Samsung Electronics Chairman Lee Jae-yong visits the Samsung BioLogics Incheon business site on the 16th and inspects the construction site of Plant 5. /Samsung
Samsung Electronics (005930) Chairman Lee Jae-yong visited Samsung BioLogics (207940) Incheon business site on the 16th. It was chosen as the first domestic site for management of the site after being acquitted in the first trial on suspicion of illegal succession of management rights, and there are interpretations that it will further strengthen the position of the biobusiness within the Samsung Group.
This interpretation can be easily seen by looking at Chairman Lee’s actions that day. On this day, Chairman Lee inspected the 5th factory site, which is under construction with the aim of completion next year, and the 4th factory production line, which is currently in full operation . Next, we received a report on the medium to long-term technology development roadmap and business strategy from Samsung BioLogics management. An official from the company said that Chairman Lee said at this event, “Let’s not be satisfied with our current performance, let’s take on a bolder challenge and move forward towards a higher goal.”
The bio industry market is more than twice as big as the semiconductor market. This is a challenge for Samsung, which strengthened its semiconductor capabilities in the early days of mass production. However, it is considered an area with a high barrier to technological entry. The top 10 global pharmaceutical companies include only American and European companies. From Samsung’s point of view, it is a business that must be approached with a long-term perspective like semiconductors.
Samsung BioLogics, which leads the bio business that Samsung Group has identified as the driving force of the future, recorded its highest ever performance by surpassing 1 trillion won in operating profit for the first time last year.
After choosing bio as a future start-up in 2010, Samsung established Samsung Biologics in 2011 and began the business of developing and producing biopharmaceutical shipments. Annual sales, which were only about 300 billion won at the time of listing in 2016, have increased about 12 times to about 3.7 trillion won in 7 years. By continuing to invest, we have achieved the world’s No. 1 production capacity by 2022. Last year, it achieved its highest performance ever, recording sales of 3.7 trillion won and operating profit of 1.1 trillion won. It is the first domestic pharmaceutical and bio company to exceed 1 trillion won in annual operating profit.
From Samsung Group’s point of view, a ‘green light’ has been given for the cause to continue to ‘drive’ the bio business.
However, the market situation is not easy. In fact, competition has intensified recently as the number of latecomers entering the biopharmaceutical contract development and manufacturing (CDMO) market has increased.
Samsung BioLogics implements a ‘big gap strategy’ to produce results that others cannot imitate through bold investments, efforts and innovation. By 2032, we plan to invest 7.5 trillion won in the Songdo Campus in Yeonsu-gu, Incheon to create a second campus with an area of 110,000 pyeong, and build four additional factories, including factories 5 and 6, there. Through this, we intend to create a ‘second semiconductor legend’ in bio. Jon Lim, CEO of Samsung Biologics, said, “When Factory 5 is completed next year, we will have the world’s No. 1 biopharmaceutical production capacity with a total of 784,000 liters.”
Chairman Lee visited the United States last year and met with Akin Duato, CEO of Johnson & Johnson, Giovanni Caporio, CEO of Bristol-Myersquip (BMS), co-founder of Moderna Nuvar Apeyan, CEO of Flagship Pioneering, and Christopher Biebacher, CEO of Biogen, I also met Organon’s CEO, Kevin Ali, one after the other.
J&J, the world’s third largest pharmaceutical company, is a major customer of Samsung, and BMS was the first customer to place an order for pharmaceutical production with Samsung BioLogics in 2013. Biogen has a history of jointly establishing Samsung BioLogics and Samsung Bioepis. Organon sells Samsung Bioepis biosimilar products in the US and Europe. Flagship Pioneering, a global pharmaceutical and bioinvestment company, has invested in Moderna.
Samsung BioLogics created a ‘Life Science Fund’ and made pre-emptive investments in future technologies. The Life Science Fund is a 240 billion won fund created by Samsung C&T, Samsung BioLogics, and Samsung Bioepis, and participates in equity investments in promising biotechnology companies.
Currently, an open innovation center is being built on the second biocampus to dominate the next generation biopharmaceutical market, such as antibody conjugates (ADC) and cell and gene treatments. Construction of an ADC production facility in Songdo, Incheon is also underway with the goal of completion this year. ADC is an anti-cancer drug technology that attaches a drug to an antibody that seeks out cancer cells and sends it to the cancer cells, delivering the drug only to the area needed, just as a missile (antibody) flies directly towards the target (cancer cell) and explodes with a warhead (drug). Manufacturing capabilities are needed in many areas to produce ADC drugs. Accordingly, cooperation between companies and mergers and acquisitions (M&A) are becoming active.
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