity from a "two-track strategy" of growing both manufacturing (CDMO) and new drug development toward businesses with higher short-term profitability, such as health functional foods. It is interpreted that group-wide rebalancing has gained momentum after CJ CheilJedang (097950) announced early this month that it would restructure its business portfolio around growth potential and profitability.
According to industry sources on Wednesday, Batavia, the Netherlands-based CGT CDMO subsidiary of CJ CheilJedang, has entered the process of winding down its business. Korean staff who had been dispatched to the site are also known to have all returned home. An industry official said, "With the corporate value having fallen sharply, it is difficult to find a buyer," adding, "liquidation rather than a sale is being discussed." Batavia's website is currently also inaccessible.
The construction of a new Good Manufacturing Practice (GMP) production facility that Batavia had been pursuing was also delayed beyond the original plan. After being acquired by CJ, Batavia began building a production facility with a total floor area of 12,000 square meters in Leiden, the Netherlands. The plan was to secure production capacity of up to 200 million vials of finished pharmaceuticals annually, expanding its production scope beyond existing CGT to include viral vector-based vaccines and therapeutics. It had originally targeted completion in the second half of last year, but construction has not yet been finished.
CJ CheilJedang acquired a 75.8% stake in Batavia for approximately 267.7 billion won in 2021 to enter the CGT CDMO market, and in February this year it acquired the remaining 24.2% stake early, incorporating it as a 100% subsidiary. However, with the company reviewing a withdrawal just months after fully incorporating it as a subsidiary, the investment of about 300 billion won appears to be effectively ending in failure.
The new drug development axis is also faltering. In May this year, CJ Bioscience voluntarily terminated the global Phase 1 clinical trial of "CJRB-101," a microbiome (gut microbe) immuno-oncology drug that is its core pipeline. This came three years after it received Investigational New Drug (IND) approval from the U.S. Food and Drug Administration (FDA) in 2023 and pursued a combination trial with MSD's immuno-oncology drug "Keytruda" in Korea and the United States.
Research and development (R&D) competitiveness is also weakening. CJ Bioscience's R&D spending fell 22% from 23 billion won in 2024 to 17.9 billion won last year. R&D personnel also declined from 86 in 2023 to 54 at the end of last year and 46 in the first quarter of this year, halving in two years. Instead, it is restructuring its portfolio around businesses with high short-term profitability, such as gut microbe analysis services and health functional foods. However, the poor performance continues. On a consolidated basis, first-quarter revenue was 783 million won, with an operating loss of 5.3 billion won.
In 2021, CJ successively acquired Batavia and ChunLab (now CJ Bioscience), presenting a two-track strategy of "stable cash generation through CDMO and microbiome new drug development." The concept was to build a virtuous cycle of reinvesting cash generated at Batavia into new drug R&D. However, as the CGT market, which had grown rapidly after COVID-19, quickly contracted and new treatment platforms such as antibody-drug conjugates (ADC) emerged, CDMO demand fell short of expectations. Ultimately, CJ CheilJedang recognized a loss (impairment loss) of about 392.8 billion won on Batavia-related assets last year.
Microbiome new drug development has also failed to overcome the wall of commercialization. An industry official explained, "Microbiome therapeutics are difficult to consistently prove therapeutic effects because gut microbe composition differs from person to person," adding, "There is technical potential, but at present it is closer to a role of supplementing existing treatments than being an independent therapeutic."
