Bigger is Better in Samsung's Approach to Biomanufacturing

Published on: 
Pharmaceutical Technology, Pharmaceutical Technology-02-01-2018, Volume 2018 Supplement, Issue 1
Pages: s26–s28

A different perspective on controlling fixed costs of biomanufacturing, based on know-how from other industries, provides a competitive edge, says the CEO of Samsung BioLogics.

The information technology industry is noted for rapid development of innovative new products and advanced manufacturing practices that produce affordable products. The impact of digital technologies can be found in all areas of consumer, transportation, manufacturing, and business life.

Digital technologies and information sciences also have helped advanced medical science and research, a lesson that was obvious to Dr. Tae Han Kim, CEO and president of Samsung BioLogics, when he was researching new business areas for Samsung about 10 years ago. His recommendation--to enter the biologics drug contract manufacturing market, an area in which it had no prior experience--leveraged the company’s manufacturing and plant construction expertise.

While solar power, electric cars, or LED lighting may have been obvious choices for the diversified industrial and technology conglomerate known widely for its consumer electronics and appliances, Kim observed that the biotech industry was at a transition point due to advances in genome science. Therapies were needed to treat disease conditions of an aging global population and the drugs had to be affordable. 

Bio diversification

 “What could be the major industry which could lead future global industry? I thought it could be the healthcare industry in addition to the IT industry,” Kim told Pharmaceutical Technology. “Of course, the healthcare industry evolution is based on the powerful information technology. For example, you cannot develop genome science without information technology.”

For biopharma to emerge as a force in advanced manufacturing, however, the industry needed to learn some lessons from other industries. Most people developing biopharma facilities are from the biopharma industry and lack exposure to practices from other industries, Kim said. 

While other industries such as aerospace, ship building, chemical, semiconductors, automobile, or steel use concurrent processing to construct facilities, biopharma uses step-by-step processes to build bioprocessing plants.

“In conventional step-by-step processes, you spend six months for basic design and spend another six months for detailed design. And you spend three to four months for procurement of equipment. Then you build a building. Then you have to fabricate. You have to validate. That’s why they need the five years or six years,” he explained. “In parallel processing or concurrent processing, you put as many processes in parallel as possible so that you can reduce the timeline.”

There are two reasons biopharma companies are slow to adopt innovative practices. First, he says, the profit in biopharma industry is very large and the cost of goods is typically less than 10% of the revenue. “So even if you innovate dramatically for the manufacturing processes, you are talking about 10% of a revenue. From the CEO and management point of view, innovation in manufacturing has not been very valuable. They have been more interested in discovery, development, marketing, and sales,” he said.

The second reason-a complicated regulatory environment-causes biopharma companies to take a relatively conservative approach to adopting innovative ideas.


Identifying a competitive edge

Kim was convinced that Samsung could be not only an IT-oriented company but also a healthcare and biotech company. After analyzing supply and demand opportunities and evaluating the industry attractiveness and competitive environment, the company targeted contract manufacturing and biosimilar development versus the innovator drug route. 


The high value nature of the novel biologics drug market makes it attractive, he said, however, thousands of small biotech companies, plus big pharma companies compete in the drug discovery and development arena. Only a few large biologics contract manufacturers and approximately 80 small contract manufacturing organizations (CMOs), served the industry. He believed that Samsung could compete against and catch up to the capabilities of the big CMOs in a short time. 

“In addition to the attractiveness of the CMO industry, I could be more competitive in the CMO industry from the viewpoint of quality and compliance,” he said. The company’s construction capabilities and ability to reduce capital expenditures and the construction timelines could lead to client satisfaction, he said.

Big plants, rapid deployment 

The company was formed in April 2011 in Incheon, South Korea as a joint venture between Samsung affiliate companies and Quintiles Transnational Corp. To date, the company has invested approximately $1.7 billion in three manufacturing facilities for monoclonal antibody (mAb) drug substance and drug product.

The company’s first plant, with 30,000-L of bioreactor capacity, received FDA approval 25 months after the plant started operation; full commercial operation began in November 2015. The facility is also certified by the European Medicines Agency (EMA) and Japan’s Pharmaceuticals and Medical Devices Agency.

The second plant for mAb manufacturing--currently the world’s largest single plant--is five times larger than the first plant, features 10 bioreactors with 152,000-L capacity, and received FDA approval in 19 months, in October 2017 (1). Two months later, EMA licensed the facility (2). 

Each facility has upstream, downstream, and fill/finish suites, bonded warehousing, as well as process development and quality control laboratories. The company has 50-L, 200-L, and 1000-L bioreactors for preclinical and clinical production.

A third plant-a $740-million investment-was completed in late 2017 and has 180,000-L capacity, bringing the company’s total capacity to 362,000 L. The company expects it to be operational in 2018 with commercial production starting in 2020.

In 2017, Samsung BioLogics added cell-line development, process development services, and clinical trial drug manufacturing as additional revenue sources and to satisfy client requests to obtain multiple services from one provider.

As of January 2018, the company reported contracts totaling $3.3 billion with 10 drug companies including Roche and Bristol-Myers Squibb (3).

Why bigger is better for CMO and clients

Samsung BioLogics chose to build “jumbo” manufacturing facilities to handle large volume demands and because it saw greater opportunity for differentiation in larger room, Kim said. Building a larger size facility is more complex; however, this approach offers opportunities to save on capital expenditures and construction timelines, if executed properly.

Contract manufacturers compete against other CMOs for business but also against drug companies choosing to manufacture in-house. The latter scenario is not an apples-to-apples comparison, Kim said, but is “a CMO’s dilemma.” A CMO’s service price--the cost of goods and a profit margin--competes against the drug manufacturer’s in-house cost of goods. Variable expenses, such as the cost of supplies and materials are borne by the drug company. Therefore, fixed costs of facility expenses and labor costs are key factors in the overall cost of drug manufacturing.

Samsung BioLogics was able to use lessons learned from other industries to reduce its capital expenditures, build more efficiently, and reduce the number of operators required to run the plants, Kim said. While the second plant is five times the size of the first plant, the number of operators in the second plant is only 1.5 times the number employed in the first plant. By managing its fixed costs, Samsung BioLogics can be more competitive with other CMOs and with in-house drug manufacturing, he concludes.


1. Samsung Biologics, “Samsung BioLogics Receives the 1st FDA Approval at the World’s Largest Plant,” Press Release, Oct. 11, 2017.
2. Samsung Biologics, “Samsung BioLogics Receives the 1st EMA Approval for its Plant No. 2 Production,” Press Release, Dec. 13, 2017.
3. Sohn Ji-young, “Samsung BioLogics Says 4th Plant Production Plans ‘Still Under Review’,” The Korea Herald, Jan. 15, 2018.

Article Details

Pharmaceutical Technology
Supplement: Partnerships in Outsourcing 2018
February 2018
Pages: s26–s28


When referring to this article, please cite it as R. Peters, “Bigger is Better in Samsung’s Approach to Biomanufacturing," Pharmaceutical Technology Partnerships in Outsourcing 2018 Supplement (February 2018).