SK Biotek Co., a manufacturer of raw materials for medicines wholly owned by SK Holdings, the holding company of South Korea’s SK Group, will acquire a global pharmaceutical company Bristol-Myers Squibb (BMS)’s manufacturing facility located in Ireland.

SK Holdings said on Sunday that SK Biotek decided to buy BMS’s small molecule active pharmaceutical ingredient manufacturing plant in Swords, Ireland. The company did not disclose the value of the deal.

Through the acquisition, SK Biotek will be able to supply its products manufactured in the facility to BMS and U.K.-based pharmaceutical firm AstraZeneca.

SK Biotek expects the takeover would significantly boost the firm’s profit as the pharmaceutical raw materials produced at the plant are mainly for drugs to treat cancer, diabetes and cardiovascular disorders. Demand for such treatments is rising rapidly in the global market due to the population aging.

SK Biotek will become the country’s first biopharmaceutical company to acquire a whole manufacturing facility of a global drug firm. With the acquisition, SK Group aims to expand its presence in the European market and broaden its biopharmaceutical business, one of its new growth engines, in the global market.

The U.S.-based BMS founded in 1877 is one of the major pharmaceutical companies in the world, recording $19 billion in revenue last year. SK Biotek has been supplying its active pharmaceutical ingredients to BMS over the last 10 years.

BMS decided to sell the plant to enhance cost-effectiveness by consigning raw material production to a contract manufacturing organization (CMO). Global pharmaceutical companies are increasingly moving from internal production to CMO or external suppliers in order to cut costs. For instance, Swiss drug giant Novartis has sold 25 manufacturing facilities since 2010.

By Jung Wook and Shin Chan-ok

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