SK Holdings said Wednesday its active drug ingredient maker, AMPAC Fine Chemicals, was selected as a major supplier for the project to secure essential medicines conducted by the U.S. Department of Health and Human Services.

SK has contract manufacturing organizations (CMOs), including AMPAC in the U.S., for producing raw materials in Europe and Korea. In January, it has established an integrated corporation, SK Pharmteco in Sacramento, Calif., to increase synergy in the global CMO business.

AMPAC is participating in a consortium led by Phlow, a U.S. nonprofit essential drug provider, to deal with the shortage of treatments during the Covid-19 pandemic.

The U.S. government is supporting the project with the outlay of up to 1 trillion won ($8.15 billion) as part of the emergency budget bill of $8.3 billion that passed the Congress in March to respond to Covid-19. Also taking part in the consortium are Civica Rx, a nonprofit drug manufacturer, and Medicines for All Institute based at Virginia Commonwealth University.

According to the contract, AMPAC will make raw materials in the U.S. manufacturing facility and provide them Phlow. Phlow will then use the raw material to produce the necessary drugs for Covid-19 and for covering the U.S. Strategic Active Pharmaceutical Ingredients Reserve (SAPIR).

SK Pharmteco CEO Aslam Malik said that AMPAC would secure additional facilities for the production of pharmaceutical ingredients at plants in Virginia in addition to the existing Virginia and California facilities.

The raw material provided by AMPAC will be used as SAPIR to make essential drugs for long-term distribution in the U.S. in the long-term, he added.

AMPAC's participation in the consortium is regarded as proof that the company could be a reliable CMO for supplying high-quality raw material by using the U.S. production infrastructure, SK said in a news release.

AMPAC's Continuous Manufacturing Technology (CMT) is one of the critical factors in reducing waste and improving production rates, and the demand is gradually increasing at the production site, it added.

"SK is actively investing in the bio and pharmaceutical business as part of the nation’s new growth engine," a company official said. "We expect the participation at the consortium will contribute to creating social value as well as the continuous growth of the CMO business by stably supplying high-quality raw material."