April 26, 2024

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[THE INVESTOR] Samsung BioLogics, the contract drug manufacturing unit of Samsung Group, is expected to turn profitable this year thanks to a surge in sales and rise in the value of its affiliate, a local securities firm said on Jan. 31.

“The revenue from contract manufacturing operations of Samsung BioLogics, which surpassed expectations last year, are expected to show strong growth this year,” said Kwak Jin-hee, an analyst at Eugene Investment & Securities. 

Sales and profit both are expected to grow this year, according to Eugene.

BioLogics, which posted an operating loss of 30.4 billion won (US$26.14 million) in 2016, is likely to swing to black by reporting 37.5 billion won operating profit this year. Revenue is projected to increase by 50 percent on-year to 440.7 billion won in 2017.

The expansion of production facilities will have a positive impact on the company’s earnings.

“Its first plant is fully operatinal and the second one with 150,000 liters manufacturing capabilities is increasing capacity utilization rate,” Kwak said.

The first and second plants have booked client orders to full capacity until 2022 and BioLogics has started to report new orders for its biggest third plant, which is expected to be completed in 2018.

The company could receive bulk orders if it wins a contract to produce Alzheimer’s antibody treatment, the analyst said.

Its affiliate Samsung Bioepis is also expecting a series of favorable events.

A Lantus biosimilar candidate SB9 funded by Samsung Bioepis was approved for sale in Europe in January.

Bioepis’ SB9 and infliximab biosimilar -- known as SB2 -- are awaiting approval by the US Food and Drug Administration for its pipeline candidates.

Its copycat version of AbbVie’s blockbuster Humira and a biosimilar version of Roche’s breast cancer blockbuster Herceptin are expected to be granted EU approval this year.

“This year will mark the beginning of the blooming of the biosimilar market as drug prices will be affected by changes in US medical policies under President Donald Trump,” Kwak said.

By Park Han-na (hnpark@heraldcorp.com)