South Korean biotech companies are on their toes as bio and pharmaceuticals are set to become next after chips and batteries to fall under U.S. mandate to be sourced on U.S. territories for incentives in sales.

President Joe Biden signed an executive order to launch a National Biotechnology and Biomanufacturing Initiative designed to push more government dollars to the U.S. biotechnology industry and build stronger supply chains in the sector.

It remains to be seen how the U.S. administration will allocate its money for the effort, but its emphasis on local production of important chemicals and active pharmaceutical ingredients may be a setback to some Korean contract manufacturer whose bioplants are located mainly in Korea, according to industry watchers on Tuesday.

Korean companies that develop and manufacture biologics under contracts are already recognized on the global stage, but if the U.S. government emphasizes local production, some Korean CDMO companies would be affected, said Lee Seung-gyu, Vice President of the Korea Biotechnology Industry Organization.

Restrictions can influence majors like Samsung Biologics and SK bioscience who manufacture various bio-products for American and other multinational pharmas, including Covid-19 vaccines as well as entrants like Lotte Biologics which only joined the CDMO industry by acquiring a bioplant from Bristol-Myers Squibb in Syracuse, New York.

It is difficult to fathom the impact of this initiative as most of the contracts for biopharmaceutical production business are long-term based.

An SK bioscience official said there would not be a big impact from the initiative as none of its vaccines are exported to the U.S., and contract production are limited to undiluted solutions for U.S. clients. It would have to respond after watching developments.

By Pulse

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