[Real Investment Techniques] When Will Sluggish Pharmaceutical and Biotech Stocks Rise?

Korean Bio Index Plunges, in Sharp Contrast to Global Uptrend

Clinical Results and New Drug Approvals Expected to Drive Stock Momentum in Second Half

"Patience is bitter, but its fruit is sweet." "Everyone is fighting for a rebound in the bio sector." These are the titles of recent reports on the pharmaceutical and bio industries released by domestic securities firms. There is growing optimism that pharmaceutical and bio stocks, which struggled throughout the first half of the year, could rebound in the second half, as key clinical results and global technology transfer momentum are expected starting in July.

According to Kiwoom Securities on July 8, the Korea MSCI Healthcare Index returned -14% in the first half of this year, making it the weakest performer among major countries. The KOSDAQ Pharmaceutical Index also fell by 20%. This contrasts with the U.S. NASDAQ Biotechnology Index (NBI), which rose 15%, reflecting a recovery in global biotech investment sentiment. Hyemin Heo, a researcher at Kiwoom Securities, commented, "Despite positive factors such as technology exports, clinical data announcements, and mergers and acquisitions (M&A), the sector has been neglected due to concentrated attention on other sectors."

However, within the securities industry, expectations for a turnaround in the second half are rising. Researcher Heo said, "If the concentration trend eases in the second half, and if global competitiveness, clinical data validation, and partnership achievements are confirmed, the sector could establish a bottom and continue a trend reversal." Geunhee Seo, a researcher at Samsung Securities, also highlighted the potential for the gap between domestic and global biotech to narrow in the second half.

First, in July, key milestones include the U.S. Phase 3 clinical trial results for Kolon TissueGene's cell and gene therapy for osteoarthritis and the FDA new drug approval decision for HLB's rivoceranib. If positive outcomes emerge from these events, investor sentiment could improve, and the sector's recovery could come sooner than expected. An even greater inflection point is anticipated in October. At the European Society for Medical Oncology (ESMO), the final survival data for Yuhan Corporation's combination therapy of Leclaza as a first-line lung cancer treatment and the breast cancer therapy data from AbClon are scheduled to be released. The topline results for Aribio's Phase 3 clinical trial on an Alzheimer's treatment will also be disclosed around the same time.

Additionally, as global big pharma companies have recently become more active in M&A, the potential for domestic companies' technology exports and strategic alliances has increased significantly. Seungmin Kim, a researcher at Mirae Asset Securities, stated, "Large-scale technology export events were somewhat weak in the first half, but momentum has been building since June," emphasizing that technology export momentum is critical for investor sentiment. Specifically, attention was drawn to D&D Pharmatech and Olix (MASH), ABL Bio (Alzheimer's), Legochem Biosciences and Orum Therapeutics (anticancer), and HanAll Biopharma (autoimmune diseases). In terms of earnings, Celltrion, which is expected to improve its margins, and Hanmi Pharm, which is anticipated to gain approval and launch a domestic anti-obesity drug, were noted.

Samsung Securities suggested that stocks likely to generate future share price momentum are those that meet the following three criteria: 1) possess or are about to secure cross-border deal momentum, 2) have visibility in their momentum schedule, and 3) show excessive disparity between new drug value and current market capitalization. Notable picks included Alteogen, Olix, Hanmi Pharm, Kolon TissueGene, and HanAll Biopharma.

This content was produced with the assistance of AI translation services.