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| Samsung Biologics CEO John Rim / Courtesy of Samsung Biologics |
This is the third in a series of articles to highlight the growing importance of the biotech industry after the outbreak of the COVID-19 pandemic and shed light on the nation's biotech companies. ― ED.
By Baek Byung-yeul
When a COVID-19 vaccine shortage emerged as a major problem facing countries around the world, Samsung Biologics stepped up to play the role of a troubleshooter by signing a production contract with U.S. biotech firm Moderna in May.
Starting in the third quarter of this year, the Korean drug manufacturer produced hundreds of millions of COVID-19 vaccine doses through a fill-and-finish production process at its Songdo factory in Incheon, southwest of Seoul.
The Moon Jae-in administration is trying to develop the biotech industry into a new axis of the Korean economy, and Samsung Biologics is eyeing a key role in that scheme by helping other domestic biotech companies grow.
One example of Samsung Biologics' efforts to foster local firms can be found in its cooperation with domestic parts equipment maker Junghyun Plant.
Pharmaceutical production requires various types of pressurized vessels for containing chemicals. Among them, incubators are essential for the large-scale proliferation of cells. But domestic manufacturers had a difficult time making incubators due to a lack of technology.
Samsung Biologics launched a localization project last November in partnership with Junghyun Plant. The objective was to make it possible to purchase the equipment at a lower price and enhance productivity by closely cooperating with local firms that are familiar to the domestic industry.
Despite the COVID-19 situation, Samsung Biologics executives and employees visited Junghyun Plant, held online meetings with its workers and fully supported the company's acquisition of necessary technology to manufacture pressurized vessels.
Thanks to the two companies' efforts, Junghyun Plant will supply pressurized vessels including incubators for Samsung's fourth plant, which is under construction now.
Junghyun Plant is the second case of Samsung Biologics' push to localize drug-manufacturing equipment. Another example is BiOCS, a domestic manufacturer of detergents and disinfectants for the biopharmaceutical industry. In 2016, Samsung supported BiOCS in developing cleaning equipment and inked a contract to use the company's equipment.
Thanks to the partnership, BiOCS was able to expand its customer base both domestically and abroad. BiOCS ended up supplying its equipment to a Singapore-based company.
"Since its foundation, Samsung Biologics has been steadily promoting the localization of raw substances and drug-manufacturing equipment. The firm will continue to contribute to the expansion and development of the Korean biotech industry by enhancing the competitiveness of domestic companies and actively supporting them to enter the global market," a company official said.
In addition to achieving win-win growth with domestic companies, Samsung Biologics is seeking to become a leading global contract manufacturing organization (CMO) business.
Based on its competitiveness as the world's largest CMO drug manufacturer, Samsung Biologics is also seeking to diversify its portfolio into the contract development organization (CDO) business, ranging from drug development and laboratory research to clinical trials.
Samsung Biologics CEO John Rim said at a shareholders meeting this year, "We will start preparing in earnest to become a global comprehensive bio company for a new future in 2021."
Samsung Biologics posted 412.2 billion won in sales and 166.8 billion won in operating profit in the second quarter, which were both record highs.
The firm's sales surged 34 percent year-on-year thanks to the increase in the operating rate of its third plant and increased sales of COVID-19-related products. Its operating profit increased by 105.7 percent year-on-year. In particular, the company achieved an operating margin of 40 percent mainly due to changes in the composition of products and the effects of operating leverage.
Samsung Biologics saw its earnings performance improve further by responding agilely to the rapidly changing business environment after the virus outbreak.
"Despite the difficult conditions caused by the pandemic, strengthening the company's ability to win orders through rapid response was effective. For instance, we enabled our client companies to conduct non-face-to-face, real-time virtual tours so they can conduct due diligence and inspections by global regulators," the company official said.
To extend its leading status as a CMO drug manufacturer, Samsung Biologics is currently constructing its fourth plant in Songdo, with the goal of starting partial production in 2022 and entering full operation in 2023.
The fourth plant will have a production capacity of 256,000 liters, which is expected to surpass the company's third plant, which holds the current record of being the world's largest production facility with an output capacity of 180,000 liters.
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