Facility investment by Korean firms up 56% in first quarter

Rendering of Samsung Biologics’ fourth factory in Songdo [Photo provided by Samsung Biologics]

South Korean companies announced the biggest facility investments in the past three years in the first quarter driven by large biopharmaceutical firms.

According to the Korea Exchange, this year’s total amount of facility investment announced by companies listed on KOSPI, KOSDAQ and KONEX in regulatory filings reached 4.73 trillion won ($3.6 billion) as of March 30, up 56 percent from 3.04 trillion won a year ago. This marks the biggest annual increase in the last three years.

Listed companies in South Korea are required to disclose new facility investments of at least 10 percent of their equity capital or 100 billion won.

The largest investment came from Samsung Biologics Co., which is planning to inject 1.98 trillion won to build its fifth factory in Songdo, representing 22 percent of its equity capital.

Samsung Biologics needs capacity expansion to proactively respond to the mounting demand for contract development and manufacturing of biopharmaceuticals. When completed next year, the company’s production capacity will total 784,000 million liters, the largest in the world.

SK bioscience Co. announced a 283.8 billion won investment plan, which accounts for 17 percent of its equity capital, to establish a global research and development center in Songdo, near Seoul. The center will house basic research facilities in vaccine and biotechnology, as well as research labs, factories and offices for process development and production.

Although both companies performed poorly in stock returns this year, their investment plans are viewed positively by analysts as they can provide future growth momentum.

“Samsung Biologics’ fifth factory will help widen its gap with CMO rivals and the fact that the construction of the fifth factory began earlier than expected, even before the fourth factory is fully operational, suggests that there are growing orders,” said KB Securities analyst Kim Tae-hee.