Today, we announced our financial results for the second quarter of 2024, another remarkable performance thanks to the smooth ramp-up of our fourth plant, milestone payment received for approvals of Samsung Bioepis' biosimilars pipeline, and a favorable FX environment. The standalone sales growth rates for Samsung Biologics and Samsung Bioepis were 27% and 107% respectively, and our consolidated sales reached KRW 1.16 trillion, marking a 34% growth year-on-year, with operating profit increasing by 71% to KRW 435 billion. On a half-year basis, consolidated sales have surpassed KRW 2 trillion, underscoring the stability and robust execution of Samsung Biologics' strategic vision. We anticipate sales revenue to exceed KRW 4 trillion this year, setting a new record for the Korean pharmaceutical sector and reaffirming our outstanding growth potential and market position.

Continued Orders Momentum Major Contract Wins with Leading Pharma Companies

As of the end of the second quarter, we have strengthened our strategic partnerships with the global pharmaceutical companies, effectively increasing our global top 20 big pharma CMO client base to include 16 companies in total. Notably, we recently announced the successful signing of several significant contracts with global big pharma companies, and these major transactions have raised our 2024 overall orders amount to an outstanding USD 2.1 billion year-to-date, elevating our total cumulative contract value beyond USD 14 billion. These achievements stand as a testament to robust demand resilience amidst global supply concerns. We take pride in our exceptional business competitiveness and the foundation of positive, collaborative relationships with our clients. Leveraging unparalleled speed, quality, and reliability, we consistently maintain high client satisfaction, further strengthening our partnerships with clients and solidifying our position as the industry leading CDMO in the global market.

Capacity Expansion Progress on the Construction of Plant 5 and ADC Facilities

Plant 5, currently under construction at our Bio Campus II, is on track to commence operations by April next year. Designed as a large-scale facility spanning 96,000 square meters with three floors, approximately 70% of the construction has been completed to date. Adjacent to the plant, we are also concurrently constructing a supporting facility equipped with infrastructure essential for manufacturing processes. This support facility, situated strategically at the center of the campus, is poised to play a pivotal role in optimizing production processes and enhancing efficiency, ensuring swift responsiveness to customer needs. Our endeavor to expand our business capability with ADC is also progressing smoothly. Consisting of a 500L conjugation reactor and one purification line, our ADC conjugation facility is scheduled to start operations by the end of the year. Also, through the Samsung Life Science Fund, we have been investing in biotechs around the world with advanced ADC technologies to secure a competitive edge in the ADC field and proactively address market demands. Through these strategic efforts, we aim to build a comprehensive ADC toolbox, thus broadening the scope of services that we can offer to our clients.

Growth of CDO with New Platforms Introduction of SelecTailor™, S-Tensify™, and DEVELOPICK™ Ver. 3.0

In order to meet the evolving CDO demands of our growing client base, we are committed to expanding new platforms while continuously improving our existing ones. As part of this effort, we introduced our rebranded SelecTailor™ service package and launched our innovative S-Tensify™ platform. Additionally, we unveiled the revamped version 3.0 of our established DEVELOPICK™ platform. S-Tensify™ platform stands out as a high-density cell culture solution, providing nutrient-rich media and effectively eliminating impurities prior to the main cultivation phase. This helps achieve high-concentration cell culture by increasing the inoculation cell density at the stage just before the final cell culture (N-1) by an average of 30 times, leading productivity to be substantially boosted during the final cell culture stage. Meanwhile, SelecTailor™ is designed to support customized biopharmaceutical development, aligning closely with specific customer requirements. This rebranded Customized CMC Solution is expected to not only provide bespoke services based on customers' diversified characteristics and propose development strategies to support successful new drug development, but also enhance our competitive edge in the market. Building upon these strengths and comprehensive service offerings, we are expanding our global reach and remain dedicated to delivering even better results to our existing and potential clients in the future.

