Top Pick for Pharmaceuticals & Biotechnology
The author is an analyst of KB Securities. He can be reached at kimtaehee@kbfg.com. -- Ed.
Top pick for Pharmaceuticals & Biotechnology
We maintain BUY and TP of KRW1,200,000 on Samsung Biologics. Our TP remains unchanged despite revisions to 2023 ERP and RFR and slight downward adjustments to earnings forecast. Our investment points are: (1) a stable 2023 revenue growth outlook, (2) an expected boost from No. 4 plant starting at year-end, (3) secured growth drivers amid a second biosimilar wave and (4) anticipation of additional growth in bio CMO demand thanks to favorable results from recent clinical trials for antibody-based Alzheimer’s disease treatments. We maintain Samsung Biologics as our industry top pick.
Earnings surprise coming from record quarterly high revenue
Samsung Biologics posted 4Q22 consolidated revenue/OP of KRW965.5bn (+117.3% YoY)/KRW312.8bn (+142.8% YoY). The record quarterly high revenue far exceeded the market consensus, resulting in an earnings surprise. Samsung Bioepis results were in line. On a standalone basis, revenue/OP climbed 68% YoY/140% YoY on the back of increases in high-ASP product sales and drug product revenue.
2023 outlook: Double-digit revenue growth despite high base
We forecast 2023 revenue/OP at KRW3.356tn (+11.8% YoY)/KRW1.017tn (+3.4% YoY). Despite a high base, we see double-digit revenue growth with improvement in production efficiency, tailwind from No.4 plant starting at year-end and continually strong growth for major Samsung Bioepis biosimilar products. The most noteworthy issue this year is the scheduled launch of biosimilars for Humira, the world’s top-selling drug. The company’s version is believed to be the most competitive given its availability of both low- and high-concentration versions, safety assessment based on real-world data in Europe and sufficient capacity. Although Amgen is set to launch the first Humira biosimilar, Amjevita, this month, the low-concentration drug should not be of concern.