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Samsung Biologics is preparing for the era of its 2nd Bio Campus, starting with Plant 5 following the near completion of Plant 4. With this increase in production capacity and the planned expansion of its modality (therapeutic approach) portfolio, including antibody-drug conjugates (ADC), the annual sales scale, which reached 3 trillion KRW for the first time in the history of the domestic pharmaceutical and bio industry last year, is expected to grow further.

Aerial view of Samsung Biologics' 2nd Bio Campus in Songdo, Incheon [Photo by Samsung Biologics]

According to related industries and financial information firm FnGuide on the 11th, Samsung Biologics' annual sales this year are projected to be around 3.4519 trillion KRW. This figure represents about a 15% increase compared to the same period last year, approaching the upper end of the 10-15% sales growth forecast previously announced by Samsung Biologics. In particular, due to the high operating profit margin characteristic of the biopharmaceutical contract development and manufacturing organization (CDMO) industry, operating profit this year is expected to exceed 1 trillion KRW for the first time, reaching 1.004 trillion KRW.

However, securities firms predict Samsung Biologics' performance this year to follow a "low-high" pattern. While continuous growth is expected in the first half of the year, growth is anticipated to be more concentrated in the second half, with a focus on reflecting Plant 4's performance and the effects of Plant 5's expansion, leading to buy recommendations.

There is also a forecast that first-quarter results will fall short of consensus expectations. Jae-kyung Park, a researcher at Hana Securities, cited the "decrease in the number of batches recognized as sales" as the reason. There is a time lag of about three months from product production to delivery to customers and recognition as sales, and especially in the fourth quarter of last year, products with longer time lags were included, which could cause a decrease in sales. Park explained, "This effect is temporary," adding, "The unrecognized batches will be recognized in the second half, so the performance this year is expected to show a low-high pattern."

Nevertheless, the first-quarter results are expected to achieve the highest sales ever recorded for a first quarter, even if they do not meet growth expectations. Since the sales of Samsung Bioepis, a subsidiary incorporated last year, have been reflected in Samsung Biologics' results since April last year, consolidated sales for the first quarter of this year are estimated at 746.7 billion KRW, representing a 46% growth compared to the same period last year. Based on Samsung Biologics' standalone performance, sales growth of about 10% is also expected.

Samsung Biologics' full-scale performance growth is expected to begin in the second half of the year, when the effects of Plant 4, the world's largest single-plant production capacity of 240,000 liters, become apparent. Plant 4, which began partial operation in October last year, is expected to be completed in June, with sales reflected in performance from the second half onward.

In particular, Plant 4 currently has contract manufacturing organization (CMO) agreements with eight customers for 11 products and is discussing CMO contracts for 34 products with 26 additional customers. Among global big pharma companies, contracts have been signed with 12 out of 20 companies. Researchers We Hae-joo and Kang Eun-ji from Korea Investment & Securities stated, "It is estimated that all orders for Plant 4 have been filled," adding, "The total order amount from last year to this year is 1.42 billion USD, and if all these orders are for Plant 4, it is judged that the volume required for full operation has already been secured."

Samsung Biologics did not stop there and announced the establishment of Plant 5 last month, aiming to secure a production capacity gap through the construction of the 2nd Bio Campus. Starting with Plant 5, which will be built with a production capacity of 180,000 liters, the plan is to build a total of four new plants, doubling the current production capacity. Song-i Park, a researcher at Meritz Securities, explained, "The Plant 5 expansion plan suggests that orders for Plant 4 have been sufficiently secured," adding, "The continuous expansion plans confirm the steady demand for antibody drugs." Samsung Biologics also stated, "Last year, we achieved results such as expanding big pharma customers and increasing contract amounts, and especially recently signed large-scale long-term contracts with big pharma companies like Pfizer and Eli Lilly," adding, "Considering the current trend of steadily increasing orders based on trust with customers, it is necessary to secure production capacity to handle order volumes even after the completion of Plant 4."

Along with this increase in production capacity, Samsung Biologics plans to continue expanding its three major growth pillars: geographic base expansion and technology acquisition. In terms of geographic bases, the company is focusing on securing overseas expansion bases. Following the R&D center in San Francisco, USA, and the sales office in Boston, a sales office was opened last month in New Jersey, where many global big pharma companies are concentrated.

Regarding technology acquisition, John Rim, CEO of Samsung Biologics, has repeatedly announced the expansion of the CDMO portfolio to various next-generation therapeutics such as ADC, messenger RNA (mRNA), bispecific antibodies, and gene therapies. Currently, work related to ADC has already begun, with production targeted for the first quarter of next year. Additionally, through synergy with Samsung Bioepis, recently fully incorporated as a subsidiary, the company aims to transform from a CDMO company into a top-tier bio company with comprehensive capabilities.

This content was produced with the assistance of AI translation services.