Samsung Group, Quintiles Plan $266 Million Venture to Make Biologic Drugs

Samsung Group, the South Korean company whose businesses range from electronics to ship-building, will partner with Quintiles Transnational Corp. to make biologic drugs as it seeks new businesses to drive growth.

The venture, with 300 billion won ($266 million) in capital, will begin building a plant in the Songdo district of Incheon, near Seoul, in the first half of the year, Samsung Group said today. It will contract-make medicines made from living cells, and Samsung Group plans to expand into producing copies of biologics including Rituxan, the leukemia and lymphoma treatment sold by Roche Holding AG and Biogen Idec Inc.

The investment will help Samsung Group, South Korea’s largest industrial group, tap a market that boasts 5 of the world’s 10 bestselling medicines. The Seoul-based group may exceed its target to generate 1.8 trillion won a year by 2020 from biopharmaceuticals because of the demand for those medicines, Executive Vice President Kim Tae Han said.

“Biopharmaceuticals are a globally hot market,” Shin Ji Won, an analyst at Mirae Asset Securities in Seoul, said by telephone. Samsung has “repeatedly expressed interest in the area” and the business plan is now more visible, he said.

The venture plans to start supplying biologic products in the first half of 2013. Most of the medicines, to fight diseases such as cancer and arthritis, will be sold overseas, the group said. Biologics include arthritis drugs Remicade, made by Johnson & Johnson, Enbrel from Amgen Inc., and Humira from Abbott Laboratories.

Production, Technologies

Samsung Electronics Co. and Samsung Everland Inc. will each own a 40 percent stake in the venture, with Samsung C&T Corp. and Quintiles each holding 10 percent, the group said in a statement. Samsung affiliates will focus on production, while Quintiles will help develop technologies, South Korea’s Ministry of Knowledge Economy said in a separate statement.

Samsung Electronics, the group’s flagship company, declined 0.3 percent to 926,000 won at the 3 p.m. close of trading in Seoul, while Korea’s Kospi index gained 0.7 percent.

Samsung Group said in May it has set aside 23.3 trillion won to spend on five new businesses by 2020, with 2.1 trillion won for biopharmaceuticals. The group expects annual revenue from the five businesses to reach 50 trillion won by 2020.

The venture represents “a significant step in Samsung’s investment strategy in future growth engines,” the group said.

Anand Tharmaratnam, Quintiles’s head of clinical development in the Asia-Pacific region, wasn’t immediately available to comment on the venture.

Biosimilar Production

Samsung Group will also develop so-called biosimilars, or copies of biopharmaceuticals, and begin producing them in 2016 starting with Rituxan, Kim said at a briefing today.

Rituxan has patent protection in the U.S. until 2018 and in the rest of the world through 2013, Nina Schwab, a Roche spokeswoman, said in May last year. It generated sales of $6.11 billion last year, making it the world’s ninth best-selling medicine, according to data compiled by Bloomberg.

Global sales of biosimilars are forecast to expand more than 40-fold to $90.5 billion a year between 2010 and 2020, according to the ministry’s statement.

Samsung Group may also set up another joint venture to make biosimilars this year, Kim said. The group ultimately aims to develop its own biopharmaceuticals after gaining experience in making them, he said.

It will spend about half of the 2.1 trillion won budget on developing biosimilars and use the other half to build factories, he said.

To contact the reporter on this story: Jun Yang in Seoul at jyang180@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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