Samsung Bioepis is reshaping its distribution and sales. Since 2015, the company has maintained an "indirect sales" system, distributing and selling biosimilar products in global markets such as the United States and Europe through multiple partners, but it is now moving in earnest to a "direct sales" system.
According to ChosunBiz reporting on the 5th, Samsung Bioepis is exploring the acquisition of U.S. sales partner Organon. An investment banking industry official said, "We completed the first due diligence at the end of last year, and the next steps are underway."
It is still at the due diligence stage, and it is uncertain whether the two sides' acquisition transaction will actually be concluded. Samsung Bioepis is also said to be reviewing acquisitions of other corporations besides Organon.
Analysts say Samsung Bioepis is seeking ways on multiple fronts to strengthen global commercialization competitiveness. Externally, competition in the global biosimilar market is intensifying, and internally, after creating a management independence structure through a spin-off from Samsung Biologics last year and becoming a key subsidiary of Samsung Bioepis Holdings, the company faces the task of boosting corporate value through new drug development results and earnings growth. However, the company said it "has never reviewed acquiring Organon."
◇ "New drug development is getting underway… need to strengthen cash generation"
The indirect sales model has the advantage of easy market entry because it leverages partners that already have distribution networks. But it also has the drawback of not capturing the full sales profit.
The biggest advantage of direct sales is profitability. If partners are not involved, the burden of distribution fees is reduced. According to the industry, when expanding overseas, domestic pharmaceutical and biotech corporations are known to pay partners fees equivalent to 30%–40% of average sales. Strengthening market control is also a benefit of direct sales.
Analysts say Samsung Bioepis is running the numbers as it reviews acquiring corporations with global sales networks, including Organon, for this very reason. In fact, the previous day Samsung Bioepis said it had obtained the return of European commercialization rights for the ophthalmology treatment "Byooviz" from its U.S. marketing partner Biogen and would begin direct sales in Europe. With this shift to direct sales, Samsung Bioepis now sells a total of four products directly in Europe.
A senior Samsung Group executive who requested anonymity said, "Under the existing sales agency structure, revenue is shared, so recognized sales are smaller," adding, "If we switch to direct sales starting with biosimilars that are established in the market, we can increase recognized sales from an accounting perspective."
Using partners has the advantage of faster market entry through already established sales networks and saving on marketing expense. However, there are limits, including constraints on pricing strategy and difficulty fully securing product sales profit.
Kim Su-min, senior researcher at Korea Ratings, said in a recent report, "Samsung Bioepis' partner-based sales system does reduce sales and marketing expense, but because pricing strategy is determined by partners, pricing control is limited, and building an independent brand is also difficult."
By contrast, in a direct sales system, managing sales and marketing expense becomes more important. A Samsung Group executive said, "When switching to a direct sales system, it's important to manage sales and marketing expense well, so we need to weigh the burdens," meaning that when shifting to direct sales, the costs of maintaining a sales network and the working capital burden, including inventories, are reflected in results, requiring a cost management strategy.
The U.S. market has a complex, private insurance-centered distribution structure, so initial expense and infrastructure burdens for direct sales are high. Accordingly, Samsung Bioepis is maintaining its strategy of selling through partners in the United States while gradually expanding direct sales centered on Europe. Europe is considered relatively easier to enter because it is structured around country-level tenders.
Celltrion, unlike Samsung Bioepis, entered from the outset with direct sales. It operates direct sales networks in major markets such as the United States and Europe and handles pricing strategy, tender responses, and brand awareness building in-house. This can allow the company to pursue more aggressive and flexible strategies. In 2024, Celltrion's biosimilar annual sales were about 3.1 trillion won, compared with Samsung Bioepis' annual sales of about 1.5 trillion won.
In particular, Samsung Bioepis Holdings is also taking on new drug development through its subsidiary EPIS NexLab, which is dedicated to that work. Funding for new drug development ultimately comes from Samsung Bioepis' biosimilar business revenue. To achieve results in new drug development following biosimilars, the company first needs to further strengthen the biosimilar business's cash generation.
