S Korea’s three biotech firms eyed closely with growing earnings momentum

SEOUL (MK Business News) – South Korea’s leading biotechnology companies Samsung BioLogics Co, Hanmi Pharmaceutical Co, and Chong Kun Dang Pharmaceutical Corp are in the limelight on growing expectations for improvement in their earnings this year.

Samsung BioLogics, a biopharmaceutical business arm of Samsung Group, is expected to make a turnaround this year and raise about 10 billion won ($8.82 million) in operating income. Last year, the company posted an operating loss of 30.4 billion won, narrowing from a deficit of 203.6 billion won in 2015.

In the first quarter of this year ended March, the company raised 3.4 billion won in operating profit in the January-March period, its first quarterly profit since inception. It, however, reported a net loss of 33.1 billion won in the cited period after reflecting biosimilar development costs of its subsidiaries Samsung Bioepis and Archigen Biotech Ltd.

Investors, nevertheless, believe there are more reasons to remain optimistic about earnings of Samsung BioLogics as the company has pre-emptively invested to ramp up output in anticipation for growing demand for bio medicines. As a leading contract manufacturing operator (CMO) of animal cell culture, Samsung BioLogics currently operates two factories – each with an annual capacity of 30,000 litres and 150,000 litres in Songdo, Incheon.

Once the construction of the company’s third facility with a capacity of 180,000 litres is complete in the end of this year, Samsung BioLogics will be capable of producing 360,000 litres annually in total to become the world’s largest CMO.

Market analysts expect that considering the nature of the CMO industry where a small number of players armed with economy of scales dominate, Samsung BioLogics would be able to secure more orders.

On growing expectations for a turnaround this year, Samsung BioLogics shares have skyrocketed more than 50 per cent since the first trading day of this year. Its shares ended at 240,000 won on Friday, remaining unchanged from the previous session.