Contract development and manufacturing organization (CDMO) Samsung Biologics has filed its third injunction against Lotte Biologics at the Seoul Eastern District Court in South Korea, while also issuing a fourth notice urging Lotte to halt its recruitment activities.
The dispute centers on allegations that Lotte Biologics poached former Samsung Biologics employees and stole trade secrets in its early attempts to enter the rapidly evolving biopharmaceutical sector. The injunctions seek to prevent three former Samsung Biologics employees from joining Lotte Biologics.
Samsung v. Lotte
Samsung Biologics, a seasoned player in the CDMO sector, has been on an expansion spree. The company recently inked a $897 million, long-term manufacturing deal with Pfizer. The partnership will focus on biosimilar production at Samsung Biologics’ newly operational Plant 4, the largest single biomanufacturing plant in the world with 240,000 liters of capacity.
This partnership is expected to bring Pfizer’s total orders from Samsung Biologics to a staggering $1.08 billion in 2023. Samsung’s focus on biosimilars is strategic, especially as patents for blockbuster drugs like Humira near expiration.
On the other side of the ring is Lotte Biologics, a newcomer with grand ambitions. The company announced its entry into the CDMO market in 2022, with a dual-track growth strategy involving acquisitions and new plant constructions.
Staffing data reveals that Samsung Biologics had a workforce of 4,646 as of June 2023, while Lotte Biologics had 64 employees as of March.
Intellectual Property: The Underlying Concern
While the injunctions and legal notices might seem like corporate saber-rattling, they point to a deeper issue: the protection of intellectual property. Samsung Biologics’ focus on personnel matters isn’t arbitrary; it’s fueled by concerns over potential technology leaks.
The tension between the two firms escalated when Lotte Biologics ventured into the biopharmaceutical sector and immediately began hiring former Samsung Biologics employees. Notably, Lotte hired Richard Lee as its first CEO. Lee joined Lotte after a decade-long tenure at Samsung Biologics, including a role as head of drug development.
Samsung Biologics has accused Lotte of illicitly obtaining trade secrets, a claim that, if substantiated, could have severe repercussions for Lotte and raise broader questions about industry ethics and regulations.
“As the biopharmaceutical industry emphasizes the importance of technology as well as talent acquisition, conflicts regarding personnel recruitment will not be easy to resolve,” an industry watcher told Korea Biomedical Review. “Bio talent is also scarce in Korea and abroad.”
The Competitive Landscape
So why are these companies so fiercely competitive? The answer lies in the evolving dynamics of the CDMO industry, particularly in South Korea. As pharmaceutical giants increasingly outsource manufacturing to focus on research and development, companies like Samsung Biologics are expanding their capabilities to meet this demand.
Lotte, recognizing lucrative opportunities, is making aggressive moves to establish itself as a key player. Both companies are vying for a slice of a growing pie, with burgeoning markets in more established areas like monoclonal antibody development, as well as newer innovations like biosimilars, antibody-drug conjugates, and mRNA vaccine production.
“We are seeing a very positive momentum as the marketplace continues to grow, with mAb therapies having a double-digit growth thanks to tech advancements and wealth increases across the globe,” John Rim, Samsung Biologics President and CEO, said in a recent interview.
“From this perspective, the drugs that are more interventional and that help patients live longer are going to take off spectacularly in the following years. The biologics market will probably topple the small molecules one, but the whole evolution is closely linked to the popularization of new technologies. Even though the general markets will possibly go into recession, medicines are an essential asset.”
Samsung Biologics is already making its next moves, including the construction of a fifth plant expected to be completed and operational by April 2025. The plant is part of a massive second Bio Campus now under construction at its Songdo headquarters. It is expected to further augment Samsung Biologics’ total capacity to 784,000 liters.
Lotte Biologics, too, has its eyes set on expansion — not just in South Korea, but also in bio-clusters in North America.
The injunction against Lotte Biologics is more than just a legal dispute; it’s a window into the state of competition and power dynamics between established companies and upstarts in the world of the CDMO industry.
Both companies have ambitious plans, but Samsung Biologics is contending that Lotte’s ambitions have led the company into the realm of intellectual property theft and employee poaching. The industry will watch closely, knowing that the outcomes of these legal and corporate battles will likely set a tone for important aspects of the sector’s future.