Samsung Inks $391M Deal with Novartis Amidst Plans for Expanding Production Capacity

After an initial deal of $81 million in June 2022, Novartis and Samsung have decided to expand their collaboration by signing a new deal worth $390.9 million, under which Samsung will continue to produce drugs for the Switzerland-based world’s fifth-largest pharmaceutical company. Samsung made this announcement at the beginning of this week in a regulatory filing.

As of yet, however, the South Korean company has not announced exactly which drugs it will be manufacturing for Novartis.

Just days before the deal with Novartis, Samsung had finalized another deal worth approximately $897 million with Pfizer. Additionally, at the beginning of 2023, the two companies had entered into two biosimilar production agreements, and now Samsung Biologics has announced that Novartis will be investing an additional $486 million.

According to a regulatory filing, the two firms got together again in March and signed a deal worth over $190 million.

The Samsung-Pfizer deal from June is the largest production pact signed with Samsung, followed by this new collaboration with Novartis, which also topped a $360 million deal with AstraZeneca. In the June deal, the Korean CDMO (Contract Development and Manufacturing Organization) agreed to produce biosimilar drugs in the fields of immunology, oncology, and inflammation.

According to reports by Korea’s Yonhap News Agency, in 2023 alone, Samsung has secured $1.7 billion in manufacturing orders. In fact, backlogs this year have reached a record high of $1.8 billion or 2.3 trillion won. Total orders have increased by over 30% from 2022 when they were valued at 1.8 trillion won.

In addition to focusing on manufacturing orders, Samsung has also been continuously expanding its capacity in recent years. This includes the construction of a fifth plant for the company in the country, which will add 180,000 liters of capacity to the complex in Incheon. Once achieved, the new site will have the highest capacity in the industry, around 784,000 liters.

Samsung is investing $1.46 billion into the project construction, which was scheduled to begin in the first half of 2023. Operations in the new plant are expected to commence by 2025.

Samsung has also been working recently to secure a contract manufacturing deal for the Alzheimer’s drug Leqembi. Leqembi is a drug for Alzheimer’s that has received full approval from the US Food and Drug Administration for its ability to slow the progression of early-stage Alzheimer’s disease in clinical trials.

According to Samsung President & CEO John Rims, this move is part of the company’s aim to produce new innovative drugs.

As part of its expansion efforts, Samsung Group leader Jay Y. Lee is also working to strengthen the CDMO unit in South Korea for future growth engines in the bio industry. For this purpose, Lee has met with many chiefs of global leading pharmaceutical companies, including the CEOs of Johnson & Johnson and Bristol Myers Squibb.

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