Samsung says its manufacturing 'DNA' will provide big biosimilar savings

Mention South Korea's prowess in manufacturing and you might think of cheap cars or inexpensive electronics. How about cheap biosimilars?

A Samsung executive has thrown down the gauntlet to drug manufacturers worldwide, saying that with its manufacturing expertise, the conglomerate intends to make generic versions of biologic drugs at half the current western prices.

"Biopharmaceutical companies are good for sales, and biotech companies for innovation, but neither is good for manufacturing,"  Tae-Han Kim, president of Samsung Biologics, tells the Financial Times. "It is in Samsung's DNA to produce products at low prices while meeting legal and industry requirements."

The company is not just talking. It has committed investing $2 billion through 2020 in its drug development business, one of 5 areas the company has identified as leading its future growth. It is building a drug manufacturing plant near Seoul which the executive says will be complete by June. Samsung is shooting for the sign-off by international regulatory authorities by the end of the year. That is a very aggressive prediction given that it usually takes takes two years to get regulatory approval, the Financial Times points out. Kim says Samsung anticipates drugs coming off of lines there by 2015.

In February, Samsung Biologics and Biogen Idec ($BIIB) announced finalization of a joint venture, Samsung Bioepis, to develop, manufacture and market biosimilars. Samsung owns 85% of that venture. When the deal was announced, Biogen CEO George Scangos said that he saw value in relying on another company for the manufacturing. "The manufacturing facilities have costs to run them, so the more products you run through them, the more efficient they are," Scangos said. "To set ourselves up commercially could be a big distraction. I'd like a partner to take over that."

Kim says Samsung's "parallel processing" will allow it to reduce costs and accelerate the speed of developing new manufacturing plants for medicines while boosting the yield, he told the Financial Times.

There are lots of companies moving into biosimilars, and many of them believe they have the manufacturing chops needed to break in at competitive prices. Analysts have warned, however, that given the complexity of making biosimilars, they expect discounts will run only in the 10% to 20% range, nothing like the 50% Samsung is predicting.

- here's the Financial Times story