Making a sensation as a contract manufacturing organization (CMO) in the biopharmaceutical industry, Samsung BioLogics has become one of the nation’s most promising biopharma giants, thereby helping boost the assets of Samsung’s owner family.

The 5-year-old biopharma subsidiary that was launched with strong backing of Samsung affiliates, the company debuted on Kospi on Nov. 10 and gained 10 trillion won ($8.6 billion) market cap three days later.


Following the listing, the Lee family’s share value soared. Stock assets held by Lee Jae-yong, vice chairman of Samsung Electronics, and five other Lee family members in Samsung Biologics are estimated to be worth more than 1.7 trillion won. A sum of 15 billion won in seed money to establish the firm has snowballed by more than 110-fold.

Since its establishment in April 2011, Samsung BioLogics has been under indirect control by the owner’s family. Samsung Group’s key affiliates Everland, Samsung Electronics and Samsung C&T were major investors, pouring a total of 67.5 billion won into this new biopharma subsidiary. Everland and Samsung Electronics injected 30 billion won respectively into Samsung BioLogics while holding a total of 80 percent of shares in it. Prior to a merger with Cheil Industries last year, Samsung C&T invested 7.5 billion won in the company.

By the time of the listing, 46 percent of Everland shares were owned by the owner’s family, including Samsung Electronics Chairman Lee Kun-hee and his heir apparent and only son Jae-yong, Hotel Shilla CEO Boo-jin, Samsung C&T CEO Seo-hyun – then Cheil Industries CEO – and the chairman’s niece Lee You-jung.

Based on the stock holdings by Lee’s family in Samsung affiliates, the six Lee family members’ stock assets in Samsung Biologics were valued to be around 15.3 billion won in 2011. 


Such initial capital expanded over the next four years as the biopharma subsidiary’s market value soared. A year ahead of initial public offering in September 2015, six Samsung family members’ stock value jumped 20-fold to touch 280.7 billion won.

Since Samsung BioLogics was listed on Kospi, the initial 15.3 billion won in capital in 2011 increased 114 times to touch 1.75 trillion won as of Nov. 14.

Lee Jae-yong is the largest beneficiary from the dramatic increase, who had 883.5 billion won asset gains in the biopharma firm. Boo-jin and Seo-hyun earned 270 billion won, respectively.

Stock assets of Chairman Lee’s wife Hong Ra-hee, director of Leeum Samsung Museum of Art, are estimated at 28.1 billion won, yet had the most dramatic 128 fold jump.

Samsung BioLogics’ IPO was a boon to its holding firms. Since 2011, Everland and Samsung C&T, which injected a combined 37.5 billion won in the company, held 51 percent stake in Samsung BioLogics. Within four years, the stock value saw a 22-fold jump to touch 836.8 billion won. After the Kospi debut, they trimmed the volume of share holdings to 43.44 percent, worth 5 trillion won as of Nov. 14. Lee Jae-yong is the biggest shareholder of Samsung C&T.

Another main shareholder Samsung Electronics now owns 32 percent of Biologics shares, 8 percentage points down from 40 percent stake four years ago. Yet the stock value has jumped 121 times to mark 3.65 trillion won now.

Samsung BioLogics was valued at around 75 billion won in 2011. Five years later, its market cap now comes to 11.61 trillion won.

A majority of local securities firms projected the corporate value to be at around 9 trillion to 10 trillion won.

Due to lack of core technology, Samsung BioLogics’ stock value may be overestimated, yet is reasonable considering its bright future, analysts said.

The newcomer in the biopharma industry has been making operating losses to date despite sales growth. Its sales rose to 91.3 billion won last year from 43.7 billion won in 2013.

Samsung BioLogics has recorded 100 billion to 200 billion won operating losses in each of the past three years. The accumulated operating losses have mounted to 455.2 billion won.

Cash outflow recorded 103.5 billion won in 2013, 163.7 billion won in 2014, then 265.5 billion won last year.

The biopharma industry requires considerable volume of initial investments, in particular in the CMO sector on which Samsung BioLogics is keen. To secure profits, the firm is required to build a flexible, large-scale production line to meet various customer needs.

The most plausible scenario drawn upon Samsung Group’s reshuffle of ownership structure is a merger between Samsung C&T and Samsung Electronics that may turn into a holding company. For this, Samsung C&T would be in need of a sharp increase in stock value and capital accumulation.

Unfortunately, outlook for Samsung C&T’s expansion is questionable following its stagnant conventional businesses, observers said.

By The Superrich Team

(jiwon.song@heraldcorp.com)

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Hong Seung-wan

Kim Yoon-mi

Yoon Hyun-jong

Min Sang-seek

Lee Se-jin

Song Ji-won