[Weekend Money] Korean Biotech Aims for a Turnaround in the Second Half

Although the global pharmaceutical and biotech industries are experiencing ongoing momentum in mergers and acquisitions (M&A) and technology transfer, Korean biotech stocks have thus far remained largely excluded from this trend. According to analysts in the securities sector, the series of upcoming clinical results and technology transfer events scheduled for the second half of the year may provide a turning point for domestic biotech stocks.

Samsung Securities recently offered an ‘OVERWEIGHT’ recommendation for the healthcare sector, stating, “We believe that clinical data from individual companies and technology transfer events scheduled for the second half of the year will serve as triggers for a reevaluation of the sector.”

Global major pharmaceutical companies are defending against share price declines by restructuring their portfolios through M&A and licensing deals, despite facing patent cliffs and pricing policy pressures. Likewise, global biotechs are showing positive stock performance, as active M&A momentum and technology transfer deals continue even under high interest rate environments.

In contrast, Korean biotechs remain relatively marginalized from these global developments, further compounded by supply-demand concentration. Keunhee Seo, a researcher at Samsung Securities, pointed out, “The fundamental reasons are that Korean companies have not yet developed late-stage clinical pipelines to make them attractive M&A targets, and they have not fully established the clinical development capabilities and economies of scale to support them.”

Nevertheless, she added, “There are compelling reasons to focus on Korean biotechs, as major milestone events—such as announcements of substantial clinical data releases and technology transfer agreements on a company-by-company basis—are densely scheduled for the second half of the year. With companies positioned to overcome uncertainty, a valuation re-rating is certainly possible.”

Among large-cap stocks, Celltrion remains the top pick. Although concerns have been raised about deteriorating earnings for export-oriented companies due to the recent decline in the dollar-won exchange rate, the actual earnings are based on the cumulative average exchange rate rather than short-term rates, thus the impact is expected to be limited. Seo explained, “Earnings are calculated based on the cumulative average exchange rate, not the spot rate, so the real impact is limited. Therefore, fundamentals for large-cap stocks such as Samsung Biologics and Celltrion are unlikely to be significantly damaged by exchange rate fluctuations.”

Celltrion is expected to see a sharper earnings growth in the second half, driven by expanded market share of its high-margin new biosimilars in the U.S. and Europe, as well as improvements in cost structure. Samsung Securities previously set its target price for Celltrion at 260,000 won, suggesting more than 28% upside from recent levels.

GC (Green Cross) and Yuhan Corporation were also highlighted as key stocks to watch in the second half. GC is projected to post better results in the latter half of the year as delayed bulk shipments of flu vaccine and overseas sales of Hunterase are expected to be reflected in its performance. For Yuhan Corporation, analysts see improved prescription access from the third quarter onward, given that Johnson & Johnson’s subcutaneous drug obtained a permanent J-code last month.

Among companies with major events that could influence second-half investment sentiment, Peptron and Kolon TissueGene were named. For Peptron, the key will be whether its material transfer agreement for the SmartDepot platform with Eli Lilly progresses to a definitive contract. The evaluation results expected around October 2026 are likely to be a critical inflection point. Seo assessed, “Stock price volatility could be significant, depending on whether the definitive agreement is reached.”

For Kolon TissueGene, the determining factor will be the U.S. clinical results for the osteoarthritis treatment TG-C. In the previous Phase 3 trial in the U.S., strong improvement in the placebo group narrowed the difference with the treatment group, causing the trial to miss statistical significance. The results of the upcoming second U.S. Phase 3 trial, expected in October, are projected to determine the future development direction for TG-C.

Seo stressed, “Both cases represent major domestic biotech events, and their outcomes could affect overall investment sentiment in the KOSDAQ biotech sector. These are key milestones that should not be missed in the second half calendar.”

In addition, on an event-by-event basis, companies expected to announce further technology transfers and clinical data include Alteogen, Olix, HanAll Biopharma, and AbClon. Seo noted, “For Alteogen, milestone revenue from Qlex sales of Keytruda is set to be fully reflected in earnings, and there is also the potential to recognize additional development milestones from ongoing clinical advances in existing partnerships, as well as new upfront payments from further technology transfers. For Olix, expectations remain for additional technology transfers based on clinical results for its hair loss treatment, possible exercise of options by Eli Lilly, and new ALK-7 siRNA primate data,” she explained.

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