[This Week's Hot Stock] Can Samsung Biologics' New Beginning Lead to an Upward Trajectory?

Samsung Biologics Separates Businesses Through Spin-off
New Start as a Pure CDMO Company
Securities Firms Raise Target Prices Across the Board
Outlook for Securing New Orders by Expanding CDMO Competitiveness

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The new beginning of Samsung Biologics, following its spin-off from Samsung Bioepis, is off to a rocky start. On November 24, Samsung Biologics was relisted as a 'pure contract development and manufacturing organization (CDMO),' but its share price dropped by more than 10% over two days. The market is voicing concerns about overvaluation. However, securities firms have started to raise their target prices for Samsung Biologics across the board, projecting that steady profits will allow the company to achieve high sales growth again next year.

Samsung Biologics' CDMO Value to Be Reassessed

Samsung Biologics decided on a spin-off in May. Through this process, Samsung Biologics was separated into the surviving company, Samsung Biologics, and the newly established Samsung Epis Holdings. The CDMO business remained with the original Samsung Biologics, while its subsidiary Samsung Bioepis, which operates the biosimilar business, became a wholly owned subsidiary under the new holding company, Samsung Epis Holdings.

Industry experts see two main purposes for this spin-off: ▲to completely separate the CDMO and biosimilar businesses to resolve potential conflicts of interest, and ▲to eliminate the structural limitation where different business models were mixed within a single consolidated company, preventing the company's value from being fully reflected.

Jung Isu, a researcher at IBK Investment & Securities, said, "The value of Samsung Biologics' CDMO business is expected to increase after the spin-off," adding, "With the lower-margin biosimilar segment separated, the high profitability of the CDMO business will become more prominent."

Jung also noted, "Samsung Biologics has been valued at a higher EV/EBITDA multiple than major global CDMO peers such as Lonza in Switzerland and WuXi Biologics in China," explaining, "The main reasons are its sales growth rate, which far exceeds the industry average, its overwhelming production capacity (CAPA) expansion, and its highly profitable business structure."

Over the past three years, Samsung Biologics' average annual sales growth rate was 23.2%, significantly higher than the global CDMO average of 11.8%. Notably, cumulative sales for the third quarter of 2025 increased by 28% year-on-year, surpassing its previous growth trend.

This is attributed to robust order performance. With a series of large-scale contract wins this year, the cumulative order amount as of the end of October 2025 reached 5.5193 trillion won, exceeding the previous year's annual order total of 5.4035 trillion won.

Jung explained, "Securing large-scale contract manufacturing (CMO) orders is a result of Samsung Biologics obtaining stable manufacturing approvals from major global regulatory agencies such as the US Food and Drug Administration (FDA) and the European Medicines Agency (EMA), thereby establishing quality credibility," adding, "This is a key factor that will enable the company to maintain a high sales growth rate going forward."

Fifth Plant to Begin Operations in 2026... Securing an Edge Over Competitors

Securities firms have unanimously raised their target prices for Samsung Biologics after the spin-off. IBK Investment & Securities set a target price of 2.09 million won, Daishin Securities raised it to 2.2 million won, and Mirae Asset Securities set the highest at 2.3 million won. The main reason behind these upward revisions is the anticipated full-scale operation of the fifth plant next year, which will expand production capacity and drive sales growth.

Samsung Biologics now has five production facilities, with the fifth plant at its second Bio Campus completed in April this year, in addition to the first Bio Campus (plants 1 to 4). The company’s total production capacity stands at 784,000 liters, the highest in the world.

Lee Heeyoung, a researcher at Daishin Securities, said, "Currently, plants 1 to 4 are all operating at full capacity, and the fifth plant’s performance will gradually be reflected from the second quarter of 2026," adding, "As large-scale capacity expansion leads to higher utilization rates, the burden of fixed costs is easing, which is a key factor behind the recent improvement in profitability."

According to industry sources, there are only about five companies worldwide, including Samsung Biologics, that have secured such large-scale capacity. Among competitors, Fujifilm Biotechnologies in Japan is aggressively expanding, but Samsung Biologics remains dominant, as it plans to secure a total production capacity of 1.324 million liters by 2032.

Jung Isu pointed out that the concentration of plants in Songdo also supports high profitability. He said, "Integrated logistics, quality, and facility management within the same area improves operational efficiency and reduces fixed costs," adding, "This is not just a short-term cost-saving measure, but a structural factor that enables sustained high profitability."

In contrast, for Lonza, the biopharmaceutical CDMO business accounts for only about 44% of total sales, resulting in a diversified business portfolio, while for WuXi Biologics, preclinical and phase 1 and 2 clinical materials make up about 58% of total CDMO sales. Unlike these competitors, Samsung Biologics has established a clear profitability advantage through its product mix focused on large-scale commercial production and its Songdo-centric operational system, according to Jung.

Outlook for Increased New Orders

The prospect of increased new orders for Samsung Biologics is another reason for the upward target price revisions. This is based on enhanced business independence following the spin-off and the anticipated rise in demand for alternatives to Chinese CDMOs due to the US Biosecurity Act, which aims to regulate Chinese biotech firms.

Lee Dalmi, a researcher at Sangsangin Investment & Securities, said, "There are moves to reduce reliance on Chinese supply chains within the US, and Samsung Biologics is benefiting from this trend," adding, "By securing large-scale orders of 2 trillion won in January 2025 and 1.8 trillion won in September 2025, the company is filling the capacity of its fifth plant. These large-scale orders are expected to serve as a catalyst for share price gains."

Jung Isu also highlighted that the spin-off has resolved conflicts of interest between the CDMO and biosimilar businesses. Previously, Samsung Bioepis developed and launched a total of 11 biosimilar products, and there were concerns about potential conflicts of interest due to overlapping client portfolios and products. Jung noted, "As major biopharmaceutical patents begin to expire in earnest, such conflicts of interest could become more pronounced when big pharma companies select CDMO partners," adding, "In this environment, the spin-off has clearly established the independence of Samsung Biologics’ CDMO business, which is expected to strengthen its competitiveness in securing new orders."

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