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Samsung BioLogics sues Korea’s FSC over accounting discrepancies Posted 11/01/2019

Samsung BioLogics is fighting back against allegations of accounting fraud and has launched a lawsuit against the South Korean financial authority, the Financial Services Commission (FSC).

South Korea’s FSC said back in July 2018 that contract drug manufacturer Samsung BioLogics had intentionally breached accounting rules in a case involving a joint venture and that it would report the firm and its CEO to prosecutors for investigation.

The controversy started in March 2018 after Korea’s Financial Supervisory Service (FSS) accused Samsung BioLogics of accounting fraud. Many in the industry thought that this accusation came as a result of a conflict created from the FSS transition to categorizing R & D expenses as part of companies’ accounting [1].

Then, in November 2018, the South Korean financial authority released new ‘relaxed’ guidelines for how drugmakers should list R & D spending as assets in an attempt to resolve the controversy that has haunted the market since early 2018 [1].

However, this seems to have not resolved the issue with Samsung BioLogics. The FSC is saying that the company failed to disclose an agreement with Biogen, which gave the US-based firm a call option to increase its stake in their drug developing joint venture Samsung Bioepis.

Samsung BioLogics denied the allegations of fraudulent accounting. It has called the government’s decision ‘very regrettable’, and has said that it will pursue ‘all possible legal measures including an administrative lawsuit’. It added that it has ‘legally implemented all accounting procedures’.

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Reference
1. GaBI Online - Generics and Biosimilars Initiative. Biosimilars makers in South Korea to benefit from new accounting guideline [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2019 Jan 11]. Available from: www.gabionline.net/Guidelines/Biosimilars-makers-in-South-Korea-to-benefit-from-new-accounting-guideline

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Source: Business Korea, Reuters, The Korea Herald

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