Is Samsung Biologics Planning to Spin Off Its CDMO and Biosimilar Business?
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Synopsis
Samsung Biologics has announced a significant strategic shift, choosing to spin off its biosimilar development unit to enhance focus on its core CDMO services. This decision is expected to strengthen both businesses, address customer concerns, and potentially boost competitiveness in the biotech sector.
Key Takeaways
- Samsung Biologics plans to spin off its biosimilar segment.
- The new entity Samsung Epis Holdings will include Samsung Bioepis Co.
- The spinoff aims to enhance focus on CDMO services.
- Customers' concerns regarding proprietary technology sharing are being addressed.
- The company expects higher competitiveness post-separation.
Seoul, May 22 (NationPress) Samsung Biologics, the biotechnology division of South Korea's Samsung Group, announced on Thursday its intention to spin off its biosimilar development segment in order to streamline its operations and concentrate on its core contract development and manufacturing organization (CDMO) services.
As per a regulatory filing, the company aims to establish a new entity, Samsung Epis Holdings, which will subsequently include Samsung Bioepis Co., a developer of biosimilar drugs, as a wholly owned subsidiary, according to Yonhap news agency.
The spinoff process is set to initiate with a securities report submission on July 29, followed by a shareholders' meeting on September 16 for final approval.
Samsung Biologics clarified that this division will enable the company to focus resources on its CDMO business, which operates on a different revenue model than biosimilars.
CDMO stands for a company that manages not only the outsourced manufacturing of drug substances but also all of the innovation and development tasks that occur prior to production.
In particular, the company acknowledged that some clients have expressed worries regarding the potential sharing of proprietary technologies for original drugs with Samsung Bioepis, which operates within the biosimilar sector.
"As Samsung Bioepis has expanded its biosimilar operations, concerns from customers of Samsung Biologics have gradually increased, affecting our order competitiveness," stated Ryu Seung-ho, chief financial officer at Samsung Biologics, during an online briefing.
"Post-separation, we anticipate that our clients' concerns regarding conflicts of interest will be more effectively addressed."
Samsung Biologics initially established Samsung Bioepis as a joint venture with U.S. pharmaceutical firm Biogen Inc. in 2012. The company acquired Biogen's stake for US$2.3 billion in 2022, making Bioepis a wholly-owned subsidiary.
Ryu also stressed that the spinoff is not indicative of any larger corporate governance restructuring within Samsung Group.
In a separate statement, Samsung Bioepis assured that the spinoff will not affect its daily operations.
"Samsung Bioepis' ongoing business activities, including research and development, manufacturing, supply distribution, and commercialization of biologic medications, will remain unaffected by the spinoff," the company confirmed.
"We will continue to focus on our core operations, committed to ensuring the uninterrupted development, manufacturing, and distribution of high-quality biosimilar medicines to patients worldwide."
By separating the two entities, Samsung Biologics aims to strengthen the independence of both, allowing each to refine its strategic focus. The company believes this will enhance competitiveness, operational efficiency, and long-term value for shareholders.
Samsung Biologics ranks among the top CDMO firms globally, reporting 4.54 trillion won (approximately $3.3 billion) in sales and 1 trillion won in net profit for 2024.
Point of View
This strategic spinoff by Samsung Biologics reflects a growing trend in the biotech industry towards specialization. It highlights the importance of maintaining competitive integrity and addressing client concerns, which ultimately serves to strengthen the company's market position.
NationPress
01/06/2025
Frequently Asked Questions
What is the purpose of Samsung Biologics' spinoff?
The spinoff aims to streamline operations and allow Samsung Biologics to concentrate on its core CDMO services, enhancing competitiveness and addressing customer concerns.
When will the spinoff take place?
The spinoff process will start with a securities report submission on July 29 and will culminate in a shareholders meeting on September 16 for final approval.
Will this spinoff affect Samsung Bioepis' operations?
No, Samsung Bioepis has stated that its daily operations, including research, manufacturing, and distribution, will not be affected by the spinoff.
What is a CDMO?
CDMO stands for Contract Development and Manufacturing Organization, which manages the outsourced production of drug substances and oversees the innovation and development processes.
How does this spinoff impact shareholders?
By separating the two businesses, Samsung Biologics aims to enhance operational efficiency and long-term value for shareholders by allowing each entity to focus on its strategic goals.
