[Into the Stocks] Ildong Holdings Shares Tripled in a Month... Last Year's Performance Gloomy Due to Increased Costs

Expectations for Commercialization of COVID-19 Treatment
IlDong Pharmaceutical Stock Rebounds but
Operating Losses Surge Due to Increased R&D Costs

[Asia Economy Reporter Myung-Hwan Lee] Ildong Holdings' stock price has nearly tripled over the past month. This surge is believed to be driven by investor expectations following the announcement of plans to commercialize an oral COVID-19 treatment at the shareholder meeting of its subsidiary, Ildong Pharmaceutical, held last month. Ildong Pharmaceutical is also rebounding despite tax investigation risks. However, both companies saw a sharp increase in operating losses last year due to rising research and development (R&D) expenses.

On the 24th of last month, Ildong Holdings traded at 12,600 KRW, closing at 51,600 KRW on the 22nd. This represents a 309.52% surge in just over a month. During the same period, Ildong Pharmaceutical rose by 20.67%. This contrasts with the KOSPI pharmaceutical index, to which both stocks belong, which fell by 4.87% over the same timeframe.

This is interpreted as reflecting expectations for the COVID-19 treatment being jointly developed by Ildong Pharmaceutical and Japan's Shionogi & Co. On the 25th of last month, at the shareholder meeting, Yoon Woong-seop, CEO of Ildong Pharmaceutical, stated, "We will focus our capabilities not only on the clinical trials and commercialization of the COVID-19 treatment but also on new drug development projects such as treatments for diabetes and non-alcoholic steatohepatitis (NASH) to achieve more tangible results."

However, both Ildong Holdings and Ildong Pharmaceutical posted poor operating results last year. Ildong Holdings recorded an operating loss of 82.8 billion KRW on a consolidated basis last year, an 801.0% increase compared to the operating loss of 9.2 billion KRW the previous year. Ildong Pharmaceutical also swung to an operating loss of 55.5 billion KRW last year. Notably, its net loss surged by 675.5% to 101 billion KRW.

The increase in Ildong Pharmaceutical's R&D expenses contributed to the deterioration in performance. Researcher Ha Tae-gi from Sangsangin Securities noted, "(Ildong Pharmaceutical) is strengthening the company's capabilities in new drug development rather than focusing on operating performance," adding, "A large-scale operating loss occurred due to factors such as an increase in cost of goods sold following higher product sales and a significant rise in R&D expenses."

However, there is also a forecast that the deficit will shrink this year due to a slowdown in the increase of R&D expenses. Sangsangin Securities estimates Ildong Pharmaceutical's consolidated sales for this year to increase by 18.1% year-on-year to 660.8 billion KRW, with operating losses expected to be in the 20 billion KRW range. Researcher Ha predicted, "With the recovery of sales from marketed products leading to growth in consolidated sales and a slowdown in R&D expense increases, operating losses will significantly decrease."

The key issue is the successful launch of the COVID-19 treatment. Researcher Kim Hyung-soo from Hanwha Investment & Securities stated, "In the reopening situation where COVID-19 variants continue, COVID-19 treatments are considered essential," adding, "If an orally administered COVID-19 treatment gains regulatory approval and is launched at an affordable price, it could become an attractive alternative."

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