Novartis $391 mn deal powers Samsung Biologics backlogs to record high

Samsung Biologics Co., the world’s top contract manufacturing organization by capacity, inked a $391 million contract from Novartis, nearly five times their initial agreement, ramping up its order backlogs to a record high.

Samsung announced on Monday it ramped up the size of the deal with the Switzerland-based world’s fifth-largest pharmaceutical company from the original $81 million agreed upon in June 2022. The South Korean company has yet to unveil further details such as products to be manufactured at the request of Novartis.

Samsung said last week that it has won a combined $897.2 million in two deals from US pharmaceutical behemoth Pfizer Inc.

Those orders powered Samsung’s order backlogs so far this year to a record high of 2.3 trillion won ($1.8 billion), up 31% from its total orders of 1.8 trillion won for all of 2022. Its customers included 13 of the top 20 global drugmakers such as Johnson & Johnson, Merck Group, Bristol-Myers Squibb Co., AstraZeneca plc. and Moderna Inc.

The company started operations of its fourth plant on June 1 to meet growing demand. It unveiled a 2 trillion won plan to build another factory in line with its aim to more than double its annual production capacity to 1.3 million liters by 2032 from the current 604,000 liters per year.

“Samsung’s business is expected to be further upgraded on higher runs of the No. 4 plant, growth in subsidiary Samsung Bioepis and momentum from the fifth factory,” said Kang Hana, a pharmaceutical and biotech industry analyst at eBest Investment & Securities Co. in Seoul.

TARGETS LEQEMBI DEAL

Samsung has secured a 98% drug substance batch success rate, higher than industry averages of 90-95% with 620 successful product batches and 47 regulatory approvals since its inception in 2011.

Its technology transfer process reported the fastest period of three months in the industry, half the sector average of six months. It delivered products for Moderna and Eli Lilly & Co. within five months of signing contracts with the drugmakers.

Samsung is known to have targeted a contract manufacturing deal for the Alzheimer’s drug Leqembi, which won full approval from the US Food and Drug Administration last week. Leqembi is the only drug currently on the market that has demonstrated the ability to slow the progression of early stage Alzheimer’s disease in clinical trials.

Samsung President & CEO John Rim has said the company aims to first produce new innovative drugs, including those for Alzheimer’s and Parkinson’s disease.

“Samsung is highly anticipated to secure deals as the new Alzheimer’s drug market is expanding,” said Mirae Asset Securities Co.

Samsung Group leader Jay Y. Lee also strengthened partnerships with chiefs of global leading pharmaceutical makers to support the CDMO unit as South Korea’s largest conglomerate is seeking a future growth engine from the bio industry.

Lee met the CEOs of Bristol-Myers Squibb and Johnson & Johnson in the US in May, as well as heads of Pfizer and Novartis in China in March.

Write to Dae-Kyu Ahn at powerzanic@hankyung.com
 
Jongwoo Cheon edited this article.