Samsung's Foray into Biologics - Analyst Blog


We usually associate Samsung with electronic products. However, Samsung is working on making a name for itself in the biopharmaceutical world as well. In May 2010, the company had declared the biopharmaceutical sector as one of five new strategic businesses that would lead the group's future growth. At that time, Samsung committed to invest KRW 2.1 trillion (approximately $2 billion) in biopharmaceuticals by 2020.

In keeping with this goal, Samsung Electronics Co., Ltd. ( SSNLF ), and its affiliated companies entered into a strategic partnership with pharmaceutical services company, Quintiles, in early 2011 for the setting up of a joint venture.

The joint venture, Samsung Biologics, was established in April 2011 with Quintiles holding a 10% stake. The remaining 90% is owned by Samsung (Samsung Electronics Co., Ltd., 40%; Samsung Everland, Inc., 40% and Samsung C&T Corporation, 10%).

The establishment of the joint venture marked Samsung's entry into the biopharmaceutical world. Samsung took another step recently by entering into an agreement with biotech company Biogen Idec ( BIIB ) for the setting up of a joint venture for the development, manufacturing and marketing of biosimilars. Biosimilars are generic versions of biologics.

The $300 million joint venture, which will be based in Korea, will not be involved in the development of biosimilars of Biogen's branded products.

Majority Stake to be Held by Samsung

While Samsung will contribute $255 million to the joint venture for an 85% stake, Biogen will invest $45 million for a 15% stake in the joint venture. The agreement brings together Biogen's expertise in biologics and Samsung's acumen and experience in new business development.

The setting up of the biosimilars joint venture should help Samsung achieve its goal of commercializing biosimilars by 2016.

Samsung is constructing a biopharmaceutical manufacturing plant in the Incheon Free Economic Zone in Songdo, Incheon, South Korea, with full-scale operation expected to commence in April 2013.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: BIIB

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