SEOUL -- Samsung Biologics announced Tuesday that it will invest 1.74 trillion won ($1.5 billion) to build a fourth pharmaceutical plant in Incheon as the company expects demand for contract drug manufacturing to surge in coming years.
The South Korean biomedicine manufacturer aims to increase its production capacity by 70% by the end of 2022 and says it will hire around 1,800 people for the expansion.
"Contract manufacturing for pharmaceutical products is yet to meet demand," Tae Han Kim, CEO of Samsung Biologics, said at an online press conference Tuesday. "There is a growing trend to outsource the pharmaceutical manufacturing process, and we expect the market will grow on average 16% per year."
With new orders pouring in, Kim said, Samsung Biologics will "overwhelm our peers in terms of production scale and foster biotech as South Korea's growth sector."
Due to the huge costs involved in creating new biomedicines, pharmaceutical companies now tend to specialize in developing products and outsource the manufacturing. Samsung Biologics' rival Fujifilm Holdings of Japan recently decided to ramp up its production capacity with an investment of over 100 billion yen ($942 million).
Samsung Biologics already mass-produces drugs at three plants in the Incheon Free Economic Zone. In the first half of 2020 alone, the company has signed contracts for orders worth nearly 2.5 times last year's total revenue, as the coronavirus pandemic has spurred demand. Plans to build a fourth plant at Incheon come as the third facility is expected to reach full capacity in 2022.
The new plant will add 256,000 liters of capacity, for a total capacity at the four facilities of 620,000 liters. This would put Samsung Biologics ahead of rivals such as Switzerland's Lonza Group and Germany's Boehringer Ingelheim.
Samsung Biologics' share price closed over 4% higher on Tuesday.