---
endpoint: analytics
pattern: Healthcare
status: done
latency_ms: 168554
conversation_id: cd6dac87-37fd-4cbd-a423-156b46e8f255
citations: 10
created: 2026-05-31 21:27:27Z
---

# What’s the bull case bear case for Samsung Biologics?

# Samsung Biologics (207940 KS) — Bull Case / Bear Case

Synthesized from internal CLSA research (May 2025: spin-off notes) and public-disclosure data (Q1 2026 earnings release, 2025 사업보고서/DART filing). CLSA carries a **High-Conviction Outperform** with a target price of **₩1,500,000** (4.3x 2Q26CL maximum backlog) [5].

---

## Bull Case

**1. Structural CDMO demand + capacity scarcity ("the order pipeline keeps filling")**
- Strong, sustained new CMO order growth supported by capacity expansion that is set to **more than double current capacity by 2032** [1].
- Plants 1–4 at full utilization in Q1'26 (Rev. +26% YoY, OP +35% YoY; OPM 46.2%); Plant 5 ramp-up underway; FY26 revenue guidance **+15–20% YoY** [9].
- Cumulative CMO contract amount has climbed to **US$21.4bn** with 112 CMO projects and 169 CDO projects — a moat built on a long, multi-year backlog [8].
- CLSA argues global biologics capacity is structurally insufficient to meet demand, and SBL is the largest player in the >300kL tier alongside Lonza, WuXi Biologics, and FUJIFILM Biotechnologies — with SBL holding the **largest single-site capacity globally** [10].

**2. Geopolitical tailwind — BioSecure Act / WuXi dislocation**
- CLSA explicitly cites **WuXi Bio's weakness from the BioSecure Act** as an opportunity for SBL to "expand its global leadership in the industry" [3]. The competitive narrative has shifted toward Western-aligned CDMOs.
- Order divergence between SBL (orders rising) and Lonza/WuXi (slower) should "build more credibility amongst investors" [2].

**3. US footprint adds a strategic dimension**
- Completed acquisition of a **US manufacturing facility in Rockville, Maryland** ($353M total, 60kL initial capacity, **scalable to 100kL**), with pre-secured GSK volumes ensuring stable utilization post-acquisition and optionality for further M&A / greenfield in North America [7][8]. This is the first non-Korean production base — directly addressing client-proximity and tariff-exposure concerns.

**4. Spin-off as a value-unlock catalyst**
- The horizontal split (SBL retains pure-play CDMO; Samsung Bioepis moves under "Samsung Epis Holdings") is designed to **eliminate the perceived conflict of interest** that had previously deterred big-pharma CDMO clients (whose biosimilar pipelines compete with Bioepis) [6].
- Management argues this should unlock new client wins (CLSA flags Amgen and Regeneron as plausible additions) and allow the market to value CDMO and biosimilar separately. CLSA calls this "**the right decision for minorities**" and maintains HC-OPF.

**5. Near-term catalysts beyond the spin-off**
- Announcement of **Plant 6 construction** or another overseas plant acquisition would be a major catalyst [2].
- Earnings momentum from Plant 5 ramp + Q2'25 OP beat vs consensus is the near-term proof point.

**6. Valuation framework rewards growth**
- CLSA values SBL on **EV/backlog (R²=0.94)**, which is consistent with an order-based revenue model; **4.3x 2Q26CL maximum backlog ($17.6bn) → fair EV $75.3bn → TP ₩1,500,000** [3][5].
- EV/backlog at the time of the May 2025 note was 2.9–3.7x — *below* the five-year average, suggesting valuation re-rating room as the spin-off completes and order momentum continues.

---

## Bear Case

**1. Execution risk on capacity expansion (the core CLSA-flagged risk)**
- "**Potential delays in the capacity expansion plan or a slower-than-expected ramp-up of manufacturing facilities could impede growth**" [4]. With Plant 5 just starting and Plant 6 in the planning queue, any slippage compresses the EV/backlog re-rating thesis.
- US Rockville integration is unproven — PMI execution and securing volumes beyond GSK are not yet de-risked.

**2. Competitive technology disruption from WuXi**
- CLSA's most concrete bear-case point: "**if Wuxi Bio's single-use bioreactors experience an unexpected breakthrough, it could diminish the competitive advantage of Samsung Biologics' stainless tank capacity, potentially resulting in a loss of market share**" [4]. SBL's edge is in large-scale stainless-steel mAb manufacturing — a single-use disruption is the canonical "moat erosion" scenario.
- Even with BioSecure pressure, **WuXi remains a >300kL global peer** [10] — geopolitics could reverse, and WuXi has not lost its embedded customer base.

**3. Spin-off ratio slightly unfavorable to SBL near-term**
- CLSA itself acknowledged the **0.65:0.35 split ratio is "slightly unfavourable short-term for SBL versus SBE."** The CDMO leg gives up a non-trivial share of value to the new biosimilar holding company before any re-rating compensates.
- Bioepis IPO is explicitly *not* under review currently, so the value-discovery mechanism for the non-CDMO leg is unclear.

