Court Restricts Samsung Biologics Strike Across Nine Production Processes

The Samsung Biologics labor union's ongoing strike has faced a significant setback after a court issued a ruling mandating continued operation across nine production processes. On October 16, the First Civil Division of the Incheon Branch of the Seoul High Court partially approved the company's request for an injunction, broadening the restrictions from three processes to include six additional procedures, such as cell culture, harvesting, and virus filtration.

The court's decision was influenced by the potential social ramifications of halting the production of cancer treatments with no substitute options, as well as the risk of pharmaceutical products degrading. In addition to the injunction, the union is required to pay Samsung Biologics 20 million won, or roughly $15,502, for every infraction.

Although the ruling has made it challenging to immediately halt ongoing production, the union remains committed to continuing its collective action, albeit with a revised strategy. Union Chairman Park Jae-jeong announced that the court's decision does not signify a complete prohibition on strikes, but rather necessitates a different approach moving forward.

The union has cancelled a planned large-scale rally and is now concentrating on communicating internally with members, while simultaneously reviewing the plans for a three-week second strike originally set to commence on October 26. The union intends to persist in its legal proceedings and is contemplating the possibility of submitting an objection and an additional appeal against the ruling.

This labor dispute unfolds in the lead-up to Samsung Biologics' third-quarter earnings announcement, raising uncertainties regarding the company's operations. Industry analysts project third-quarter revenue to amount to approximately 1.3 trillion won, a 9% increase from the previous year, with the labor dispute identified as a crucial factor.

The company estimates that the initial strike in May resulted in revenue losses of around 150 billion won, primarily due to potential issues with supply reliability, a critical element of the contract development and manufacturing organization (CDMO) business. Given that interruptions in biopharmaceutical production processes may necessitate the disposal of entire batches, a protracted labor dispute could erode confidence among global clients.

An industry official emphasized that uninterrupted production operations are directly tied to securing new CDMO contracts, underscoring the urgency for labor and management to reach an agreement. Both sides remain deeply divided over working conditions, with the union demanding a 15.5% wage increase for entry-level employees, while the company asserts that its compensation already surpasses industry averages.

Last year, Samsung Biologics employees earned an average annual compensation of 114 million won, which exceeded the 107 million won paid to rivals at Celltrion. The dispute has also taken a contentious turn, with the union requesting a review of the company's planned 2.6 trillion won rights offering, arguing that the union's actions extend beyond labor negotiations and represent excessive pressure.

Samsung Biologics maintains that the union's actions are within the scope of labor negotiations and reaffirms its dedication to fostering a mutually advantageous labor-management relationship.