Continued Investment into New Modalities Investment into Flagship Pioneering Fund VIII to Support New Drug Development

In July, Samsung Biologics decided to invest USD 52.23 million (KRW 72 billion) in Flagship Pioneering Fund VIII through the Samsung Life Science Fund II, established jointly with Samsung C&T, Samsung Bioepis, and Samsung Venture Investment. Flagship Pioneering is a premier U.S. venture capital firm which manages about USD 14 billion (approx. KRW 19 trillion) in assets and has founded over 100 companies. This Flagship Pioneering Fund VIII, valued at USD 2.6 billion, focuses on platform technologies for new drug development leveraging artificial intelligence (Al). With priority access to and continued investments in innovative biotechs, Samsung Biologics aims to ultimately support and promote significant advancements in drug development.

Digital Transformation Client-centered business process optimization through Automation and Digitization

Samsung Biologics is enhancing its CDMO competitiveness by implementing Digital Transformation across all operational areas, from technology transfer to manufacturing processes, aiming to optimize our customer-centric business processes. More specifically, we are trying to maximize efficiency through various activities including implementation of electronic manufacturing batch records (EMBR), use of integrated digital management systems, and adoption of Generative Al. Additionally, we have classified our operations into five categories, each tasked with specific initiatives to drive process innovation: creation of master data and standardization of technical documents, implementation of manufacturing execution system (MES), end-to-end SCM process systematization, lab automation, and adoption of a CDMO project management solution. These strategic efforts are meticulously designed to significantly reduce overall production timelines, optimize cost efficiency, and substantially elevate customer satisfaction, thereby reinforcing our commitment to operational excellence and industry leadership.

Acceleration of Biosimilar Business Product Approvals from Global Regulatory Authorities

Samsung Bioepis made significant strides in the second quarter, enhancing its global market presence through innovative achievements. In May, the FDA approved its biosimilar SB15 (Eylea biosimilar) as the first interchangeable biosimilar to Eylea, highlighting its product competitiveness and setting the stage for market share and revenue growth following its market launch. Additionally, Samsung Bioepis has received regulatory approvals for SB17 (Stelara biosimilar) from Korea's Ministry of Food and Drug Safety (K-MFDS) and European Commission (EC) in April, followed by the U.S. Food and Drug Administration (FDA) in June, expanding its immunology portfolio to include interleukin inhibitors beyond the existing trio of tumor necrosis factor-alpha (TNF-a). These accomplishments attest to Samsung Bioepis' robust product competitiveness and dynamic approach, indicating a promising trajectory for continued growth.

ESG Achievements Publication of ESG Report and the Launch of a New Initiative, Dubbed 'Samsung Biologics Way'

On May 30th, we published our fourth ESG Report. This year's report adopted and integrated the regulatory requirements for ESG disclosures as mandated by European and U.S. standards. It incorporates an enhanced double materiality assessment, addressing 13 material issues including net zero, biodiversity, information security, and supply chain management, as well as our roadmap to reduce carbon emissions by 32% within our operations and by 36% across our supply chain by 2030. Additionally, we established a natural capital strategy in alignment with the TNFD guidelines for the first time, in response to the heightened importance of ESG issues, particularly in the wake of climate change. With this, we identified and disclosed nature-related dependency and impact near our Songdo business site and the business sites of our seven major strategic suppliers. Furthermore, recognizing the necessity for a unique and innovative organizational culture which fosters full engagement among all employees to achieve our goal of becoming a 'Global Top-tier Bio Company by 2030,' we held a declaration ceremony for the announcement of the 'Samsung Biologics Way' on June 20th. Through this initiative jointly established between union and management, all employees affirmed commitment to establishing and nurturing this distinctive organizational culture. The essence of the Samsung Biologics Way is to foster a global organizational culture which is grounded in our mission to save human lives. This entails every employee to focus on enhancing their Quality of Work while realizing the intrinsic Value of Life by embodying the principles of mutual respect, transparent communication, and adaptability. This core message is the outcome of a comprehensive three-month collaborative effort between the union and management, consolidating valuable insights from our employees and external experts. As we move forward, we remain steadfast in our commitment to unite labor union and management in diligently implementing the Samsung Biologics Way. As a global leader in the CDMO industry, we are committed to proactively addressing the demands and key issues of the global community and demonstrating our distinctive ESG competencies. We are committed to upholding these principles and ensuring that our efforts in the CDMO industry contribute to a sustainable society. We ask for your continued support and encouragement as we strive to create a better future. Yours Sincerely, July 24, 2024 President & CEO, Samsung Biologics John Rim