SEOUL -- Samsung Biologics has become South Korea's third-most-valuable company, besting the much larger Hyundai Motor thanks to its status as a rare winner in the coronavirus economy.
The drugmaker's shares soared this month after it won an order worth up to $362 million from a U.S. company developing antibody treatments for the virus.
The deal announced this month with Vir Biotechnology -- a startup specializing in fighting infectious diseases, whose backers include the Bill & Melinda Gates Foundation and Japan's SoftBank Group -- is the company's largest to date, equivalent to 60% of its 2019 revenue.
The drugmaker was already enjoying solid growth before the order. It reported 207.2 billion won ($168 million) in revenue for the three months through March, up 65% on the year, and swung to a 39 billion won net profit from a 38 billion won loss.
Samsung Biologics' shares closed 16.8% higher on April 10, the day the agreement was announced, hitting a record high for the first time in two years. The company's market cap has reached 38 trillion won, putting it behind only fellow Samsung Group member Samsung Electronics and chipmaker SK Hynix.
Hyundai Motor slipped to fourth place despite boasting well over 100 times the drugmaker's sales. Its revenue for the same period rose 5.6% to 25.32 trillion won for the first quarter. But its net profit tumbled 42% to 553 billion won as its Chinese sales slumped by half amid the coronavirus outbreak, and the outlook going forward looks even grimmer with the pandemic spreading worldwide.
Samsung Biologics, meanwhile, is flourishing. It had recently decided to build a fourth plant in the city of Incheon amid an influx of orders from pharmaceutical companies worldwide. The Vir order has spurred it to move up its expansion plans by a year.
The company is expected to invest roughly $1 billion in the plant, which will add 200,000 liters of cell culture capacity. This will bring its total to more than 500,000 liters, eclipsing rivals such as Switzerland's Lonza Group and Germany's Boehringer Ingelheim.
Samsung Biologics is part of former Samsung Group Chairman Lee Kun-hee's 2010 plan to cultivate new growth drivers for the conglomerate and avoid the decline faced by Japanese industrial titans. His heir, Lee Jae-yong, continues to prioritize biologic drugs, positioning them alongside fifth-generation wireless, artificial intelligence and automotive equipment as a future growth field.
Because of the immense costs involved in developing and producing biologic drugs, many pharmaceutical companies have opted to focus on research while outsourcing manufacturing. This is similar to the division of labor between designers and foundries that has developed in the semiconductor industry.
This trend has driven the success of Taiwan Semiconductor Manufacturing Co., which now holds more than half the global foundry market. Samsung Biologics aspires to similar dominance as a biologic drug "foundry."
Samsung Electronics -- which became a leader in semiconductors and displays through bold, far-sighted investment -- offers another equation for success. Samsung Biologics can also benefit from its fellow group member more directly, by tapping its expertise on designing advanced clean rooms, for example.
The company is slated to open a drug development laboratory in California this summer, expanding its presence in the high-value business of drug research. It hopes to use the facility to win more orders from promising pharmaceutical startups like Vir.