Be honest, did anyone get the Neil Diamond reference? 2,000 InsightCity bonus points if you did. So, why is Samsung blue? A week ago, Samsung BioLogics (the world’s 3rd largest biotech contract manufacturer) lost $6B in market cap because South Korea’s financial regulator indicated there is a “suspicion it breached accounting rules to inflate its net profit before its 2016 listing.” In 2015 they posted a ₩1.9 trillion net profit, in 2014 they posted a ₩28 billion net loss. Too many zeros. This comes on the heels of Samsung’s heir apparent, Lee Jae-yong, being formally indicted a year ago on multiple charges including bribery and embezzlement. See Samsung BioLogics’ response here (spoiler, they say they didn’t do it). It’s going to take more lawyers than My Cousin Vinny to clear this one up.
Quick question. How many different “flavors” of J&J’s Remicade can you buy? Currently there are three, but more a coming. You can be prescribed Remicade (2016 sales of $4.45 billion), or Pfizer’s biosimilar Inflectra, or Samsung’s biosimilar Renflexis, and soon you might be able to get it from Amgen or Sandoz. When initially launched, Pfizer’s Inflectra was priced at a 15% discount to Remicade. Then Renflexis recently launched at a 35% discount. Just before the Renflexis launch, Pfizer knocked off another 4% to get to a 19% discount. What does J&J have to say about this? Sales of Remicade have not fallen as much as analysts predicted. Biosimilars are tricky and huge sales are at stake. Stay tuned, these battles are just beginning.
Remember the supply-demand curves you learned about in economics class? No? Guess who does remember them. Spoiler alert… it’s South Korea. To better understand what we’re talking about, go ask your friends in the industry who are responsible for manufacturing biologics if they think there is enough industry capacity (supply) to handle future demand. For those of you who don’t have friends, the answer is definitely “Not even close.” A little secret, South Korea knows this and has been building plants to take advantage of the divergence in the supply-demand curves. It’s probably no coincidence that Samsung announced in late 2015 that it is building the world’s largest biomanufacturing plant.