The Big Red Biotech Blog

Samsung Sinks Another $2B into CMO

I guess making TVs is not exciting enough. 

Samsung announced at this week's JP Morgan Conference that it would be spending another $2 B to add to its CMO facility in the Songdo Free Economic Zone in Seoul, Korea.  The multi-national giant has already built a 30,000 sq ft facility with 6 x 5000 L reactors by the end of Dec 2012.  It plans to add a further 150,000L of mammalian cell culture manufacturing capacity and 40,000L of microbial fermentation.  This would make it among the top 4 or 5 CMOs in capacity in the world.  It would be similar in capacity to Celltrion also located in the Korean enterprise zone. See Fine.

TH Kim, Samsung BioLogics CEO, says the company can exploit its construction and manufacturing expertise in this business. They have also hired experts and professionals from other CMOs in the industry to staff their new facility.  Samsung believes that it will be able to manufacture biologics (and biosimilars) at lowered costs over the competition and therefore deliver value to clients and patients.

There is no doubt that they have the financial muscle to make an impact -- assuming they can get the right staff in place to run the business.

Posted by Bruce Lehr Jan 9th 2013.

More Big Pharma Woes Decried

Big Pharma performance continues to receive muted reviews from various analysts and industry commentators.  Pharma Reform starts with an analysis of drug approvals in 2012 by FDA.  It is TRUE that 35 drugs were approved last year.  It is also TRUE that this represents the fruit of only 31 sponsoring companies and only 13 of these 35 could be classified (somewhat generously) as Big Pharma. Of 12 priority approvals, only 4 came from Big Pharma. How about discovery?  Of the 35 new approvals, only 7 (20%) came from Big Pharma. So while the total number of approvals in 2012 is slightly up from previous years -- is Big Pharma actually doing any better? 

PharmaTech Talk chimes in with a piece describing how Big Pharma's "firepower" -- i.e. ability to compete and conduct M&As -- has been reduced.  Partly this is caused by Big Pharma's lack of growth. In 2011, the overall drug market saw growth that exceeded Big Pharma's by $20 B.  In 2012, this is expected to have widened to $50 B and predictions are that it will reach $100 B by 2015.  This is largely due to the much discussed patent cliff and lack of replacment product revenues in Big Pharma pipelines. So of course, Big Pharma should bail itself out with M&As right?  Wrong according to Ernst & Young. Big Pharma's firepower according to their calculations has decreased by 23% between 2006 and 2012. Specialty pharma and biotechs have become much more hardy competition and have increased their firepower. So now, Big Pharma might get bumped from M&A deals they heretofor would have taken if they wished. Uh-oh.

That means more bolt-on deals, more divesititures, and more offshore deals in emerging markets. Big Pharma will need to pursue actions that boost and conserve firepower if it wishes to pursue transactions that require it to bail themselves out of revenue holes.

Posted by Bruce Lehr Jan 9th 2013.