The labor dispute at Samsung Biologics is escalating toward a general strike.
The Samsung Biologics Win-Win Labor Union held a large-scale rally to vow a fight at the Incheon Songdo headquarters on the 22nd and warned of a full strike on the 1st of next month. Management has filed for an injunction to ban industrial action in response.
The company's labor dispute surfaced after an incident last November in which employees' personal information was exposed on the internal network. The union demanded compensation and follow-up measures, and the company continued talks, but the conflict was not resolved due to differences in views and expanded into a dispute over wages and bonuses.
The union is demanding an average 14% wage increase and bigger bonuses, while management proposed a 6.2% raise.
Park Jae-seong, Chairperson of the Samsung Biologics Win-Win Labor Union, said at the rally to vow a fight that day, "We held 13 rounds of talks, but there were no substantive negotiations, and management stalled for time by repeatedly asking for explanations," adding, "If the company does not change, we will use every possible means starting May 1 to push through our demands."
Industry watchers say that if a strike materializes, it could affect not only short-term production but also mid- to long-term order competitiveness and investment capacity.
◇ "Labor dispute seen as a factor even in actual order talks"
According to ChosunBiz reporting, the labor dispute at Samsung Biologics is acting as a variable in negotiations with some global clients.
When the labor dispute triggered by the internal leak of employees' personal information became public in November last year, Samsung Bio was continuing discussions with Global Pharma A for an Antibody-Drug Conjugate (ADC) contract development and manufacturing (CDMO) order, but A raised concerns during the talks about the labor dispute, and the final contract ultimately fell through.
It affected order-taking activities, which are the company's core lifeline in practice. A member of the company's union said, "It is hard to see labor risk as the sole reason for the failed order, but it could have acted as one of the variables in the contract."
The industry is also watching the situation. That is because even a one-day stoppage due to a labor dispute could cause losses worth hundreds of billions of won.
Corporations engaged in the bio CDMO (contract development and manufacturing) business tout not only production capacity but also on-time delivery and process stability as core competitiveness. Samsung Biologics, Switzerland's Lonza, and China's WuXi Biologics are representative.
These corporations sign long-term contract manufacturing agreements with clients and produce medicines based on specific production facilities and processes. In this process, process conditions, equipment, and quality control systems are fixed in advance and are not easy to change after the contract.
◇ "A one-day halt triggers cascading losses"…production stability at risk
The industry estimates that, considering Samsung Bio's annual production capacity, a simple calculation suggests production of about 100 batches per day (batch: a single production unit of a biopharmaceutical). The analysis is that if the process is halted, cascading losses could occur across multiple batches.
Biopharmaceutical production processes are structurally different from general manufacturing processes that can be stopped and restarted. Because of the continuous process nature that uses living cells, if interrupted, it is difficult to immediately restart under the same conditions. If a process stops, cells under cultivation can be damaged, making it highly likely that the relevant production will be discarded.
The U.S. Food and Drug Administration (FDA) and the European Medicines Agency (EMA) require impact assessments and revalidation procedures upon process changes or interruptions, under the principle that pharmaceutical manufacturing processes must maintain consistency and reproducibility.
An industry official explained, "In biopharmaceutical production, continuity is critical due to product characteristics," adding, "If there is a history of delayed deliveries or production instability, it works to your disadvantage in competing for new orders, and if the situation worsens, existing volumes could move to rivals."
Lee Seung-gyu, vice chair of the Korea Biotechnology Industry Organization, said, "The global CDMO industry landscape is not fixed; representative corporations in major countries are fiercely competing and trading places, and it is regrettable that uncertainty has arisen," adding, "I hope the Samsung Bio labor-management conflict is resolved smoothly and quickly."
◇ "Guarantee the right to collective action" vs. "Essential operation" to be decided by the court
At the heart of the labor dispute is whether personnel in the cell culture and purification processes can join the strike. Article 38 of the Trade Union and Labor Relations Adjustment Act states that work to prevent the deterioration and spoilage of raw materials and products must be performed as usual even during a labor dispute.
Based on this, management argues that production processes must be maintained during industrial action. The union, however, counters that management is infringing on the constitutional right to collective action. In a vote among members on the strike, more than 95% reportedly voted in favor.
The court held a hearing on the 9th and concluded proceedings on the 16th. A decision on whether to grant the injunction is expected soon.
A simple application of the union's demands (an average 14% wage increase) suggests additional expense of several hundred billion won could occur, including about 410 billion won based on 20% of operating profit and about 110 billion won for a 30 million won incentive per person. However, this is a simple calculation based on publicly stated demands, and the actual burden could vary depending on the payment method and calculation criteria.
Some in the industry also say that, because the biopharmaceutical CDMO business structurally accepts certain risks such as production stoppages, quality risks, and uncertainty in contract execution, the company's burden factors should be considered when designing compensation systems.
Conflict over the compensation system could also affect the company's mid- to long-term investment direction. Samsung Biologics completed and is operating Plant 5, the first production facility at its second campus in Songdo, Incheon, last year. The company is also investing to build a third biocampus by 2034 with about 7 trillion won. Through this, the company aims to create more than 10,000 new jobs.
The company released first-quarter results that day. Samsung Biologics posted first-quarter revenue of 1.2571 trillion won and operating profit of 580.8 billion won. Compared to the same period a year earlier, revenue rose 26% and operating profit rose 35%.
This growth came from fully operating Plants 1 through 4. Given the nature of the CDMO business, these results reflect production and deliveries of long-term orders already secured. Performance from new orders is reflected in future results with a time lag.
Since its founding, Samsung Biologics has won 112 contract manufacturing (CMO) projects and 169 contract development (CDO) projects. The cumulative order aggregates are $21.4 billion. Last year, the company's annual revenue on a consolidation basis rose about 30% from a year earlier to 4.557 trillion won, and operating profit rose 56.6% to 2.0692 trillion won.