Janssen, Bayer to close South Korean plants due to limited demand

Janssen and Bayer are closing manufacturing plants in South Korea. (Pixabay)

Another drugmaker will close up manufacturing in South Korea. Janssen Korea will shutter its Hyangnam plant in Hwaseong, South Korea, by 2021, laying off an undetermined number of workers.
 
According to a Janssen Korea spokesperson cited by The Korea Times, the closure is a strategic decision made over limited needs for solid-dosage drugs.

“Our manufacturing network for solid dosage forms was found to have significant excess capacity, and our future pipeline is unlikely to drive significant volume upside for the solids, due to an ongoing shift of production to cancer drugs and immune booster injections,” the spokesperson told the Korean newspaper.

A Johnson & Johnson spokeswoman confirmed the closure to FiercePharma, saying that the company reached the conclusion after a review of existing and future global manufacturing capabilities.

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“This decision was not made lightly, and Johnson & Johnson remains committed to the Korean market, with further investment planned for the company’s Incheon facility and through its local partnership to produce innovative beauty products in Cheongju for the global market,” said the spokeswoman.

It is not yet clear how many staffers will be affected, but the J&J spokeswoman said the company will provide them with resources, support and opportunities for ongoing employment during the next three and half years.

The Janssen announcement follows one by Bayer, which in May said it would close a plant in Anseong that manufactures contrast media, according to Business Korea. It now intends to stop operations at the plant by the end of the year as it seeks a buyer.

RELATED: Samsung BioLogics reports $420M in sales for 2017, helped by production boosts from new plants

Bayer has been selling off assets to fund its Monsanto acquisition. It has just agreed to sell its prescription dermatology unit to Denmark’s Leo Pharma.

A declining Korean market and hence an increasing payroll burden was cited as a reason for the closure. “We have no reason to maintain our plants in every country, because of the global tendency of establishing integrated logistics centers,” a Bayer Korea spokeswoman said, as quoted by The Korea Times.

This is at least the second plant Bayer has closed in the country, following the shutdown of its Namyangju plant in 1999. After that, Novartis, Eli Lilly, Pfizer, Roche, Boehringer Ingelheim and Merck & Co. followed suit, and over 16 plants run by multinational pharma companies have been closed in South Korea over the past two decades, according to Business Korea’s tally.

In contrast to global pharmas’ retreat from Korea, some local drug manufacturers are expanding. For example, buoyed by the increasing global need for biologics, CDMO giant Samsung BioLogics is in the process of completing a third, $740 million biologics plant in Incheon, and a fourth one could be on the horizon should drugs by major clients Roche and Biogen pass clinical tests.