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Samsung Group, Quintiles to Form Drug Venture

From Associated Press (February 25, 2011)

SEOUL, South Korea -- Samsung said it will form a joint venture with a U.S. drug testing company in its first significant project in biopharmaceuticals -- a sector the South Korean conglomerate is targeting for growth.

Samsung said in a release Friday that three of its group companies are partnering with clinical research company Quintiles Transnational Corp. in a venture with capital of 300 billion won ($266 million).

The Samsung companies, which include conglomerate flagship Samsung Electronics Co., will own 90 percent of the venture. Durham, North Carolina-based Quintiles, a contract research organization that tests drugs for pharmaceutical companies, will take 10 percent.

Samsung said initial plans are for a factory to be constructed in Incheon, a major port city west of Seoul, to produce biopharmaceutical drugs to treat cancer and arthritis.

Biopharmaceuticals are made by using living organisms such as cells and bacteria. Traditional drugs are typically produced from inert chemicals.

Construction of the factory will begin during the first half of this year, Samsung said. Production is expected to commence in the first half of 2013.

The drugs will be produced on a contract manufacturing basis for other pharmaceutical companies, though Samsung said that it plans to eventually develop new biopharmaceuticals.

Samsung, a diverse conglomerate consisting of dozens of businesses with interests in electronics, shipbuilding, finance, leisure and other areas, announced an aggressive plan in May of last year to invest 23.3 trillion won in new businesses over 10 years, targeting solar cells, rechargeable cells for hybrid electric vehicles, LED technologies, biopharmaceuticals and medical devices.

The conglomerate said at the time that it would invest 2.1 trillion won in biopharmaceuticals. "Today's announcement signals the first major step of these plans," Samsung said Friday.

Samsung Electronics, the world's biggest manufacturer of flat screen televisions and computer memory chips, will hold 40 percent of the venture, with Samsung Everland Inc. taking a similar share. Samsung Everland is a theme park and resort operator widely seen as the de facto holding company for the conglomerate. Samsung C&T Corp., the group's construction and trading arm, will take 10 percent.

Samsung said it expects the venture to create more than 300 new jobs to be filled from abroad and from Samsung affiliates. The conglomerate said last year when announcing its 10-year investment plan that it expected to create about 45,000 jobs and achieve an additional 50 trillion won in annual revenue for affiliate companies by 2020.

Shares in Samsung Electronics fell 0.3 percent to close Friday at 926,000 won.

Posted: February 2011