Samsung Biologics(207940) carried out the largest merger and acquisition (M&A) in the history of Korea's pharmaceutical and biotech industry and will make a full-fledged entry into the contract development and manufacturing organization (CDMO) market for peptide medicines, a key raw material for obesity and diabetes treatments.
It is viewed as a strategic investment to expand from the existing antibody drug–focused CDMO business into peptides and to leap forward as a comprehensive CDMO covering next-generation medicines.
Samsung Biologics disclosed on the 20th that it signed a deal to acquire PolyPeptide Group, a global peptide CDMO corporations. The acquisition price is about 2.7 trillion won (1.46 billion Swiss francs), the largest among M&As in Korea's pharmaceutical and biotech industry.
The company will seek to secure 100% equity in PolyPeptide Group through the acquisition of the major shareholder's equity and a tender offer, and plans to complete the acquisition by the end of December this year.
◇ Targeting surging peptide demand on obesity drug growth
The acquisition is a strategy to respond to the recent surge in peptide production demand driven by growth in the global obesity drug market, while also securing a new growth engine.
Peptides are substances in which amino acids are linked in short chains and play roles in hormones and signal transmission in the body. A representative class of medicines using this is GLP-1 obesity and diabetes treatments.
Global drugmakers have recently been expanding the application range of peptides beyond obesity to anticancer drugs and treatments for immune disorders and brain diseases such as Alzheimer's. More than 170 peptide medicines are in clinical development worldwide, and over 80 have been successfully commercialized.
PolyPeptide Group spun off in 1996 from the peptide division of Ferring, a global drugmaker, and is headquartered in Baar, Switzerland. It has a track record of developing and producing more than 1,000 peptide medicines. In particular, it is recognized for securing manufacturing technology that significantly reduces the use of organic solvents in peptide production, boosting both production efficiency and eco-friendliness.
Through this acquisition, Samsung Biologics will secure PolyPeptide Group's production facilities, core technologies, and specialized workforce in full.
The company has six production bases and research and development (R&D) facilities across five countries—Malmö, Sweden; Braine, Belgium; Torrance and San Diego, United States; Strasbourg, France; and Ambernath, India—and about 1,500 specialized employees.
The company expected to secure a stable revenue base immediately after the acquisition by succeeding to existing CDMO contracts signed with current clients.
◇ Cross-order synergy expected… strengthening the "three growth pillars"
The company plans to maximize synergy by combining its experience operating large-scale production facilities with PolyPeptide's development and production technologies, and will consider expanding capacity in line with future market growth.
With more global drugmakers developing both antibody medicines and peptide therapies, cross-order effects leveraging both companies' customer bases are also anticipated.
From a customer's perspective, entrusting both antibody and peptide production to a single CDMO can improve supply chain management efficiency and stability, the company said.
Global investment banks (IBs) project that the world's obesity drug market will grow to as much as $150 billion (about 200 trillion won) by 2035, driven by expanded indications and rising demand. Accordingly, the peptide CDMO market, a key raw material supply chain, is also expected to continue its rapid growth.
With this acquisition transaction, Samsung Biologics has expanded its business portfolio from its antibody drug–centered operations to include peptides, following messenger RNA (mRNA) and antibody-drug conjugates (Antibody-Drug Conjugate (ADC)).
This is an extension of the "three-axis expansion strategy" pursued by Samsung Biologics. The company has strengthened its competitiveness with a strategy that reinforces capacity, portfolio, and geography.
John Rim, CEO of Samsung Biologics, said, "This acquisition is a strategic investment that strengthens all three of the company's growth pillars—capacity, business portfolio, and global footprint," adding, "By combining the capabilities of both companies, we will provide broader solutions to customers and further enhance our competitiveness in the global CDMO market."
Peter Wilden, chair of the board of PolyPeptide Group, said, "By combining Samsung Biologics' large-scale production capabilities and operational know-how, we can secure differentiated competitiveness in the global peptide CDMO market."