Samsung Bioepis has launched nine products to date and plans to develop more than 10 new biosimilars by 2030. Following the biosimilar launched last year, next-in-line products such as the "Keyrtuda" biosimilar, an immuno-oncology drug, are expected to take at least three years to commercialize. Maximizing sales of existing approved products during this period has emerged as a key task that will determine performance and future investment capacity.
It has also taken a first step in new drug development. At the end of last year, Samsung Bioepis applied to the U.S. Food and Drug Administration (FDA) for a phase 1 clinical trial plan for its first new drug pipeline candidate, an antibody-drug conjugate (ADC) for bladder cancer. The candidate was developed through joint research with IntoCell, and the company aims to enter a global phase 1 this year. In 2023, the company signed a joint research agreement with IntoCell for up to five ADCs, and this year it agreed with China's Frontline to co-develop two ADC candidates. Recently, it has been expanding its new drug pipeline by partnering with Seoul National University and PROTEINA to discover 10 antibody new drug candidates by 2027.
◇ Drug price cut policy opens opportunities as biosimilar developers face fierce competition
Samsung Bioepis' shift in sales system is also seen as a strategy to respond to the rapidly changing global market environment. The U.S. Trump administration is pursuing a drug price cut policy that aims to align U.S. drug prices with the lowest levels applied in other major advanced countries.
Global Big Pharma with original drugs face heavy pressure from deteriorating profitability. By contrast, for biosimilar corporations, the industry sees an opportunity to increase market share. The expectation is that biosimilars, which are cheaper than original drugs, will be encouraged to reduce medical costs.
To lower drug prices, the Trump administration is also pursuing PBM (pharmacy benefit manager) reforms that connect insurers, pharmaceutical companies, and pharmacies. By reducing or eliminating rebates and introducing fixed fee systems, it is highly likely to weaken PBMs' preference for original drugs and induce price-centered competition.
The European Medicines Agency (EMA) and the U.S. Food and Drug Administration (FDA) are also changing their approval systems to ease entry barriers by considering waivers of comparative clinical trials to reduce the burden of biosimilar development. For biosimilar development corporations, this could improve business viability by cutting development costs and shortening development timelines.
The global biosimilar market is currently an oligopoly in which the top eight corporations—including Switzerland's Sandoz, U.S. companies Pfizer and Amgen, Korea's Celltrion and Samsung Bioepis, India's Biocon, and U.S. company Biogen—account for about 70% of sales.
As competition for market share among the top-tier group intensifies, more latecomers are entering the biosimilar market. Some analysts say corporate competition could become even fiercer due to the impact of U.S. drug price cuts. After launch, as follow-on biosimilars increase, structural price declines occur due to intensifying competition.
Lee Seung-gyu, vice chair of the Korea Biotechnology Industry Organization, said, "I believe the U.S. drug price cut policy will be an opportunity for Korean biosimilar corporations that rank among the top in the biosimilar market," but added, "There is persistent concern about worsening profitability as competition intensifies, with more biosimilar applications being filed in the United States by Indian and Chinese corporations."
The explanation is that both qualitative and quantitative competition could intensify because Indian and Chinese biosimilar corporations may pursue strategies to increase market share through economies of scale and low-price offensives.
There is also the variable of litigation risk with global pharmaceutical companies that hold original drugs. In May last year, Samsung Bioepis received FDA approval for its Eylea biosimilar "Opuviz" for macular degeneration, but it lost on appeal early this year in a preliminary injunction case filed by original drugmaker Regeneron to ban the sale of Eylea biosimilars, and litigation is ongoing.
The companies sued included not only Samsung Bioepis but also Sandoz, Amgen, Mylan, and Celltrion. Among biosimilar developers, only Amgen won its case and has been selling its product in the United States since Nov. 2023. Mylan and Sandoz, which reached settlements with Regeneron, are preparing to launch in the second half of this year, and Celltrion also plans to enter the U.S. market at the end of this year.
Kim Su-min, senior researcher at Korea Ratings, said, "As biosimilar competition intensifies, securing first-mover status, constructing each corporation's portfolio, establishing market access strategies and sales networks, and managing cost structures are becoming even more important."