Samsung’s Move into Biologics: Diversifying to Survive and Thrive

When a company best known for consumer electronics decides to move beyond its comfort zone, and take on the emerging global biosimilars opportunity, the competition has to sit up and notice. When the company is Samsung, the competition does have lots to worry about.

In 2010, Samsung decided to bet big on five strategic areas where it has no core expertise. It decided to focus on Green – solar panels, light-emitting diodes (LEDs) used for lighting, electric-vehicle batteries, and Health – biosimilars and medical devices.

The strategic intent behind Samsung’s thinking in defining its future is diversifying for surviving and thriving.

In 2010, Samsung established Samsung Biologics with 40% investment from Samsung Electronics, 40% from Samsung Everland, 10% from Samsung C&T, and 10% from Quintiles Transnational, recognized for its extensive contract research capabilities. By moving into contract manufacturing of biosimilars, Samsung bet on gaining exposure and experience, assuming little commercial risk.

Samsung aims to commercialize biosimilar versions of blockbuster drugs such as Rituxan, the leukemia and lymphoma treatment, sold by Roche and Biogen Idec, and Remicade, the drug from Johnson & Johnson for arthritis by 2016. By adopting a customer-oriented business model focused on innovative and collaborative novel drug development and high-quality, fast-turnaround contract manufacturing partnerships, Samsung is showing great agility and determination to shape the biosimilars opportunity.

In February 2012, Samsung Biologics entered into a strategic collaboration with Biogen Idec to setup their joint venture, Samsung Bioepis Co. Ltd. The new venture will develop, manufacture and market biosimilars. New research from Samsung Economic Research Institute points to a global biopharma market of US$ 260 billion, with biosimilars accounting for US$ 90.5 billion by 2020. The market will be driven by the expiry of patents of high-value global blockbuster drugs.

AtIncheon,Korea, the construction of the R&D facility of Samsung Bioepis is expected to be completed by end 2012. Samsung Bioepis will benefit from Biogen Idec’s expertise in developing high-quality biosimilars.

A state-of-the-art manufacturing plant is scheduled to start the production of biopharmaceutical drugs in early 2013. With Government of Korea setting an ambitious goal of capturing 22% of the global biosimilars market by 2020, the industry is gearing up for significant growth in the biosimilars space.

Samsung Biologics is aiming to stay ahead of the biosimilars curve by tapping into R&D expertise of Biogen Idec and contract research capabilities of Quintiles, while deploying the legendary manufacturing capabilities that Samsung’s technological leadership is renowned globally for.

For a long time now, the mantra of the Western pharma industry has been to focus only on their core competencies – be it drugs, vaccines, or diagnostics. Moving beyond the comfort zone has always been shrugged off as a fail.

The question remains:  If Samsung can, why cannot the Western pharma firms?

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