'Samba Achieves Annual Operating Profit of 1 Trillion Won... "This Year's Goal is 4 Trillion Won in Sales" (Comprehensive)'

Samsung Biologics has made a new history in the pharmaceutical and bio industry by achieving 'annual operating profit of 1 trillion KRW.' Leveraging the world's largest production capacity, it continued its unstoppable order-taking momentum and sustained growth alone despite the global contract development and manufacturing organization (CDMO) industry's downturn. This year as well, it confidently aims for sales growth, setting a target of 4 trillion KRW in annual sales.

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

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On the 24th, Samsung Biologics announced that its consolidated sales for last year were 3.6946 trillion KRW, with an operating profit of 1.1137 trillion KRW. Net profit was 857.7 billion KRW.

In terms of sales, following the industry's first-ever annual sales breakthrough of 3 trillion KRW in 2022, the company continued to grow by 23.1% 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 due to the full-year reflection after Samsung Bioepis became a consolidated subsidiary, drove the growth in results.

Notably, 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, first achieved in the 3rd quarter by the pure pharmaceutical and bio industry.

Remarkable achievements were also made on a separate basis. Samsung Biologics posted separate sales of 2.9388 trillion KRW and operating profit of 1.2042 trillion KRW. Thanks to the sales reflection from Plant 4 and operational efficiency improvements, sales increased by 21% and operating profit by 24% compared to the previous year. An operating profit margin of 41.0% was achieved.

Subsidiary Samsung Bioepis also recorded excellent results, surpassing 1 trillion KRW in annual sales for the first time since its establishment. It posted annual sales of 1.0203 trillion KRW and operating profit of 205.4 billion KRW. Sales increased by 8% year-on-year, but operating profit decreased by 11%. The company explained this as a "base effect due to milestone payments received in 2022 for research and development."

John Rim, CEO of Samsung Biologics, reflected at the JP Morgan Healthcare Conference (JPMHC) held earlier this month, saying, "It was a difficult time with 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-taking and achieved growth.

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

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

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Orders underpinning this upward trend are substantial. Samsung Biologics recorded total orders of 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). It secured 14 of the global top 20 big pharma companies as clients 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.

Researcher Donggeon Lee of 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 order-taking for Plant 4. With the full operation of Plants 1 to 3 expected to continue in 2024, and the ramp-up of Plant 4 sales reflecting in revenue, high growth is anticipated to continue."

Samsung Biologics' next goal is to surpass 4 trillion KRW in annual sales this year. Along with the earnings announcement, the company revealed an expected growth rate of 10-15% for this year. It is confident it can achieve sales between 4.064 trillion KRW and 4.2488 trillion KRW. Since the securities industry already forecasts sales of 4.3024 trillion KRW this year, exceeding the upper target, this goal does not seem overly ambitious. Moreover, having raised sales targets three times last year, the goal may increase further depending on future operational conditions.

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

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To this end, 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, it 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 invested in Swiss Araris Biotech and domestic Aimed Bio, securing related technologies. CEO Rim stated, "We will pursue production of bispecific antibodies and ADCs beyond single antibodies," and regarding the other global trend, the obesity treatment drug 'glucagon-like peptide (GLP)-1,' he explained, "Although there is a concern about needing a separate production facility, since it is a promising drug in the market, we can consider production if requested by clients."

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