Pharmaceutical and Bio Stocks Smiling Thanks to COVID-19

Positive Factors from Therapeutic Development Issues and Strong Performance... KOSPI Pharmaceutical Index Rises 63.08% This Year

[Asia Economy Reporter Song Hwajeong] The pharmaceutical and bio sectors have continued to show strength due to the novel coronavirus infection (COVID-19). This is because issues related to therapeutic development are acting as positive factors. Additionally, strong earnings have further supported the upward trend.

According to the Korea Exchange on the 22nd, the KOSPI pharmaceutical index has risen 63.08% so far this year until the previous day. The KOSDAQ pharmaceutical sector index increased by 45.95%, and the KOSDAQ 150 healthcare index rose by 45.9%. During the same period, the KOSPI increased by 1.42%, and the KOSDAQ by 18.03%.

The pharmaceutical and bio sectors, which have been considered beneficiaries after COVID-19 and have maintained strength, continue to benefit from ongoing issues related to COVID-19 therapeutic development. Previously, U.S. Pfizer and German BioNTech succeeded in inducing immune responses in early clinical trials of the COVID-19 vaccine, and U.S. pharmaceutical company Moderna also announced that its RNA-based COVID vaccine succeeded in forming antibodies in all participants during Phase 1 clinical trials. Subsequently, British pharmaceutical company AstraZeneca confirmed antibody and T-cell immune responses in all participants in the Phase 1 clinical trial of its COVID-19 vaccine candidate (AZD1222). On the previous day, SK Bioscience signed a Letter of Intent (LOI) to cooperate in securing domestic supplies of AstraZeneca’s COVID-19 vaccine candidate, causing the stock prices of SK Bioscience’s parent companies, SK Chemicals and SK Discovery, to surge. As of 9:50 AM on the 22nd, SK Chemicals soared to the upper limit, and SK Discovery rose by 25.98%.

Not only vaccine-related issues but also solid earnings are supporting the stock prices of the pharmaceutical and bio sectors. Samsung Biologics, a leading bio company, announced that its operating profit for the second quarter turned positive to 81.1 billion KRW compared to the same period last year. Sales increased by 294.06% to 307.7 billion KRW, and net profit also turned positive to 88.7 billion KRW. Lee Dong-geon, a researcher at Shinhan Financial Investment, analyzed, "Samsung Biologics recorded an earnings surprise with second-quarter sales and operating profit exceeding market consensus by more than 30%, due to increased utilization rates of Plant 1, balanced sales growth across all plants, and stable management of selling and administrative expenses." He added, "The high growth of the biopharmaceutical market and increased demand for COVID-19 therapeutics and vaccines will benefit contract manufacturing organizations (CMOs)."

Seegene is also expected to achieve its highest performance in the second quarter. Shin Jae-hoon, a researcher at Hanwha Investment & Securities, said, "Seegene’s second-quarter results will record the highest performance ever, driven by COVID-19 diagnostic sales," and added, "This performance is expected to be maintained until the development of COVID-19 therapeutics and vaccines."

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