Samsung Looks To Mirror Fellow Korean Pharma Celltrion's Path From CMO To Biosimilars Developer With Quintiles JV

Samsung plans to begin construction on its manufacturing plant in Incheon during the first half of this year, and production is expected to commence in the first half of 2013.

SEOUL - South Korea's leading conglomerate Samsung Group is following in the footsteps of Korea's biosimilar front-runner Celltrion in beginning its biopharmaceutical journey as a contract manufacturing organization via a joint venture announced Jan. 25 with multinational contract research organization Quintiles Transnational Corp.

Analysts and other industry stakeholders noted that contract manufacturing is generally the form of business local Korean companies, including Celltrion, took up in the past during their initial entrance into the biopharma business because they lacked experience in the sector.

"What Samsung Group is trying to do is 100% the same as Celltrion did in the past, thus I think Samsung would start the biopharmaceutical business in three stages," HMC Investment Securities analyst Choi Jong-Kyung told PharmAsia News. "In the initial first stage, Samsung will be a CMO for multinational pharmaceutical companies beginning sometime in the first half of 2013, and in the second stage it will sell its own biosimilars beginning in 2016 before it becomes a global biopharmaceutical service company in the third stage."

Premature Optimism Should Be Avoided

Choi, however, cautioned that investors should keep away from any premature optimism toward Samsung's project.

"Samsung has a long way to go in research & development, and should know the fact that it is a late-comer in the biopharmaceutical sector," said Choi, referring to the clinical trials Samsung is pushing for biosimilars (Also see "Samsung Electronics Takes Step Into Korea's Biosimilar Foray With IND For MabThera Generic" - Scrip, 5 Jan, 2011.).

Although it may indeed have a long way to go, analysts said Samsung's entry into the biopharma sector will help wipe out uncertainty about the sector and would in fact "help to generate a bright outlook for the sector," Kim Hye-rim, an analyst with Hyundai Securities told PharmAsia News. She also predicted that Samsung will eventually be Celltrion's rival in the future.

As HMC's Choi noted, Celltrion also believes that Samsung is taking the same route Celltrion took in 2002 when it entered the biopharma industry.

"CMO is the stance Celltrion had taken from 2002 to 2009 when we didn't have biopharmaceutical experience and infrastructure," Celltrion spokesman Kim Yong-Joong told PharmAsia News. "First, we tried to create a cash cow after establishing our production facility, and then achieved production experience, and at the same time, we were working on developing our own biosimilars."

After nine years of CMO experience, Kim noted that Celltrion is now a company producing its own biosimilars (Also see "Biosimilars Aid Korea's Celltrion To Post Record Sales And Profit In FY 2010" - Scrip, 23 Feb, 2011.).

"Samsung's announcement is 99.9% the same as the announcement we made in 2002," said Kim, predicting that Samsung will try to produce its own products even as it plays the role of CMO.

Three Samsung Companies Partnering With Quintiles

Samsung Group said three of the group's companies, including Samsung Electronics, Samsung Everland and trading and construction arm Samsung C&T are partnering with Quintiles in the joint venture announced Feb. 25 (Also see "Change Of Guard At Quintiles India As Company Continues Aggressive Asia Efforts With Samsung Deal" - Scrip, 25 Feb, 2011.).

Samsung Electronics, manufacturer of flat screen televisions and computer memory chips, will hold 40% of the venture, with Samsung Everland taking a similar share of 40%, and Samsung C&T holding 10%, the company said in a press release. Durham, North Carolina-based Quintiles will take 10% of the venture.

Samsung plans to build its manufacturing plant in Incheon, a major port city west of Seoul, which is also where Celltrion produces its biosimilars. Construction of the facility will begin during the first half of this year, Samsung said, and production is expected to commence in the first half of 2013.

Samsung Group, a diverse conglomerate consisting of dozens of businesses with interests in electronics, shipbuilding, finance, leisure and other areas, announced an aggressive plan in May 2010 to enter the health care sector, particularly focused on biosimilars and medical devices (Also see "Samsung Group Set To Enter Biosimilars Market With $1.9 Billion Investment" - Scrip, 17 May, 2010.)).

Before the formal announcement in May, Samsung had begun using its economic clout to draw biosimilar experts from other companies, including LG Life Science's top biosimilars executives (Also see "Korea's Samsung Electronics On Manhunt For Biosimilar Talent As Local Companies Keep Wary Eye On Competition" - Scrip, 26 Mar, 2010.).

In December 2010, Samsung Electronics took over South Korea's leading medical equipment maker Medison Co. as it builds up its presence in the health care sector (Also see "Samsung Electronics Takes Over Leading Medical Device Maker Medison" - Scrip, 17 Dec, 2010.).

For its part, Quintiles, like many CROs, has been looking to move up the value chain in part by forming risk-sharing drug development deals in the last year with multinational companies. In addition to the Samsung deal, Quintiles also recently announced a major R&D partnership with Japan's leading pharma Takeda Pharmaceuticals; Quintiles also signed an earlier less comprehensive partnership with Eisai related to co-development of several experimental oncology compounds (Also see "Takeda Goes Virtual, Splitting Non-oncology Development Between Covance And Quintiles" - Scrip, 17 Feb, 2011.).

- Peter Chang ([email protected])

[Editor's note: This article appears courtesy of PharmAsiaNews.com, Elsevier Business Intelligence's source for Asian biotech and pharmaceutical news. Register for a 30-day risk free trial.]