Samsung Biologics rights offering highlights future growth, but stock price drops

Samsung Biologics will issue new shares worth 3 trillion won ($2.17 billion) to finance its planned acquisition of a Swiss-headquartered contract drug manufacturer and the expansion of its manufacturing facilities in Korea.

Its shares fell after the announcement on Friday, as the new offering will increase the number of outstanding shares. However, analysts said the capital increase could strengthen Samsung Biologics’ long-term growth prospects by helping the company quickly enter the fast-growing market for materials used in obesity treatments and expand capacity ahead of further large-scale orders.

Samsung Biologics said it will issue 2.27 million new shares, equivalent to 4.9 percent of its outstanding shares. The planned offering price is 1.322 million won per share, which will raise a total of 3 trillion won.

Of the proceeds, 2.7 trillion won will be used to finance the acquisition of PolyPeptide Group, and 294.8 billion won will be allocated to facility investment for the company’s sixth plant in Incheon.

PolyPeptide Group is a global contract development and manufacturing organization (CDMO) specializing in peptide-based drugs. On July 17, Samsung Biologics decided to acquire the company for 2.7 trillion won, marking the largest acquisition deal in Korea’s biotech industry.

Peptides are widely regarded as a hybrid modality between chemical drugs and biologics. They tend to cause fewer side effects than chemical drugs while retaining strong efficacy by binding precisely to disease-related proteins.

Demand for peptides has been rising rapidly as obesity treatments based on glucagon-like peptide-1 (GLP-1), such as Wegovy and Mounjaro, have gained global popularity. As pharmaceutical companies accelerate the development of GLP-1-based obesity drugs, demand for peptides, a key ingredient in such treatments, is expected to grow further.

The proceeds will also be used to expand Samsung Biologics’ production capacity. The company completed its fifth plant in Songdo, Incheon, last year and is set to add three more plants. Once the expansion is completed, the company’s total production capacity will reach 1.385 million liters per year, up from the current 785,000 liters.

“The immediate entry into the peptide market to meet surging demand driven by GLP-1 obesity treatments is a positive development,” Shinhan Securities analyst Lee Ho-cheol said. “The company is also planning Plant 6 with a target capacity of 180,000 liters, and the decision itself reflects a solid order backlog and the possibility of securing additional large-scale contracts.”

Despite the upside potential, Samsung Biologics closed at 1.486 million won on Friday, down 6.78 percent from a day earlier, because the new offering will increase the number of shares outstanding in the market.

The company said it will give existing shareholders priority for new shares, with any unsubscribed shares to be offered to the public. Under the law, 20 percent of the new shares will first be allocated to the company’s employee stock ownership association, while the remaining 80 percent will be offered to existing shareholders in the form of subscription rights.

Samsung Biologics stressed that limiting the offering to below 5 percent of its outstanding shares would have minimal impact on shareholder value. It added that its largest shareholder and related parties together hold a 74.3 percent stake in the company.

"Building on our position as a global top-tier CDMO, this capital raise sets the stage for our next phase of growth,” Samsung Biologics CEO John Rim said. “We are confident that executing our growth strategy, including the acquisition of PolyPeptide Group and the expansion of bio campus, will deepen our leadership and create lasting value for shareholders."