Hanmi's $200M China plant likely to make branded drugs versus generics

South Korean drug manufacturer Hanmi is building a $200 million manufacturing plant and R&D center in China, though it won't, apparently, be producing generic drugs at the facility.

The company announced earlier this year it would build the plant on a 200,000-square-meter swath of land near Yantai in an economic development zone in the eastern province of Shandong. The facility will be the production site for chemosynthetic and biological drugs as well as various health foods. However, the company known for generics has decided to take a different route and is steering toward branded medicine. It will commit 80% of its R&D toward that end, a top executive of the company said.

“We will embark on an R&D strategy in which we gradually reduce the weight taken up by generics and come out as a company specializing in branded drugs,” Hanmi President Lee Gwan-sun told The Nikkei. The company has been steadily growing its presence in China since starting up business there in 1996.

"Among global pharmaceutical markets, China will probably experience continuously high growth," Lee told the publication. "We're set on leveraging our two decades' worth of experience in China to develop the market.” The majority of the drugs Hanmi has zeroed in on are for obesity, diabetes, autoimmune diseases and cancer.

After seeing its stock soar to astronomical levels after signing licensing deals with large Western pharma companies in 2015, Hanmi’s shares stagnated, and the move into branded drugs is seen as part of Lee’s strategy to reinvigorate revenues.

In its fiscal year ended in December, the company reported spending $163 million on R&D, whichThe Nikkei reported was double the amount 5 years earlier. The company told the publication that moving forward, it will budget the equivalent of more than 20% of group sales to capital spending and funnel the majority of that money to branded drugs.

The new facility in China is expected to be completed by 2026. Hanmi says it has about 28 new drug candidates in the pipeline at this time.