Samil Pharmaceutical is ramping up its operations at its eye drop production facility in Vietnam by injecting additional funds. The company aims to transform its revenue structure, which has been heavily reliant on the domestic market, by leveraging its competitive edge in the local ophthalmology sector to develop its contract manufacturing organization (CMO) business as a future growth driver.
According to a disclosure on June 11 through the Financial Supervisory Service's electronic disclosure system, Samil Pharmaceutical announced plans to issue 10 billion won in convertible bonds to invest in the operational funds for its Vietnamese ophthalmology CMO factory.
Since establishing its Vietnamese subsidiary in 2018 to enter the eye drop CMO market, Samil Pharmaceutical has reportedly invested over 150 billion won in local production facilities and equipment. Although the company completed the construction of a specialized ophthalmic production plant in Vietnam in 2022, it has yet to generate significant revenue. Due to the costs associated with the factory investment and delays in regulatory approvals, Samil Pharmaceutical 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 also driven by the limitations of growth in the domestic market. After establishing the first ophthalmology division in Korea, Samil Pharmaceutical 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. In the first quarter of this year, Afilibu generated 5.1 billion won in sales, making it the company’s top-selling product. However, the competitive nature of the biosimilar market and limitations in the co-marketing structure with Samsung Bioepis have 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 Vietnamese 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 by the end of this year or in the first half of next year, followed by sequential efforts to secure U.S. cGMP and European EU-GMP certifications in the first half of next year. Ji-won Lee, a researcher at Heungkuk Securities, stated, "If the Korean GMP certification is approved within this year, the company is expected to transfer domestic production volumes to the Vietnamese factory and commence full-scale commercial production."
A representative from Samil Pharmaceutical said, "The Vietnamese 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, through its Vietnamese subsidiary, Samil Pharmaceutical signed an exclusive distribution and sales agreement for the steroid eye drop APP13007 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 royalty payments during the contract period. Specific details were not disclosed as per the agreement between the two companies.
Industry insiders noted, "The KGMP approval could accelerate the monetization of the Vietnamese factory, and the company is in a phase 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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