"Alignment Over Speed"... Samsung Biologics Remains Cautious on Overseas Sites

Judging Domestic Operations as Superior in Both Cost and Quality Competitiveness
Strong Performance and Order Growth Despite External Risks Such as Tariffs

Samsung Biologics is maintaining its 'domestic single-site' strategy. This approach differs from competitors in the CDMO (Contract Development and Manufacturing Organization) industry such as Lonza, Fujifilm, and Boehringer Ingelheim, which are pursuing strategies centered on multiple production sites in regions like Europe and the United States. Even as tariff variables and reshoring pressures intensify, Samsung Biologics remains cautious, stating that "overseas sites are under review." The reasoning is based on two pillars: cost and quality.

According to industry sources on October 13, Fujifilm is expanding large-scale facilities in four locations, including Denmark and the United States. Lonza also has four sites, and Boehringer Ingelheim is expanding its network across four locations focused on North America and Europe. While WuXi Biologics in China is reducing its global presence, it still operates a total of five global sites.

The strategy of competitors to operate multiple sites ultimately ties back to cost issues. Their aim is to reduce production costs more efficiently through tariffs and local production support policies. However, securing multiple sites is not always the best answer. As investments concentrate in specific regions like North Carolina and Texas in the United States, construction and equipment costs rise, labor shortages worsen, and risks related to process consistency and quality variation increase.

John Rim, CEO of Samsung Biologics, recently stated at 'Bio Japan 2025' held in Yokohama, Japan, "Production costs in the United States are more than 70% higher than in Korea," adding, "Tariffs and import regulations are constantly changing, making it difficult for anyone to predict how policies will converge. Timing is crucial for making meaningful decisions." With construction and labor costs rising together, and considering the high turnover rate in local labor markets, the company believes that rapidly expanding large-scale overseas capacity could actually undermine price competitiveness.

At this point, Samsung Biologics has chosen 'alignment over speed.' The company says, "If customers express concerns about tariff burdens, we will look for support measures together, but overseas investment must meet three conditions: cost, quality, and timing." Although geopolitical risks are coming to the fore this year, Samsung Biologics' performance outlook remains positive. The company has raised its annual revenue growth guidance from the previous 20-25% to 25-30%. This year, sales are expected to exceed 6 trillion won.

The 'quality first' principle, which takes into account the essence of the CDMO business, is also at the core of the strategy. If the price of an antibody drug sold on the market is 1 million won, the price of the active pharmaceutical ingredient is about 100,000 to 200,000 won. Although the unit price is lower, it is the key ingredient that determines the success or failure of the final product administered to patients. Therefore, even if a local site exists, if process equivalence, supply stability, and quality indicators are not ensured, it is difficult to gain the trust of customers and regulatory agencies. This is why global big pharma companies are reluctant to risk the quality of a 1 million won product just to save 50,000 to 100,000 won in costs.

To address this, Samsung Biologics has introduced a new CMO service system called 'ExellenS,' which integrates design, equipment, and operational standards. The system is designed so that products can be approved and technology transferred at the same speed, regardless of which plant manufactures them.

The perspective of the domestic industrial ecosystem is also a variable. Transferring large-scale production jobs and advanced manufacturing technology overseas could weaken the domestic value chain. CEO John Rim stated, "We will comprehensively consider domestic policies and the group's overall direction." CDMO competitors encountered at Bio Japan were also closely monitoring Samsung's moves. Nicole Zhang Liwen, Director of Commercial Development at Fujifilm, commented, "Samsung Biologics' swift decision-making and execution have surprised the CDMO industry. We are keeping a close watch."

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