Samsung Bioepis Holdings, which was spun off from Samsung Biologics, was relisted on the Korea Exchange on the 24th. The industry sees this partitioning and reorganization as "the starting point of Samsung Bio 2.0." Unlike production-centered Samsung Biologics, Samsung Bioepis Holdings has taken on the role of a strategic bridgehead to secure a new drug pipeline, redefining the group's bio business.
Samsung Bioepis Holdings is a company with the nature of an intermediate holding company and does not conduct direct business. Its main revenue source is expected to be dividends from its subsidiary Samsung Bioepis. Although Samsung Bioepis has sufficient growth potential and dividend capacity, a financial dilemma arises from the fact that, considering cash flow and borrowing burdens, it is difficult to supply the funds needed by the parent company without limit.
Samsung Bioepis Holdings started trading at 611,000 won that day and weakened to 497,000 won as of 10:08 a.m., down 114,000 won (18.66%). Immediately after a spin-off, short-term supply-demand instability often occurs as the values of the parent and the new entity are reassessed, increasing share-price volatility. In particular, new drug development has a low success rate and accumulates costs over a long period, making short-term earnings volatility high, which is cited as a factor dampening investor sentiment.
Kim Seon-a, an analyst at Hana Securities, said, "As the Epis division, which has high earnings volatility due to new drug development, has been separated, the corporate value of Samsung Biologics is expected to show a more stable upward trend."
◇Samsung builds a triangular structure for new drug development… "Tailored division of labor" in strategy, technology, and commercialization
Samsung's goal is to create a "Samsung-style new drug development structure" in which everything from basic technology development to clinical trials and approval proceeds within a single system. Samsung Bioepis Holdings, in the form of a holding company, will be dedicated to managing subsidiary equity and new investment businesses, incorporated Samsung Bioepis on the 1st of this month at its launch, and on the 11th established EPIS NexLab, a new drug platform research organization.
In summary, the structure links Samsung Bioepis Holdings (strategy)–EPIS NexLab (platform)–Samsung Bioepis (development, clinical, approval). A Samsung Bioepis official explained, "If EPIS NexLab builds platform technology, Samsung Bioepis can commercialize it in various ways, such as directly developing new drugs based on it, licensing it out, or pursuing joint development with external partners."
The foundation of this strategy is the biosimilar performance Samsung Bioepis has accumulated over the past 13 years. The company has developed and launched biosimilars for 11 global blockbuster biologics, and last year posted its best results since its founding with sales of 1.5377 trillion won and operating profit of 435.4 billion won.
The newly established EPIS NexLab will first begin developing peptide-based platform technology. Peptides, which are structures in which amino acids are connected in short chains, are used to improve drug delivery efficiency or to discover new drug candidates. However, it did not disclose detailed directions for development.
In the long term, it is also reviewing development of a bispecific antibody platform to be used in the Antibody-Drug Conjugate (ADC) field. ADCs are a high-difficulty area that requires toxicity control, drug delivery technology, and mass-production processes, and a single pipeline's clinical expense alone is known to run into the hundreds of billions of won.
◇Samsung Bioepis, the "cash engine" within the holding company… carries both growth and funding burdens
The key is securing funding. Samsung Bioepis Holdings plans to inject 100 billion won, secured during the partitioning process, into EPIS NexLab. However, the industry assesses that while 100 billion won is sufficient for initial platform building, it is insufficient for securing a new drug pipeline.
Han Hyeong-seop, principal researcher at the Korea Institute of Science and Technology (KIST), said, "100 billion won is sufficient to secure key research talent, build research infrastructure, and conduct proof of concept for the peptide platform, but it is not enough to cover all processes through to platform completion, generation of candidate substances, and commercialization, including licensing out," and added, "To realize the platform's monetization and expand into modality areas such as ADC platform development, additional capital injections and strategic resource allocation will be essential."
The problem is that other financing means are not readily available. Bank loans secured by assets as collateral are also difficult. This is because Samsung Bioepis Holdings did not inherit real estate assets at the time of the spin-off. Capital market fundraising is also assessed to be challenging due to the characteristics of the governance structure connected to Samsung C&T and Samsung Electronics.
For these reasons, there is talk that Samsung Bioepis could contribute funds. As of the end of last year, Samsung Bioepis held 703.7 billion won in retained earnings available for distribution, giving it ample capacity for dividends.
Its growth trend is continuing. Sales increased from 941.4 billion won in 2022 to 1.5377 trillion won last year, and operating profit rose from 231.5 billion won to 435.4 billion won over the same period. In the third quarter of this year, sales were 441 billion won and operating profit was 129 billion won, up 110.7 billion won and 61.1 billion won, respectively, from a year earlier.
However, it also faces considerable financial burdens of its own, including 57.8 billion won in cash and cash equivalents and 422.4 billion won in total borrowings, and it must continue to expand its own R&D investment, such as launching more than 20 new products in the future and developing ADC new drugs. Samsung Bioepis previously increased its general research expenses by 75.3%, from 63.1 billion won in 2023 to 110.6 billion won in 2024.
As a result, market attention is focused on whether Samsung Bioepis will go public. This is because, as a non-listed company, it does not have many means to raise funds directly from the market.
A Samsung Bioepis official said, "For the next five years, listing is impossible because it is the minimum grace period pre-agreed with the exchange," and added, "After that, we could consider listing as needed." On concerns about a shortage of initial funds, the official said, "How the 100 billion won is managed could make a difference," and added, "At first, it is highly likely that expenses will be used very frugally."