Samsung chief looks to bio as new growth engine

Industry

Published: 07 May. 2023, 17:54 Updated: 07 May. 2023, 18:56

Samsung chief looks to bio as new growth engine

Samsung Electronics Executive Chairman Lee Jae-yong, left, poses for a photo with Flagship Pioneering, a venture capital firm, CEO Noubar Afeyan at the venture capital's office in the United States in November 2021. [SAMSUNG ELECTRONICS]

Samsung Electronics Executive Chairman Lee Jae-yong had a round of meetings with global biopharmaceutical leaders to find a new growth engine beyond chips.

Johnson & Johnson CEO Joaquin Duato, Bristol Myers Squibb CEO Giovanni Caforio, Flagship Pioneering CEO Noubar Afeyan and Biogen CEO Christopher Viehbacher are some of the corporate chiefs Lee met during his trip to the Eastern United States.

"The starting point isn't important," Lee said during the trip. "Bold and persistent challenges set victory apart from defeat. Let's continue the success story of chips with bio."

Samsung Biologics, the world's largest contract manufacturing and development organization by production capacity, is a relative latecomer to the competition. It was established in 2011 and listed on the main bourse in 2016. Samsung Electronics owns 31.22 percent of Samsung Biologics.

Lee and the chief executives of the U.S. bio firms discussed ways to cooperate on strengthening competitiveness and discovering new businesses.

J&J is a Samsung Biologics client, and Bristol Myers Squibb is a company that placed Samsung Biologics' first production order for drugs in 2013. Afeyan is also a co-founder of Moderna, which placed orders for mRNA Covid-19 vaccines with Samsung Biologics. Biogen established Samsung Bioepis with Samsung Biologics in 2012. Its entire stake was sold to Samsung Biologics for $2.3 billion in 2022.

Samsung did not reveal the specific agenda items discussed or the accomplishments achieved during the trip that started in mid-April.

"Bio is typical of an industry with high barriers to entry," Samsung Electronics said Sunday in a press release. "Production technology, research and development capacity, as well as trust and reputation building, are essential for long-term cooperation."

Samsung expects cooperation with global bio firms will function as "leverage" for the group's bio business to discover future growth engines.

Samsung has been investing heavily in the bio industry, expanding its production capacity in contract manufacturing of biopharmaceutical products.

Its latest investment includes 1.98 trillion won ($1.5 billion) to build its fifth plant in Songdo, Incheon. The construction is slated to be completed in September 2025.

"Amid the steady global demands for biopharmaceuticals, outsourcing biomedical products is on the rise since the Covid-19 pandemic," Samsung Biologics' chief executive John Rim said in March. "Preemptive investment is needed in order to continue our leadership in the market."

Samsung Biologics vowed to expand its business portfolio to next-generation medicines, including antibody-drug conjugates and gene therapy.

Samsung Biologics reported a 141.76-billion-won net profit in the first quarter, down 3.53 percent on year, on revenue that grew 41 percent to 721 billion won in the same period, according to its preliminary earnings in April.

BY JIN MIN-JI [jin.minji@joongang.co.kr]