Samsung Biologics to add new contract drug-making plant

Samsung Biologics CEO Kim Tae-han speaks during the firm's shareholders' meeting at Incheon Global Campus, Friday. / Courtesy of Samsung BioLogics

By Baek Byung-yeul

Samsung Biologics said Friday that it will establish a fourth drug manufacturing plant to expand its capacity in contract-based drug production.

“By the year 2022, the operational capacity of our third plant is expected reach maximum,” CEO Kim Tae-han told shareholders during the general shareholders meeting at Incheon Global Campus.

“In the long run, the company will prepare to add a fourth plant and new bio campus,” he added.

At the meeting, shareholders reelected Kim as a board director.

Located in Songdo, just west of Seoul, the biopharmaceutical affiliate of Samsung Group has built three drug-manufacturing plants there. It is the world's largest contract-based manufacturer in the biopharmaceutical sector with an annual production capacity of 364,000 liters.

Its first and second plants are nearly at maximum capacity, while the third plant that began mass production last year, is at 35 percent. The company said the utilization rate of the third factory will reach 60 percent in 2020, but a new plant will be required in order to meet growing demand.

“Global bio companies are making progress in developing new drugs for Alzheimer's disease and we are also seeing rapid demand from various fields in the biotechnology sector,” Kim said. “We expect securing new customers will be tougher than ever, but at the same time we see this increasing competition as an opportunity to gain new ones.”

A shareholder of Samsung BioLogics undergoes a temperature check at the entrance to the firm's shareholders' meeting held at Incheon Global Campus, Friday. / Courtesy of Samsung BioLogics

During the meeting, the company shared its overseas expansion plan. Samsung Biologics is set to open a research and development center for contract development organization (CDO) in San Francisco this year.

Taking the San Francisco center as a starting point, it will continue to launch overseas branches in the eastern part of the U.S., Europe and China, aiming to become a leader in new drug development and manufacturing.

Samsung BioLogics is also moving to strengthen its compliance and ethics capability as shareholders agreed to appoint Eunice K. Kim, a law school professor at Ewha Womans University, as an external director.

Kim is the company's first female director. She worked as an attorney in the United States for years and has been a director for companies such as Hana Financial Group, Citibank Korea and KB Financial Group.

The company expects the newly appointed director will help the firm improve its compliance with government regulations and address investors' concerns on risks stemming from its alleged accounting fraud.

“Kim is the first female external director of our company. She is a global expert with full experience and knowledge in compliance and internal audits. We expect she can help Samsung BioLogics fully develop a law-abiding monitoring system and ethical management,” a company official said.

The company has struggled with the allegation that it intentionally violated accounting rules to inflate its corporate value in 2015, a year before its initial public offering, by changing the status of Samsung Bioepis from a “subsidiary” to an “affiliate.” Samsung Bioepis is a joint venture between Samsung BioLogics and the U.S. firm Biogen.