SK bioscience Acquires Global Biotech IDT Biologika

Update : 2nd July, 2024

SK bioscience, a global innovative vaccine and biotech company committed to promoting human health from prevention to cure, has acquired a German company, IDT Biologika, one of the top 10 global vaccine contract manufacturers. The IDT Biologika is a global company with an enterprise value of KRW 656 billion. This is regarded to be a notable transaction that will drive the growth of Korea’s biotechnology industry. With this acquisition, SK bioscience will gain a new growth engine and prepare for a leap forward into global markets in earnest.

Image: SK bioscience

SK bioscience has signed an agreement with Klocke Group, a German biopharmaceutical group, to acquire the controlling stake in Klocke Group’s affiliate, IDT Biologika, a contract development manufacturing organization (CDMO) company.

IDT Biologika is a large biotechnology company founded in 1921 with over a century of combined expertise and capabilities. The company has a track record of being recognized by more than 10 key medicines regulatory authorities worldwide, including the U.S. and Europe. It develops processes and analytical methods, as well as manufactures drug substances (DS) and drug products (DP) in vaccines and biologics from a clinical to a commercial scale. The company has built a solid business foundation as a key manufacturing partner for global pharmaceutical and biotech companies, employing approximately 1,800 people.

Through a wholly-owned subsidiary established in Germany, SK bioscience will acquire 60 percent of IDT Biologika’s shares from the Klocke Group for approximately KRW 339 billion. The transaction includes the existing shares and approximately EUR 75 million (KRW 112 billion) in new shares issued through a paid-in capital increase. It will position SK bioscience as the largest shareholder of IDT Biologika. At the same time, Klocke Group will retain its 40 percents stake in IDT Biologika and secure 1.9 percent of SK bioscience’s stake by investing approximately KRW 76 billion. Consequently, SK bioscience will close the deal with approximately KRW 263 billion in cash.

This cross-shareholding acquisition aims to build a close partnership between the two companies based on trust in each other´s business capabilities and growth potential. SK bioscience and Klocke Group will jointly operate IDT Biologika to ensure stable management and new growth.

This transaction is considered as a notable example in the Korean pharmaceutical and biotech industries, as SK bioscience acquires one of the top 10 global vaccine contract manufacturers at a reasonable value. With an enterprise value of approximately KRW 656 billion, this deal represents the largest investment ever made in the history of the Korean vaccine industry. Through this transaction, SK bioscience expects to immediately double its revenue, secure a client network and production capabilities to meet the standards of developed countries such as the U.S. and Europe, and build an integrated infrastructure that connects multiple nations, including the U.S., Europe, and Korea.

SK bioscience also enables it to accelerate its future growth strategy. In particular, this deal means immediate access to best-in-class manufacturing and R&D infrastructure, expansion into the global supply chain for the next pandemic, and immediate entry into the new bio business. Furthermore, the company looks forward to broadening its portfolio and accelerating the implementation of SKYShield (glocalization project) by expanding its potential production base.

Through this transaction, SK bioscience now secures cGMP-level manufacturing and R&D infrastructure to be a global company. It will enable the company to expand its portfolio for developed countries such as the U.S. and Europe and enter new bio business such as anti-cancer viruses and cell and gene therapy (CGT). In addition, it will enable the company to accelerate the growth strategy by diversifying markets based on expanded manufacturing infrastructure for various products under development or completed, as well as securing core supply chain to respond to the next pandemic.

  • Acquiring advanced business capabilities and performances in the U.S. and Europe and securing global talents in the vaccine and bio industry.

IDT Biologika is recognized for its strong business capabilities by wining in all of six categories at the 2024 CDMO Leadership Awards, hosted by Life Science Leader, a U.S.-based life sciences publication, and Industry Standard Research (ISR), a pharmaceutical and biotechnology industry research organization.

IDT Biologika has long-standing CDMO partnerships with over 15 of the world’s major biotech and pharmaceutical companies, as well as research institutions. Takeda is one such company that IDT has partnered with many years for its dengue vaccine. In addition to manufacturing vaccines for viral diseases such as COVID-19, the company has experience in contract manufacturing of various biopharmaceuticals. IDT Biologika has also the capability to expand into the CGT business especially as the producer of one of the few worldwide FDA and EMA-approved oncolytic viral therapies of a global player. The CGT business is one of the future growth engines of SK bioscience.

With over a century of experience and a large-scale cGMP manufacturing facility, IDT Biologika has worked with regulatory agencies in developed countries, including the U.S. FDA, EMA, Brazilian ANVISA, and Korea Food and Drug Administration, as well as multinational biopharma companies. Furthermore, the company has signed a capacity reservation contract for a vaccine supply with the German government, based on a solid basis of trust, for 80 million doses per year for the next five years. IDT Biologika has more than 1,800 global talents with long-standing expertise in the vaccine and bio fields, from process development to commercialization.

