Samsung Biologics to double production by 2032; eyes ADCs, M&As

BOSTON – Samsung Biologics Co., the world’s No. 1 contract drugmaker, plans to more than double its total annual production capacity to 1.3 million liters in a decade to further widen its gap with global rivals, the company reaffirmed on Monday (local time) as part of its long-term masterplan.

The South Korean bio contract development and manufacturing organization (CDMO) leader at the Bio International Convention 2023 presented a bird’s-eye view of its new four plants to be built in Songdo, Incheon, west of Seoul, where it already operates four plants with a combined production capacity of 604,000 liters per year.

The new four plants to be ready for commercial operation by 2032 will jointly produce 720,000 liters of medicine, the company disclosed at the global bio convention held in Boston, Massachusetts from June 5 to 8.

The company announced in July last year to double its manufacturing capacity by adding four more plants worth 7 trillion won ($5.4 billion) at its second bio campus in Songdo to cement its leadership by 2032.

The new four plants include the fifth plant with a 180,000-liter capacity, of which the construction plan was already announced in March. The remaining three plants will also produce 180,000 liters of drugs annually.  

TO MORE THAN DOUBLE TOTAL PRODUCTION CAPACITY BY 2032

Once the final eighth plant is completed in 2032, the Korean CDMO giant will be able to churn out 1.3 million liters, ensuring its lead against not only traditional titans such as Lonza Group of Switzerland and Boehringer Ingelheim GmbH of Germany, but also latecomers in China and Japan.

Lonza, the world’s second-largest CDMO, currently produces 410,000 liters a year.

To meet the surging demand, Samsung Biologics will aim to complete its fifth plant five months earlier than the original plan by September 2025, John Rim, the president and chief executive officer of Samsung Biologics, said at the bio convention on Monday.

The company kicked off the full operation of its fourth plant, the world’s largest single biomanufacturing facility, on June 1, less than three years after its construction began. The plant will produce medicines for nine customers.

The company has significantly reduced the construction period of its contract drug-making plant from the day of breaking ground to operation to 31 months from 48 months, Rim said.

“We are breaking our own records not only in production capacity but also in building speed,” he added.

HUNT FOR NEW GROWTH VIA ADCs AND M&As

Samsung Biologics will continue to seek business expansion under its “three-dimensional growth strategy in capacity, geography and portfolio diversification,” the CEO reiterated. The growth strategy was already shared at the 41st Annual J.P. Morgan Healthcare Conference in San Francisco in early January.

At the J.P. Morgan conference, Rim also said that the company was considering CDMO services for antibody-drug conjugates (ADCs) and cell and gene therapy (CGT).

As part of the plan, Samsung Biologics is currently building a new plant dedicated to ADC production to embark on its operation in 2024, he said on Monday, adding that it is time to focus on ADC now while waiting for its foray into the CGT CDMO market.

The Korean biologics company is also looking for M&A opportunities not only in foreign countries but also at home to expand its business realm in line with its parent Samsung Group’s long-term plan to groom bio as one of its new growth engines along with robotics and artificial intelligence technologies.

“We are considering an investment in a Korean company for the sake of open innovation,” said Rim.

LOCAL VS OVERSEAS FOR PRODUCTION FACILITY

The company will eventually build production facilities abroad under its long-term plan, but Korea is currently most attractive for its production facilities, according to the CEO.

Given ongoing uncertainty about state support such as tax breaks for foreign companies in the US, Samsung Biologics is expected to wait for investment in the US for a while.

The industry also expects great synergy between Samsung Biologics and its biosimilar subsidiary Samsung Bioepis Co. through biosimilar portfolio diversification and novice drug development through a Samsung Bioepis fund, invested in by Samsung Biologics in January.

Samsung Bioepis became Samsung Biologics’ fully-owned subsidiary in August last year when the latter completed the first payment of $1.0 billion to Biogen Inc. to take over the American partner’s entire stake in their biosimilar joint venture for $2.3 billion.

Samsung Biologics will pay the rest in installments until 2024, the company said.

The Korean CDMO giant’s cumulative orders amount to $10 billion as of this month, Rim said, adding that it has already secured 13 customers out of the top 20 global pharmaceutical companies.

The company is expected to rake in 3.52 trillion won in sales this year, he said.  

In January it reported an operating profit of 983.6 billion won last year on a consolidated basis, up 83% from the previous year on sales of 3 trillion won, up 91% on-year.

Write to Jeong Min Nam at peux@hankyung.com

Sookyung Seo edited this article.