As big pharma continues to sharpen its focus on R&D by outsourcing other elements of the supply chain, including manufacturing, CDMOs have thrived. Samsung Biologics, one of the world’s top CDMO organizations, with revenues of USD 1.21 billion in 2021, is no exception. In response to increased demand, the firm has been building its manufacturing capacity since its creation in 2011. In its latest expansion move, the CDMO begins construction on a new USD 1.5 billion plant in South Korea’s Songdo Industrial cluster.
Given the continuing increase in the demand for outsourced manufacturing of biopharmaceuticals, we are proactively making this investment in alignment with our growth strategy to further strengthen our standing as a leading CDMO
Samsung Biologics CEO John Rim
Taking Advantage of a Trend Towards Outsourcing
In the past, pharma companies may have considered manufacturing partnerships as risk mitigation, providing a secondary sourcing option. But this view has changed in recent years, particularly since the COVID-19 pandemic. “Pharma is now realising that its core competencies are in R&D rather than in building and maintaining manufacturing facilities, leading to a greater degree of outsourcing. I foresee that trend continuing, particularly in an environment of constrained supply chains post-COVID,” said CEO John Rim in a PharmaBoardroom interview.
The Korean CDMO was able to capitalize on the trend. According to Rim, “12 of the Top 20 global pharma companies, as well as many smaller players, currently partner with Samsung Biologics because of our ability to ensure security of supply, as well as because of the quality, speed, and cost of our offering.”
To continue to deliver and meet the increased demand, Samsung has expanded its manufacturing capacity in Korea as well as the scope and scale of its CDMO services. Apart from the CDMO’s existing plants, 1, 2 and 3, which are running on near-full capacity and its plant 4, which started partial operations in October last year, the company has been purchasing land in the Songdo Industrial cluster for some time, having acquired 360,000 square meters last year.
This capacity to adapt has led to year-on-year sales growth of 35 percent over the last few years with operating income margins in the 30th percentile. “Operational excellence has been crucial to our strong performance; we do an outstanding job for our customers and, for example, are able to build facilities faster than any other player in the industry,” said Rim.
An Added Facility
With 96,000 square meters, the new manufacturing facility will be the first in Samsung Biologic’s new Bio Campus, Bio Campus II, which Rim claimed would be 30 percent larger than its first campus. According to the company, the site will have a total capacity of 180,000 litres and maintain Samsung’s global biomanufacturing capacity leadership with a total of 784,000 litres.
“Given the continuing increase in the demand for outsourced manufacturing of biopharmaceuticals, we are proactively making this investment in alignment with our growth strategy to further strengthen our standing as a leading CDMO,” said Rim.
The company says it will go on to invest USD 5.7 billion in the Bio Campus II, which is adjacent to its current facilities and plants in the Songdo Industrial cluster.
In addition to its additional manufacturing horsepower, Samsung will also enhance its presence in the US with the opening of a regional office in New Jersey next week. The new office will streamline communication and enable the company to work in closer proximity to clients based in the U.S. and Europe.