Based on such proven track record of technology and expertized talents, SK bioscience is expected to create synergies with IDT Biologika. SK bioscience has demonstrated its superior CMO and CDMO capabilities during the COVID-19 pandemic by winning multiple contracts to manufacture and supply COVID-19 vaccines with global pharmaceutical companies. Andong L HOUSE, the company’s vaccine manufacturing plant, has acquired EU-GMP (Good Manufacturing Practice) certification. Last year, the company signed a contract with global pharmaceutical giant Merck & Co., Inc. (MSD) to contract manufacture next-generation Ebola vaccine candidates.

  • Securing cGMP-compliant infrastructure to accelerate expansion to global business.

The transaction paves the way for SK bioscience to strengthen its global presence for its main products, notably in Europe and the United States.

SK bioscience has recently explored new markets by applying for and obtaining global licensing for its self-developed vaccines. The company has been discussing on expanding its production capacity, including the expansion of Andong L HOUSE, to meet increasing global demand in line with its global expansion strategy.

IDT Biologika´s advanced production facilities will help to accelerate immediate production expansion. It enables SK bioscience to develop processes suitable for its diverse pipeline for global markets.

IDT Biologika´s geographical location in Germany is also an advantage. Germany accounts for 20 to 30 percent of vaccine production in Europe, making it a significant manufacturing base. In addition to the 1.36 million-square-meter production facility in Germany, the company also operates in Maryland, United States, allowing these facilities to serve as a base for both Europe and North and Central American markets.

IDT Biologika will enable SK bioscience to diversify its business by expanding its main export products, which are mostly finished drug products, into bulk drug substances. In addition, it is expected that SK bioscience will immediately leverage its current global partnerships to expand IDT Biologika´s business expansion.

SK bioscience plans to maximize the synergies of SK bioscience and IDT Biologika´s core competencies and actively expand its partnership network by leaps and bounds. In particular, the company aims to expand its business into biopharmaceuticals other than vaccines, such as CGTs, to further accelerate its entry into new markets.

  • Doubling revenue immediately and enhancing mid-to-long-term corporate value.

This transaction is expected to contribute to SK bioscience´s financial performance based on IDT Biologika’s solid sales.

IDT Biologika recorded its highest sales in its history at EUR 312 million (KRW 466 billion) in 2022, when it was contract manufacturing COVID-19 vaccines. Even after the pandemic transitioned into the endemic stage, the company’s business remained stable with revenues of approximately EUR 275 million (KRW 410 billion) last year. In terms of EBITDA (earnings before interest, taxes, depreciation, and amortization), a measure of a company´s capacity to generate cash from operations, the company remained on track at EUR 33 million (KRW 50 billion) in 2022 and EUR 16 million (KRW 24 billion) in 20230

Non-coronavirus products accounted for 95 percent of the company´s total sales last year. The prospects for future sales are even more positive based on the existing C(D)MO contracts and new growth in various business areas.

SK bioscience aims to more than double IDT Biologika´s revenue and stabilize its operating profits at more than 20 percent of revenue. To achieve this goal, SK bioscience will actively pursue new projects and clients, and increase plant utilization rates under a cost optimization strategy. At the same time, the company will prepare a package of management enhancements, including streamlining investments and operation costs.

Carsten Klocke, CEO of the Klocke Group, said, "I am delighted with SK bioscience´s decision to enter the future together with us. This shows that they value and trust our know-how, our scientific expertise, and our strong partnership with customers.” He added, “We have invested significantly in the future of IDT Biologika in recent years. In addition to the development of highly qualified personnel along the entire value chain, the expansion of our manufacturing capacities, including in the production of drug substance and large-volume filling, was a key focus. We are combining our expertise and commercial capabilities to contribute to the health of people worldwide."
Dr. Ulrich Valley, CEO of IDT Biologika, said, “IDT Biologika has built up an excellent reputation in the field of viral vaccines in recent years and has a reliable business with top pharmaceutical companies as well as government agencies worldwide.” He added, “SK bioscience is also pursuing this strategy and has extensive expertise in the development and production of vaccines, enabling us to jointly expand our market position."
Jaeyong Ahn, CEO and President of SK bioscience, said, "The main purpose of this deal is to establish a new growth base and to further expand our core businesses into global markets, including developed countries. Since it represents a high business value for the investment by securing immediate revenue, a global production base, and efficient production facilities, we will continue to make an effort to enhance the company´s corporate value.”

Source : SK bioscience

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