In April 2022, Samsung Biologics, a leading contract development and manufacturing organization (CDMO), announced the completion of a full acquisition of Samsung Bioepis, a joint venture started by Biogen and Samsung Biologics in 2012. Samsung Bioepis develops biosimilars: biotherapeutics that are highly similar to biologic reference medicines. Samsung Biologics’ full acquisition of Samsung Bioepis signals the CDMO’s commitment to this fast-growing market for cost-effective biologic medicines.
According to a recent report, the biosimilars market reached $13 billion in 2021. Several factors will drive growth in this market in the next five years. These include patent expirations for popular biologics, a push for lower drug prices, the rising prevalence of chronic diseases, and government cost-cutting initiatives. The report predicts that, driven by these and other factors, the biosimilars market will reach $60.8 billion by 2027, exhibiting a combined annual growth rate of 26.1% over the five-year period from 2022 to 2027.
With its full acquisition of Samsung Bioepis, identified in the report as a leader in the biosimilar space, Samsung Biologics is diversifying its portfolio to position itself at the cutting edge of this innovative developing market.
“Today’s announcement marks a significant milestone for Samsung Biologics in our continued venture into the biosimilar business and accelerating biosimilar growth,” said John Rim, CEO and president of Samsung Biologics, in a press release announcing the Samsung Bioepis acquisition. “By leveraging our extensive experience as a leading CDMO, we will further contribute to saving the lives of patients and address a wide array of diseases.”
The Samsung Bioepis Acquisition
Now in its 10th year of operation, Samsung Bioepis has developed 10 biosimilars, including six currently available worldwide. The company has primarily focused on immunology and oncology applications. This includes infliximab, etanercept, and adalimumab biosimilars, which are tumor necrosis factor inhibitors that treat immunological diseases such as rheumatoid arthritis. Its oncology products include trastuzumab and bevacizumab biosimilars.
Samsung Biologics had operated Samsung Bioepis as a joint venture with Biogen since 2012, but the CDMO has now acquired Samsung Bioepis as a wholly owned subsidiary, purchasing Biogen’s stake in the company after raising $2.5 billion through the issue of new Samsung Biologics shares.
According to a company statement announcing the acquisition, Samsung Biologics’ goal is to provide Samsung Bioepis with “increased autonomy and agility in business operations, accelerating sales growth, operating margin improvements, as well as biosimilar development capabilities and future performance in novel drug development.”
The Future of the Biosimilars Market
According to the report on biosimilar market growth, the outlook for the development and manufacture of new biosimilars is positive.
As patents for blockbuster biologic medicines expire, biosimilar developers could look to develop cost-effective alternatives. And government efforts to reduce the cost of drugs could lead to an increase in demand for biosimilars over branded products.
The report found that autoimmune diseases, the primary focus of Samsung Bioepis’ products, account for the majority of demand for biosimilars, but several other potential applications were identified, including blood disorders, diabetes, oncology, growth deficiency, and female infertility.
Samsung Bioepis is actively pursuing diverse future applications of biosimilars, with a pipeline that includes products for endocrinology, gastroenterology, hematology, and ophthalmology applications.
Samsung Biologics’ Multidimensional Growth Plan
Samsung Biologics’ acquisition of Samsung Bioepis is a key component of what Rim calls the CDMO’s “multidimensional growth strategy.”
Rim explained this strategy in a March 2022 letter to shareholders, writing: “Samsung Biologics aims to maximize its financial performance and lay a strong foundation to deliver sustainable future growth based on three core pillars: increasing manufacturing capacity (capacity), enhancing portfolio diversification (portfolio), and expanding its global footprint (geography).”
The Samsung Bioepis acquisition fits within the portfolio diversification pillar of this strategy, as Samsung Biologics can build on its success as a CDMO with increased involvement in drug development.
In his letter to shareholders, Rim explained that, with the Samsung Bioepis acquisition, “Samsung Biologics will leap forward as a global biopharmaceutical company with three business areas: CDMO, biosimilar, and new drugs.”
In addition to its involvement in biosimilars, Samsung Biologics is diversifying its portfolio by adding mRNA vaccine production capabilities at its facilities in Songdo, South Korea. After providing fill/finish services for Moderna’s COVID-19 mRNA vaccine, Samsung Biologics has added drug substance capabilities, meaning that it can produce the active ingredient in mRNA vaccines at its facilities and provide end-to-end mRNA vaccine production services.
The CDMO is also continuing to focus on expanding its industry leading capacity. It plans to complete construction of its fourth plant in early 2023, with the plant ready for partial operation in October 2022. Upon completion, the plant is expected to provide 256,000 liters of capacity, bringing Samsung Biologics’ total capacity to 620,000 liters at its Songdo facilities and solidifying its status as the largest biomanufacturing hub in the world.
This growth has come on the heels of Samsung Biologics’ steady revenue gains in recent years amid increasing demand for CDMO services. After reporting a 35% increase in revenue in 2021, Samsung Biologics reported record-high 96% year-over-year revenue growth for the first quarter of 2022.
Samsung Biologics plans to continue to use this revenue growth to fund its expansion.
“As a leading CDMO service provider, we will continue to demonstrate our excellent business operations throughout our value chains to ultimately contribute to saving the lives of patients and build a better future for all,”