Samsung Biologics estimates $100 million strike loss as unions press demands

SEOUL — Samsung Biologics estimated on Monday that a strike by its union over pay has cost the contract drug manufacturer about 150 billion won ($101.90 million) so far, marking the latest labor unrest to hit the South Korean conglomerate.

The estimate reflected the financial impact from a “partial disruption to overall line production,” the company said in an email sent to Reuters.

Samsung Biologics added that “the precise financial impact cannot be quantified at this time, as the company is continuously applying all applicable measures to minimize impact.”

About half of the company’s workforce of 2,861 employees have been on strike since April 28, according to the union’s website. The dispute could slow the drug company’s efforts to win new orders and disrupt a review into whether to build a sixth plant, according to a note by Shinyoung Securities.

Management offered a 6.2-percent pay rise, according to the company. The union has demanded a 9.3-percent increase in base salary, a bonus equivalent to 20 percent of operating profit, as well as other cash or cash-equivalent benefits.

In response to the company’s estimate on the potential cost of the labor action, the union said management should make more effort to reach a deal rather than asking workers to stop striking.

The union also said the company was struggling with slower orders due to staff shortages and excessive cost reduction that hurt its competitiveness.

Both sides will resume talks on Monday, the union said.

Clients, attracted by Samsung Biologics’ on-time, low-cost delivery, could turn to rivals in Europe and the United States, the note said.

Samsung Biologics’ clients include Pfizer, Merck, Eli Lilly, GlaxoSmithKline, and Novartis, according to a filing in March. The firm’s five plants have about 784,000 litres of capacity in total to produce biologics such as antibody drugs.

The strike follows a broader threat of labor unrest at parent Samsung Group, with unions at Samsung Electronics threatening industrial action to secure a bonus increase.

Unions at the chip giant have said they plan to strike for 18 days from May 21. That could delay shipments to customers, push up semiconductor prices further and benefit rivals. — Reuters