Will Bio Stocks Rebound Next Year?

[Asia Economy Reporter Song Hwajeong] Can the bio stocks, which performed particularly poorly this year, rebound next year?

According to the Korea Exchange on the 30th, the KOSPI pharmaceutical sector index has fallen by 18.02% this year, showing the largest decline among major KOSPI sectors. The KRX Healthcare index also dropped 32.05%, marking the worst performance.

Researcher Seo Mihwa from Yuanta Securities analyzed, "This year, pharmaceutical and bio stocks showed the opposite trend compared to last year, which recorded the highest returns. Last year, when COVID-19 broke out, there was an anticipated surge in demand for diagnostic kits, vaccines, and therapeutics, so expectations for development companies were priced in early. However, this year, with vaccine distribution underway, the prevailing judgment was that diagnostic kit sales would find it difficult to achieve additional growth." For vaccines and therapeutics, global companies took the lead in market capture, reflecting sales uncertainties for subsequent development companies. The decline in trust toward new drug development firms also had a negative impact, and news such as the increase in global COVID-19 cases and the development of COVID-19 treatments influenced the stock price fluctuations of pharmaceutical and bio stocks.

Next year, a stock price rebound is expected to be possible. Kim Hakgyun, head of the research center at Shin Young Securities, said, "We have a high expectation for a rebound in pharmaceutical and bio stocks next year," adding, "During the cyclical downturn phase of the economic cycle, sectors that can reflect growth expectations tend to perform strongly." He also analyzed that this year's surge in metaverse and non-fungible token (NFT)-related stocks was a result of the desire for growth, which is difficult to satisfy through macroeconomic factors, being expressed through these sectors.

The only time the KOSPI pharmaceutical sector index showed a weaker performance than the KOSPI for two consecutive years was right after the global financial crisis, in 2009-2010. Technically, this means the timing for a rebound is approaching. Kim explained, "The pharmaceutical and bio sector is a representative industry where research and development investment is steadily increasing," and added, "Important events related to pharmaceutical and bio stocks include the JP Morgan Healthcare Conference in January next year, the American Society of Clinical Oncology in April, and the American Society of Clinical Oncology in June."

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