Samsung Biologics drives foreign lead in Korea’s biotech supply chain

A surge in orders from Samsung Biologics Co., the world’s largest contract drugmaker, has propelled South Korea to the forefront of global revenue growth for major biotech materials and equipment suppliers, industry data showed on Monday.

Analysts said the data also underscores the country’s heavy reliance on foreign technology in its burgeoning pharmaceutical manufacturing sector.

According to research firm Korea Credit Data, the Korean operations of four global biotech supply giants – Thermo Fisher Scientific Inc., Merck & Co. (MSD), Sartorius AG and Cytiva Co. – posted combined revenue of 1.63 trillion won ($1.2 billion) in 2024, up 9.1% from the previous year and 60.7% higher than 2020.

The market’s expansion has even seen Korea overtake China as a key revenue source for them in certain categories.

Thermo Fisher led the pack with 598 billion won in Korean sales last year.

The US company, which manufactures bioprocessing reagents and diagnostics equipment, dominates the Korean market for cell culture media – crucial input for biopharmaceutical manufacturing.

German biotech firm Merck followed with strong sales in purification filters.

US firm Cytiva posted 290 billion in revenue last year, a 46.6% increase from 2023 and a 135% jump over the past four years – the fastest growth rate in Korea among the four firms.

FOREIGNERS DOMINATE THE KOREAN MARKET

Industry watchers attributed foreign companies’ strong performance in Korea to a combination of underdeveloped local supply capacity and surging orders from Samsung Biologics, the world’s largest contract development and manufacturing organization (CDMO) by capacity.

Korean devices and equipment accounted for just 7% of biotech supply chain inputs, according to industry and government data.

Data showed about 80% of the foreign big four’s Korean revenue stemmed from Samsung Biologics, with the remaining 20% tied to other domestic players such as Celltrion Inc. and SK Bioscience Co.

Last year, Samsung Biologics spent more than 1.1 trillion won – nearly a quarter of its total sales – to purchase biopharma raw materials like resins and filters for its CDMO and biopharmaceutical products.

Most of that outlay went to international vendors, including Cytiva Singapore, Sigma-Aldrich Korea, Thermo Fisher, Merck and Sartorius Korea Biotech, according to Samsung’s regulatory filing.

The imbalance has stirred debate about Korea’s ability to build a self-reliant biotech supply ecosystem, even as global demand for such products is forecast to grow at an annual pace of 10.3% to reach 96.5 trillion won by 2029, according to Korea’s trade ministry.

“Just as Samsung Electronics Co. helped cultivate a domestic supply base in semiconductors, Samsung Biologics should also take responsibility in seeding a viable biotech materials ecosystem,” said an industry official. “Without meaningful localization, Korea risks locking itself into heavy foreign dependence in a sector it seeks to lead.”

Samsung Biologics said it is bound by the stringent demand of global pharmaceutical clients who favor tried-and-tested international suppliers.

A company official said that partnerships with domestic suppliers are under “review.”

Last week, Samsung Biologics, the biotech unit of Korea’s top conglomerate Samsung Group, said it will spin off its biosimilar and novel drug development business, undertaken by Samsung Bioepis Co., as a separate entity to focus on the CDMO business.

Write to Dae-Kyu Ahn at powerzanic@hankyung.com

In-Soo Nam edited this article.