In a significant development in South Korea’s biopharmaceutical sector, contract development and manufacturing organization (CDMO) Samsung Biologics, one of the largest biopharmaceutical manufacturers in the world, has accused burgeoning competitor Lotte Biologics of trade secret theft.
Samsung Biologics initiated the latest round of legal proceedings against Lotte in June, claiming illicit acquisition and utilization of its confidential information. This lawsuit follows a series of similar allegations against Lotte, which, since its 2022 inception, has employed multiple former Samsung Biologics employees and is headed by Richard Lee, previously an executive at Samsung Biologics.
A provisional injunction granted by the Seoul Central District Court on June 21 seeks to prevent Lotte from utilizing information on production methods and technology allegedly procured from ex-Samsung Biologics employees. The case is expected to reach a resolution by August. This follows a March 2023 indictment of an ex-Samsung Biologics employee for sharing trade secrets with Lotte upon changing employers.
Potential Impact on the CDMO Industry
CDMOs provide a range of services to the pharmaceutical industry. These services encompass the development, production, and packaging of drugs. Partnering with outside manufacturers allows pharmaceutical companies to focus on core competencies, including drug discovery and marketing, while the CDMO handles the complexities of drug development and manufacturing.
In recent years, the CDMO industry has undergone significant evolution, experiencing rapid growth driven by myriad factors. Advances in biopharmaceutical technologies, increased regulatory infrastructure, and a trend toward the outsourcing of pharmaceutical manufacturing have all contributed to this sector’s expansion. These changes have been accompanied by an increased focus on intellectual property rights, as the success of these companies often hinges on their proprietary manufacturing techniques and processes.
In this context, the legal action initiated by Samsung Biologics could be of significant import to the industry as a whole. While neither Samsung Biologics nor Lotte has chosen to comment on the pending case, one key factor potentially influencing the court’s judgment is the potential breach of nondisclosure agreements. These contracts, which are often legally binding and signed upon employment, play a crucial role in safeguarding sensitive and proprietary information within the highly competitive CDMO industry.
Establishing a clear legal framework governing how NDAs and other measures restrict employees from spreading proprietary information is crucial to the industry. Beyond the specific accusations, the dispute raises broader questions about information ownership and the increasingly competitive nature of the CDMO industry.
If Samsung Biologics is successful in proving its allegations, it could lead to significant financial and reputational consequences for Lotte, potentially serving as a cautionary tale for other companies in the industry. The case could underline the necessity for all players in the fast-evolving CDMO industry to handle sensitive information responsibly and to respect the intellectual property rights that underpin industry growth and innovation.
Notable Business Moves Amid Legal Tensions
In the midst of these emerging legal challenges, Samsung Biologics is marking some notable recent successes.
Shortly after filing the injunction, the CDMO announced an expanded partnership with Pfizer worth a combined $897 million. This brings the total value of Samsung Biologics – Pfizer partnership to $1.08 billionincludes a record-breaking $704 million contract for biopharmaceuticalssimilar production, the largest single contract in Samsung Biologics’ history. The collaboration will leverage Samsung Biologics’ fourth manufacturing plant, which achieved full operational status in June and boasts a biomanufacturing capacity of 240,000 liters.
John Rim, Samsung Biologics’ CEO, has expressed enthusiasm about the extended partnership and the role of the new Plant 4 in the company’s expansion. By broadening its scope from monoclonal antibodies to biosimilars, Samsung Biologics is keeping pace with the industry trend of portfolio diversification, as more pharmaceutical companies look to outsource manufacturing.
“We are pleased to extend the strategic collaboration with Pfizer as we share and support their strong vision to bring innovative solutions for patients around the globe,” said Rim in a statement announcing the partnership. “This new meaningful partnership comes just as our Plant 4 is fully completed early this month as we had previously committed and are on the move for future expansion into our second campus in order to provide our clients with even more flexible and advanced manufacturing technology.”
The industry speculates that the biosimilar portfolio from Pfizer includes a variant for AbbVie’s leading biologic, Humira, used to manage an array of inflammatory and autoimmune disorders ranging from arthritis to Crohn’s disease. Humira is the world’s bestselling drug and its patent expires this year.
Mike McDermott, Pfizer’s chief global supply officer and executive vice president, lauded the partnership and noted its significance for the booming Korean biotech industry.
“Pfizer is excited to continue our strategic partnership with Samsung Biologics Ltd. that aims to enable greater access to medicines for more patients across the world,” said McDermott. “This commitment is a reflection of Pfizer’s trust in the Korean pharmaceutical industry to address emerging health challenges.”
Samsung Biologics’ augmented Pfizer contracts have boosted Pfizer’s total orders from the CDMO to $1.08 billion in 2023 alone.
