COVID treatment deals drive Samsung Bio’s record quarterly earnings

South Korea’s Samsung Biologics Co. posted its highest quarterly revenue and operating profit, thanks largely to a number of long-term manufacturing deals with global firms on COVID-19 treatment.

The company posted on July 27 an operating profit of 166.8 billion won ($144.5 million) for the second quarter of 2021 on revenue of 412.2 billion won ($357.2 million).

Compared to the same period last year, its operating profit grew by 106% and revenue by 34%. The second-quarter figures were much higher than analyst consensus estimates with an operating profit of 112.3 billion won ($97.3 million) on revenue of 374.4 billion won (324.4 million).  

Previously, Samsung Biologics’ highest quarterly profit was made in the fourth quarter of 2019 at 107 billion won ($92.7 million), while its highest quarterly revenue was in the fourth quarter of 2020 at 375.3 billion won ($309.6 million).

Market watchers highlight that the company’s strong performance is driven by the two large-scale COVID-19 treatment manufacturing deals signed in 2020. In April last year, Samsung Biologics signed a $231 million contract with GlaxoSmithKline (GSK) to manufacture and supply the British firm’s COVID-19 treatment for eight years. In addition, last November, it also signed a $150 million deal with Eli Lilly to make and supply its COVID-19 treatment.

“The COVID-19 treatments have a relatively higher unit price and profitability compared to other drugs. The manufacturing deals on these treatments really drove our profit growth,” said a Samsung Biologics official. The company added that setting up an online factory inspection system last year for potential partners also helped to win the orders.

Due to the COVID-19 treatment deals, Samsung Biologics has operated its Plant 3 in Incheon at 90% capacity, almost double that of the first quarter at 50%. Its Plant 1 and Plant 2 are currently running at almost 100% capacity.

The company by 2023 will build its fourth plant, also in Incheon, which will have the world’s largest manufacturing capacity of 256,000 liters. Samsung Biologics’ annual capacity after completing the fourth plant will be 640,000 liters.

The analysts highlight that the company’s outlook for the third quarter is positive as well, with the revenue generated from making Moderna’s mRNA vaccines starting to be reflected.

Write to Woo-sub Kim at duter@hankyung.com
Daniel Cho edited this article.