Korea Herald correspondent

SAN DIEGO -- With Samsung Biologics securing as clients 16 of the top 20 global pharmaceutical companies based on market capitalization, up from 14 last year, its CEO John Rim expressed confidence in the company's continued expansion in the coming years.

The CEO announced Wednesday during a press conference at the Bio International Convention in San Diego that their clients' orders have more than doubled this year. While industry sources suggest that this has been primarily driven by the US government's BioSecure Act, the firm insists its tireless marketing efforts, including attending conferences, compiling white papers and hosting multiple webinars, have also significantly contributed.

"The US-China conflict is unlikely to end any time soon, and the US measures will impact various areas, particularly technology, intellectual properties and patents in the bio sector. With this in mind, we will continue to promote our CDO (contract development) services and enhance our quality production capacity to stay competitive against other rivals vying for market share," Rim said.

As biotech companies from around the world compete for US orders with China sidelined, including those from Japan and India seen as strong competitors, Rim stated that there are no concerns about strengthening government relations with the US, given Samsung Group's long-standing cooperation dating to the late 1970s.

"Samsung was among the most heavily invested companies during the early stages of foreign investment in the US. Additionally, we have our US public affairs office located in Washington for consistent communication."

Samsung Biologics has signed four more contracts with global pharmaceutical companies already this year.

In March, it signed an expanded contract worth 381.9 billion won ($288 million) with Union Chimique Belge, followed by additional contracts worth 92.8 billion won and 154.6 billion won, respectively, with Merck Sharp and Dohme. In May, it secured an increased contract of 256.2 billion won with Eli Lilly and Co.

Rim attributed the success to the company’s overwhelming production capacity, high quality outcomes and flexibility, which the firm believes is crucial in securing a series of Big Pharma contracts.

"I currently make strategic decisions around three pillars: scalability, modality and geopolitical scalability. Based on the three, we continuously evaluate which place would be the best match to establish our next potential plants. So far, the locations in Korea have been more efficient due to its infrastructure. While other global companies face manpower issues, in Korea, we have a turnover rate of only 2-3 percent, which I believe is one of Samsung's core competitive advantages, allowing us to build plants rapidly in such high standards."

Rim explained that in line with Samsung Biologics' plan to secure preemptive production capacity to maximize clients' satisfaction, clients are also strengthening their existing partnerships by expanding contract products or the production scale of existing contract supplies.

As global demand for biopharmaceuticals surged, Samsung Biologics started construction of the world's largest 240,000-liter plant in 2020, which began full operation in June last year. The company commenced construction of a 180,000-liter fifth plant in April, aiming to complete it by April 2025. Upon completion, Samsung Biologics will have a total production capacity of 784,000 liters.

In terms of quality, the company demonstrates stellar competitiveness throughout the entire process, from drug manufacturing to management, with 271 cumulative regulatory agency approvals as of the end of the first quarter of this year and a 99 percent batch success rate last year, backed by a strong track record.

"Pharmaceutical companies are conservative and will not sign contracts unless they fully trust the supplier, regardless of how low the cost could be. Consistent quality, production speed and flexibility are essential," said the CEO.

"In terms of technology transfer and flexibility, many companies request changes to orders, and we accommodate these requests selectively. For instance, clients who initially engage us for CDO services see the results and later expand to CMO (contract manufacturing), and vice versa," said Rim.

In regards to high-ranking Korean presidential officials visit to Bio USA and high-level talks with the US that followed Wednesday, Rim highlighted the importance of the government's continued efforts with Korean bio companies.

"While the battery and bio-semiconductor sectors are crucial, the bio industry represents the next major global business opportunity, potentially twice as significant. Korea, as a latecomer in this field, has much ground to cover to achieve global expansion, as did Japan. Currently, development costs in Korea are under 2 trillion won in total, whereas each Big Pharma company surpasses 10 trillion won."

Samsung Biologics' consolidated sales and operating profit in the first quarter of 2024 were 946.9 billion won and 221.3 billion won, respectively, representing increases of 31 percent and 15 percent compared to the same period last year.

The CEO expects such double-digit growth to continue this year with the 180,000-liter part of Plant 4 contributing to performance in the second half, maintaining the annual sales growth forecast at 10-15 percent, compared to the previous year.

Meanwhile, Samsung Biologics' Plants 6 to 8, to be constructed at its second Bio Campus, will follow the same design and layout as the fifth plant, but the timing for investment in Plant 6 is currently under review, the CEO added.