[Click eStock] "Biosecurity Act Passed by US House... Long-term Benefit for Sambah"

Hana Securities on the 17th anticipated that the newly passed Biosecurity Act in the U.S. House of Representatives would serve as a mid- to long-term benefit for domestic Contract Development and Manufacturing Organization (CDMO) companies. Samsung Biologics was identified as a beneficiary company.

The new Biosecurity Act, named 'H.R 8333,' passed the U.S. House on the 15th (local time). This bill, jointly proposed by Republican and Democratic lawmakers on the 10th, prohibits the federal government from contracting with or providing loans to certain Chinese bio companies.

Researcher Park Jaekyung stated, "The bill includes a provision that it will not apply to contracts signed before January 20, 2023, the effective date of the bill, reflecting industry opinions." He added, "Previously, the U.S. Bio Association expressed concerns that the sudden application of the Biosecurity Act could harm U.S. patients and that switching Chinese CDMOs to other production sites could take up to eight years."

Park further explained, "The introduction of this grace period could actually broaden the bill's practical applicability and scope. While we had thought that a bill assuming a sudden transition would have low practical applicability, the U.S. Congress appears to be accepting industry opinions, demonstrating their commitment to the bill."

He continued, "The remaining steps for final legislation are mainly committee review, plenary session review, Senate review, and presidential signature. Since this is a bipartisan bill jointly proposed by Republicans and Democrats, the process is expected to proceed quickly, making enactment within the year possible."

It is analyzed that the enactment of this bill will lead to indirect benefits for CDMO companies outside China. For instance, Wuxi Biologics, expected to be subject to sanctions, had 2023 sales of 17 billion yuan (approximately 3.1556 trillion KRW), with 47.4% of that generated in North America.

Researcher Park said, "Although Samsung Biologics' Contract Development Organization (CDO) sales currently account for less than 10%, an increase in this proportion is expected in the mid to long term," adding, "Due to the lock-in effect of CDMO, it is expected to lead to long-term growth in Contract Manufacturing Organization (CMO) sales."