Samil Pharmaceutical is ramping up its expansion efforts by investing additional funds into its eye drop production facility in Vietnam. Building on its competitive edge in the domestic ophthalmology market, the company aims to shift its revenue structure from a domestic focus to a contract manufacturing organization (CMO) model as a future growth driver.
According to a disclosure made on June 11, the Financial Supervisory Service reported that Samil Pharmaceutical plans to issue 10 billion won in convertible bonds to fund operations at its Vietnamese ophthalmic CMO factory.
Since entering the eye drop CMO business with the establishment of its Vietnamese subsidiary in 2018, Samil Pharmaceutical has invested over 150 billion won in building local production facilities and equipment. Although the company completed a specialized ophthalmic manufacturing plant in Vietnam in 2022, it has yet to generate significant revenue. Due to the costs associated with the Vietnam factory and delays in regulatory approvals, Samil reported consolidated revenues of 52.5 billion won and an operating loss of 8.3 billion won in the first quarter of this year.
The push into Vietnam is partly driven by the growth limitations in the domestic market. After establishing its ophthalmology division as the first in South Korea, Samil has built a strong presence in the ophthalmic treatment sector and is currently responsible for the domestic distribution and sales of the blockbuster biosimilar drug Afilibu, which generated 5.1 billion won in revenue in the first quarter, making it the company's top-selling product. However, the competitive nature of the biosimilar market, coupled with limitations in its joint sales structure with Samsung Bioepis, has raised ongoing concerns about the need for revenue diversification.
The company views the eye drop business as a key growth area and continues to invest in it. The Vietnam factory has completed inspections for Good Manufacturing Practice (GMP) certification from the Vietnamese Drug Administration (DAV) and is now capable of producing 330 million eye drops annually. Once new orders and commercial production commence, the company expects to offset its current fixed cost burdens through cost competitiveness.
Market analysts anticipate that the CMO business targeting global clients will gain momentum starting next year. However, obtaining KGMP certification is seen as a prerequisite for expanding commercial production, as it would enable the company to secure orders from domestic pharmaceutical firms and accelerate its global CMO business expansion.
The company plans to obtain KGMP certification in the second half of this year, followed by sequential efforts to achieve cGMP certification in the U.S. and EU-GMP certification in Europe next year. Ji-won Lee, an analyst at Heungkuk Securities, stated, "If the Korean GMP certification is approved within the year, the company is expected to transfer domestic production volumes to the Vietnam factory and commence full-scale commercial production."
A representative from Samil Pharmaceutical remarked, "The Vietnam factory will not only serve as a production site for our eye drops but will also be developed into a specialized contract development and manufacturing organization (CDMO) facility through partnerships with global partners."
The company is also expanding its business scope. Recently, Samil Pharmaceutical signed an exclusive distribution and sales agreement for the steroid eye drop APP13007 in the Vietnamese market with Taiwanese pharmaceutical company Formosa. APP13007 is a new drug approved by the U.S. Food and Drug Administration (FDA) for treating inflammation following ophthalmic surgeries such as cataract and glaucoma procedures.
The licensing agreement includes a signing bonus, milestone payments related to regulatory approvals, and royalties during the contract period, although specific details have not been disclosed due to mutual agreement between the two companies.
Industry insiders noted, "The KGMP approval could accelerate the profitability of the Vietnam factory, and the company is in the stage of making long-term investments to develop the Vietnamese production site into a global hub for ophthalmic pharmaceuticals."
* This article has been translated by AI.
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