Celltrion Acquires Eli Lilly's New Jersey Plant in $330M Deal, Citing Tariff Mitigation

South Korean pharmaceutical company Celltrion has announced the acquisition of Eli Lilly's drug substance plant in Branchburg, New Jersey, for 460 billion Korean won ($330 million). The deal, expected to close by the end of 2025, marks a significant move in Celltrion's strategy to mitigate potential pharmaceutical import tariffs and expand its U.S. operations.

Strategic Acquisition and Tariff Mitigation

Celltrion, known for its specialization in biosimilar drugs, views this acquisition as a "fundamental solution to the tariff issue." The company has been proactively preparing for the risk of pharmaceutical import tariffs under a potential second Trump administration. By acquiring the New Jersey facility, Celltrion aims to eliminate "all potential future tariff risks related to its products in the U.S. market."

The 37-acre plant, with an additional 10 acres reserved for future expansion, is equipped to handle the full production cycle, from drug substance manufacturing to finished products, as well as packaging, logistics, and sales. Celltrion plans to retain all employees at the Branchburg facility and begin its own operations "immediately."

Impact on U.S. Operations and Revenue

Celltrion expects the acquisition to provide immediate revenue streams through existing CDMO contracts at the site. The increased U.S. production capacity is anticipated to reduce costs related to U.S.-bound shipments and external contract manufacturing expenses.

The company estimates that it will take 12 to 18 months to validate the acquired facility. Once validated, Celltrion will be able to manufacture and supply its U.S.-bound products directly from the New Jersey plant. This move, combined with efforts to transfer two years' worth of inventory to the U.S. and expand agreements with local contract manufacturing partners, forms a comprehensive strategy to address potential tariff challenges.

Industry-wide Trends in U.S. Manufacturing Investment

Celltrion's acquisition reflects a broader trend in the pharmaceutical industry, with many companies announcing significant investments to strengthen their U.S. production capabilities. Recent examples include:

• GSK's $30 billion investment plan in the U.S. through the end of the decade
• Gilead Sciences' new pharmaceutical development and manufacturing hub in California, part of a $32 billion U.S. investment
• Johnson & Johnson's $55 billion pledge for U.S. spending
• AstraZeneca and Roche each committing $50 billion to bolster their U.S. operations

These investments come against the backdrop of evolving trade policies. While the Trump administration had previously warned of potential pharmaceutical import tariffs as high as 200%, recent trade deals with the EU and Japan have set more moderate rates. Under these agreements, many pharmaceutical imports will be subject to a 15% duty, with generic medicines potentially facing effectively zero or near-zero tariffs.