Samsung drug-making unit soars on market debut

[SEOUL] Shares in Samsung's drug-making unit soared almost six percent on their market debut on Thursday, after one of South Korea's biggest ever initial public offerings that raised nearly US$2 billion.

Samsung Biologics, a contract manufacturer of biotech drugs for global pharmaceutical firms, soared 5.88 per cent to 144,000 won (S$175) in Seoul, putting its total value at nearly 9.5 trillion won.

The firm was set up by the South Korean conglomerate in 2011 as part of a multi-billion-dollar drive to find new growth avenues including healthcare and green energy over the next decade.

The highly anticipated IPO is the second largest in South Korea's history, raising 2.25 trillion won, which the unit says will be used to expand production capacity and invest in research and development.

The firm makes biopharmaceutical drugs for major firms including Bristol-Myers Squibb and Roche at plants near Seoul.

Bio-drugs, unlike chemically synthesised drugs, are made of organic, live substances such as plant or animal cells and are more complex to research and manufacture.

Construction unit Samsung C&T and the flagship Samsung Electronics together hold a 75 per cent stake in Samsung Biologics after the share sale.

The firm has been in the red for years with a net loss of 75.7 billion won in 2015 as it invested heavily in its two existing plants and a new facility slated to open in two years.

Completion of the third plant is expected to make the company the world's top contract drug manufacturer in terms of production capacity, said Woo Chang Hee, analyst at IBK Investment & Securities.

The global biopharmaceutical market is expected to grow to US$488 billion by 2025, compared with US$164 billion in 2012, due to the world's ageing population, Mr Woo said.

AFP