K-Bio’s growth limited to contract manufacturing gains

A view of Samsung Biologics’ Plant 2 in Songdo, Incheon. (Samsung Biologics)

As South Korea’s pharmaceutical and biotech companies release their third-quarter earnings, Samsung affiliates have emerged as the sector’s growth leaders. While Samsung Biologics reported strong gains, traditional players like Chong Kun Dang (CKD) and Hanmi Pharmaceutical faced challenges.

According to filings from the Financial Supervisory Service and individual companies on Sunday, Samsung Biologics, a leading contract drug manufacturer in South Korea, reported a 6.3 percent on-year increase in operating profit to 338.6 billion won ($245.2 million) for the July-September period. Revenue rose by 14.8 percent to 1.18 trillion won, marking the first time quarterly revenue surpassed the 1 trillion won milestone. The company attributed this growth to increased global demand for biopharmaceuticals, with full operations at its Songdo plants 1–3 and ramp-up of its fourth plant. Favorable exchange rates have also helped, leading Samsung Biologics to project annual revenue surpassing 4 trillion won, a first for any domestic biopharma.

Samsung Biologics secured record-breaking orders of 1.5 trillion won in July and 1.7 trillion won in October. The company’s fifth plant, scheduled to open in April 2025, is already attracting strong demand. Daishin Securities analyst Lee Hee-young highlighted these recent deals as promising indicators for Samsung Biologics’ future performance.

Samsung Bioepis, Samsung Biologics’ biosimilar developer, also posted a 38 percent increase in operating profit to 67.9 billion won. Meanwhile, Celltrion, another key biosimilar developer set to release its earnings on November 8, is expected to show similarly positive results.

In contrast, traditional pharmaceutical companies like Hanmi Pharmaceutical and CKD reported declines in earnings. Hanmi, amid a family-led management dispute, saw a 11.4 percent drop in operating profit to 51 billion won, partly due to a 42.3 percent decline in earnings at its Beijing subsidiary, which was impacted by floods. CKD’s operating profit fell 52.5 percent to 25.2 billion won, largely attributed to the end of its co-marketing contract for K-CAB, a gastroesophageal reflux disease drug previously generating annual sales over 100 billion won.

Yuhan Corporation, one of South Korea’s largest pharmaceutical companies, saw a dramatic 690.6 percent increase in standalone operating profit to 54.5 billion won in the third quarter. This surge was largely due to a $60 million milestone payment received after the U.S. Food and Drug Administration (FDA) approved its non-small cell lung cancer treatment, Leclaza, which Yuhan licensed to Janssen in a 2018 deal valued at 1.4 trillion won. Without this payment, Yuhan’s quarterly earnings would have faced the possibility of an operating loss.

Daewoong Pharmaceutical and GC Biopharma recorded operating profit growth, with increases of 20.3 percent and 20.8 percent, respectively, compared to the same period last year.

“As major companies focus on faster-profit CDMO and biosimilar businesses while traditional pharmas continue to invest heavily in the lengthy process of novel drug development, the profitability gap between the two segments appears likely to widen,” said a pharmaceutical industry insider.