Unstoppable Growth: Samsung Biologics Sets New Record with Annual Operating Profit of 1 Trillion Won

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Solo Growth Despite CDMO Industry Downturn
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Samsung Biologics has made a new history in the pharmaceutical and bio industry by achieving an 'annual operating profit of 1 trillion KRW.' Leveraging the world's largest production capacity, the company continues its unstoppable order-taking momentum, maintaining growth alone despite the global contract development and manufacturing organization (CDMO) industry's downturn.

John Rim, CEO of Samsung Biologics, is presenting at the JP Morgan Healthcare Conference (JPMHC) on the 9th (local time).
[Photo by Samsung Biologics]

On the 24th, Samsung Biologics announced that its consolidated sales for last year amounted to 3.6946 trillion KRW, with an operating profit of 1.1137 trillion KRW. The net profit was 857.7 billion KRW. In terms of sales, following the industry's first-ever annual sales exceeding 3 trillion KRW in 2022, the company continued its 23.1% growth last year, achieving the previously stated 'over 20% sales growth.' The company analyzed that the stable operation of Plants 1 to 3 and the successful ramp-up (starting mass production after equipment installation) of Plant 4, along with the performance improvement reflecting the incorporation of Samsung Bioepis, drove the growth in results.

In particular, the annual operating profit of 1.1137 trillion KRW last year is a record-breaking milestone, being the first time the industry surpassed 1 trillion KRW. The operating profit margin reached an impressive 30.1%. In the domestic pharmaceutical and bio industry, where operating profit margins rarely exceed the high teens even when sales surpass 1 trillion KRW, this is an outstanding profit margin. On a quarterly basis, the 4th quarter sales of 1.0735 trillion KRW continued the 'quarterly sales of 1 trillion KRW' myth, which was first achieved in the pure pharmaceutical and bio industry in the 3rd quarter.

Continued Growth Through Orders Despite Global CDMO Contraction

John Rim, CEO of Samsung Biologics, reflected at the JP Morgan Healthcare Conference (JPMHC) held earlier this month, saying, "It was a difficult time due to the transition of COVID-19 to an endemic, high interest rates, inflation, and war," but added, "We achieved superior performance compared to competitors by maintaining a growth rate of over 20%." Despite the global CDMO industry's difficulties last year, Samsung Biologics succeeded in continuous order acquisition and maintained its growth momentum.

Last year, the global CDMO industry suffered from adverse factors such as a decline in CDMO demand due to the contraction of research and development (R&D) by bio ventures and a drop in vaccine demand, compounded by the global economic slowdown and the end of the COVID-19 pandemic. As a result, major competitors like Lonza and Catalent repeatedly lowered their sales targets. In contrast, Samsung Biologics raised its sales targets three times last year. Starting with a guidance of 10-15% growth in January, it increased to 15-20% in April, and again raised the minimum sales target to 20% in October.

Interior view of the bioreactor hall at Samsung Biologics Plant 3 in Songdo, Incheon [Photo by Samsung Biologics]

Orders underpinning this upward trend are significant. Samsung Biologics recorded total orders worth 2.704 billion USD (approximately 3.5009 trillion KRW) last year. This is about double the previous year's order amount of 1.372 billion USD (approximately 1.7835 trillion KRW). The company secured contracts with 14 of the global top 20 big pharma companies and succeeded in large-scale long-term contracts of 6 to 7 years with big pharma companies such as Pfizer and Novartis, ensuring the quality of orders as well.

Lee Dong-geon, an analyst at SK Securities, said, "Samsung Biologics is steadily filling orders for Plant 4, and based on the faster-than-expected order pace, there is a possibility of early completion of Plant 4 orders. With Plants 1 to 3 expected to continue full operation in 2024, and the ramp-up of Plant 4 sales reflecting in revenue, the company is expected to maintain its high growth trend."

Expecting to Surpass 4 Trillion KRW in Sales This Year... Production Capacity Expansion and ADC Wings Anticipated

Samsung Biologics' next goal is annual sales of 4 trillion KRW this year. Since securities firms predict sales of 4.3024 trillion KRW this year and 5.0674 trillion KRW next year, this target does not seem unrealistic.

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

To achieve this, Samsung Biologics is continuing to expand production capacity and secure new platforms. In June last year, Samsung Biologics fully operated Plant 4 with a production capacity of 256,000 liters, securing the world's largest production capacity of 604,000 liters. Furthermore, starting with the recently ground-broken Plant 5 with a capacity of 180,000 liters, the company plans to establish Plants 5 to 8 of the same scale at the 2nd Bio Campus, aiming for a total production capacity of 1,324,000 liters by 2032. At JPMHC, the company also revealed plans to consider expanding the 3rd Bio Campus.

Production platform acquisition is also ongoing. The antibody-drug conjugate (ADC) production facility, which has become a global trend, is scheduled for completion within the year. Last year, Samsung Biologics secured related technology by investing in Swiss Araris Biotech and domestic Aimed Bio. CEO Rim stated, "We will pursue production of bispecific antibodies and ADCs beyond single antibodies," and regarding another global trend, the obesity treatment drug 'glucagon-like peptide (GLP)-1,' he explained, "Although there is a concern about needing separate production facilities, since it is a promising drug in the market, we can consider production if requested by clients."

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