**4. Bioepis (SBE) pipeline risk passes through to ownership value**
- "**Any failures or delays of SBE's pipelines can also be one of risks**" [4]. Pre-spin, SBE losses or pipeline setbacks (SB27 Keytruda biosimilar in Ph III, etc.) directly hit SBL's consolidated P&L. Post-spin, the parent still holds the economic exposure via Samsung Epis Holdings.

**5. Sector-wide funding sensitivity for the CDO leg**
- SBL's own annual report notes CDO business is concentrated in **small/mid-cap biotech clients**, which makes it sensitive to interest-rate-driven biotech funding cycles and clinical-trial delays — a transmission channel from macro tightening into order book softness [10].

**6. Valuation already premium vs the global peer**
- SBL 12-month-forward PE has historically traded at **130–290% of Lonza's 12MF PE** (170% in May 2025). Premium has narrowed but a re-widening (Lonza recovery or SBL multiple compression) would re-introduce relative-valuation drag. The thesis is built on premium-multiple persistence, not mean reversion.

**7. Tariff / pharma supply-chain policy risk**
- The US plant acquisition is partly defensive against this risk — implying SBL/management itself sees pharma-tariff and US-onshoring policy as a real exposure that required a >$350M strategic response.

---

## Bull/Bear Summary Table

| Driver | Bull Read | Bear Read |
|---|---|---|
| **Order Backlog** | $21.4bn cumulative; 27 consecutive quarters of YoY growth [8] | Backlog growth depends on continued global capex from Big Pharma |
| **Capacity** | Plants 1–4 fully utilized, P5 ramp, P6 pipeline, 100kL US optionality [7][8] | Delays/ramp slips directly hit thesis [4] |
| **Geopolitics** | BioSecure Act gives durable WuXi share to SBL [3] | Single-use bioreactor breakthrough or policy reversal erodes moat [4] |
| **Spin-off** | Removes conflict of interest, unlocks separate valuation, attracts new big-pharma clients [6] | 0.65:0.35 ratio slightly punishes SBL near-term; no Bioepis IPO clarity |
| **Margins** | Q1'26 OPM 46.2%, EBITDA margin 53.7% — operating leverage as plants fill [9] | Margin gains slow as P5/P6 ramp dilutes ahead of order fill |
| **Valuation** | EV/backlog 2.9x (vs 5y avg ~3.7x) → re-rating room; TP ₩1,500,000 [5] | 170% premium vs Lonza could mean-revert if execution slips |
| **Pipeline (Bioepis)** | Multiple FDA/EMA approvals, biosimilar diversifier | Pipeline failures hit value [4] |

---

## Bottom Line

The bull case is anchored in **capacity scarcity + BioSecure-driven share shift + spin-off-led client expansion** [1][3][6], reinforced by hard operating data (Q1'26 +26% revenue, OPM 46.2%, $21.4bn backlog, US facility [8][9]). The bear case is anchored in **execution risk on multi-plant ramp + WuXi single-use technology risk + Bioepis pipeline drag**, all explicitly flagged by CLSA [4]. CLSA's HC-OPF with ₩1,500,000 TP [5] reflects a view that the bull factors materially outweigh the bear factors at current levels — but the thesis is highly contingent on flawless capacity ramp and continued WuXi headwind.

---
**Sources**
[1] CLSA — Samsung Biologics, "Entering a new phase" (607960304LinqAlpha.PDF, 22 May 2025) — Investment thesis
[2] CLSA — Same document — Catalysts
[3] CLSA — Same document — Valuation details
[4] CLSA — Same document — Investment risks
[5] CLSA — Samsung Biologics, "Making the right decision" (607960664LinqAlpha.PDF, 27 May 2025) — EV/backlog valuation table
[6] CLSA — Same document — Q&A on spin-off rationale
[7] Samsung Biologics — Q1 2026 Earnings Release (22 April 2026) — US facility acquisition / 100kL capacity scalability
[8] Samsung Biologics — Q1 2026 Earnings Release — Contract status, CMO/CDO project counts
[9] Samsung Biologics — Q1 2026 Earnings Release — Financial Performance (Plants 1–4 full operation)
[10] Samsung Biologics — 2025 사업보고서 (DART) — Competitive landscape (Lonza, WuXi Biologics, FUJIFILM Biotechnologies)

## Citations

- [1] **607960304LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607960304LinqAlpha.PDF>
- [2] **607960304LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607960304LinqAlpha.PDF>
- [3] **607960304LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607960304LinqAlpha.PDF>
- [4] **607960304LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607960304LinqAlpha.PDF>
- [5] **607960664LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960664LinqAlpha.PDF>
- [6] **607960664LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960664LinqAlpha.PDF>
- [7] **Samsung Biologics Co.,Ltd., Q1 2026** · external
- [8] **Samsung Biologics Co.,Ltd., Q1 2026** · external
- [9] **Samsung Biologics Co.,Ltd., Q1 2026** · external
- [10] **사업보고서 (2025.12)** · external

