Azernews.Az

By Alimat Aliyeva

Samsung Biologics Co., the biotech arm of South Korea's Samsung Group, announced Thursday that it plans to spin off its biosimilar development business to streamline its operations and focus more on its core Contract Development and Manufacturing Organization (CDMO) services, Azernews reports.

According to a regulatory filing, the company will create a new entity, Samsung Epis Holdings, which will later incorporate Samsung Bioepis Co., a biosimilar drug developer, as a wholly owned subsidiary.

The spinoff process will begin with the submission of a securities report on July 29, followed by a shareholders meeting on September 16 for final approval.

Samsung Biologics explained that this move will enable the company to better concentrate resources on its CDMO business, which operates under a different revenue model compared to biosimilars.

CDMO refers to a company that not only manufactures drug substances on an outsourced basis but also handles all the innovation and development work that takes place before production.

Samsung Biologics emphasized that this move is aimed at improving operational focus and addressing concerns raised by its CDMO clients about potential conflicts of interest.

In particular, the company acknowledged that some customers were worried that proprietary technologies used for original drugs might be shared with Samsung Bioepis, which operates in the biosimilar space.

"As Samsung Bioepis has been expanding its biosimilar business, the concerns of Samsung Biologics' customers have gradually increased, which has affected our order competitiveness," said Ryu Seung-ho, Chief Financial Officer at Samsung Biologics, during an online briefing.

"After the separation, we expect our customers' concerns about conflicts of interest will be better addressed," Ryu added.

Samsung Biologics originally established Samsung Bioepis as a joint venture with U.S. pharmaceutical company Biogen Inc. in 2012. In 2022, Samsung acquired Biogen's stake for $2.3 billion, making Bioepis a fully owned subsidiary.

Ryu also stressed that the spinoff is not part of any broader corporate governance restructuring within Samsung Group.

In a separate statement, Samsung Bioepis reassured that the spinoff would not affect its day-to-day operations.

"Samsung Bioepis' ongoing business operations, including research and development, manufacturing, supply distribution, and commercialization of biologic medicines, will not be affected by the spinoff," the company stated.

"We will continue to focus on our core business and remain committed to ensuring the continued development, manufacturing, and distribution of high-quality biosimilar medicines to patients worldwide without disruption."

By separating the two businesses, Samsung Biologics aims to reinforce the independence of both entities, enabling each to focus more strategically. The company believes this will enhance competitiveness, operational efficiency, and long-term value for shareholders.

Interesting fact: Samsung Biologics is already one of the world’s leading CDMO firms, reporting 4.54 trillion won ($3.3 billion) in sales and 1 trillion won in net profit for 2024. With the increasing demand for biologic drugs and the rapid growth of biosimilars, this spinoff could position both Samsung Biologics and Samsung Bioepis for even greater success in their respective markets.

Shares of Samsung Biologics fell 1.82 percent to close at 1.08 million won on the Seoul bourse, underperforming the broader Korea Composite Stock Price Index, which dropped 1.22 percent. The spinoff plan was announced before the market opened.