[MarketING] Pharmaceutical Stocks Rally on Continued Earnings and Contract Boons

KOSPI Closes Slightly Lower
KOSDAQ Falls for Second Day Due to Foreign and Institutional Selling

The KOSPI turned bearish after a day. Amid increased caution due to the announcement of U.S. economic indicators and debt ceiling negotiations, pharmaceutical stocks, which continued to benefit from strong earnings and contract signings, showed remarkable strength.

KOSPI Closes Slightly Lower

On the 9th, the KOSPI closed at 2,510.06, down 3.15 points (0.13%) from the previous day. The KOSDAQ ended the session at 835.85, down 6.43 points (0.76%).

[Image source=Yonhap News]

With the U.S. Consumer Price Index (CPI) announcement and debt ceiling negotiations approaching, a wait-and-see sentiment deepened, resulting in a sluggish index movement. Meanwhile, stock prices showed clear differentiation depending on individual issues such as earnings. Seokhwan Kim, a researcher at Mirae Asset Securities, analyzed, "In the early session, the KOSDAQ fell more than 1% due to declines in secondary battery material stocks, but the drop narrowed in the afternoon as foreign selling pressure eased. Amid caution over the U.S. debt ceiling negotiations, imminent inflation data releases, and slowing Chinese export-import figures, sectoral differentiation based on first-quarter earnings announcements was evident."

Foreign investors maintained buying in the KOSPI market but selling in the KOSDAQ market. On the day, foreign investors net bought 139.6 billion KRW in the KOSPI market and net sold 109.3 billion KRW in the KOSDAQ market. Institutions also bought 37.1 billion KRW in the KOSPI market but sold 51.9 billion KRW in the KOSDAQ market. Individual investors showed the opposite trend, selling 175.1 billion KRW in the KOSPI market and buying 169 billion KRW in the KOSDAQ market.

The strength of pharmaceutical stocks stood out. The KOSPI pharmaceuticals sector rose 1.49%, marking the largest gain among KOSPI sector indices. Celltrion, which announced strong first-quarter earnings, and SK Bioscience, which disclosed a contract manufacturing agreement, each rose more than 5%, leading the pharmaceutical sector's rally. Researcher Kim said, "Pharmaceutical stocks showed strength following Celltrion's first-quarter earnings surprise announcement."

Celltrion closed at 171,800 KRW, up 5.79% from the previous day, buoyed by strong earnings. After the market close the previous day, Celltrion disclosed that it recorded sales of 597.5 billion KRW and operating profit of 182.4 billion KRW in the first quarter of this year. These figures represent increases of 12% and 41%, respectively, compared to the same period last year and were in line with market expectations (sales of 598.7 billion KRW, operating profit of 190.9 billion KRW). Hyemin Heo, a researcher at Kiwoom Securities, analyzed, "Despite reflecting losses exceeding 60 billion KRW due to inventory asset write-downs at the U.S. subsidiary of the COVID-19 diagnostic kit caused by price declines, profitability improved thanks to expanded supply of the high-margin Remsima SC and overall growth in biosimilar sales."

Clear Stock Price Differentiation Based on Individual Issues

SK Bioscience's stock price strength was driven by positive evaluations of its contract manufacturing agreement.

The previous day, SK Bioscience announced that it had signed a contract to manufacture a next-generation Zaire Ebola vaccine candidate on a contract manufacturing basis with MSD (Merck & Company), a global pharmaceutical company based in the U.S. MSD is developing a next-generation Zaire Ebola vaccine candidate that improves the process efficiency and safety of the currently used Zaire Ebola vaccine 'Ervebo,' and SK Bioscience will receive technology transfer to produce this candidate.

Donggeon Lee, a researcher at SK Securities, said, "This contract is SK Bioscience's first general vaccine contract development and manufacturing organization (CDMO) agreement since COVID-19, and specific volumes and amounts will be disclosed in the future. The signing of this next-generation Zaire Ebola vaccine candidate contract is expected to be a turning point for the revaluation of CDMO value." SK Securities raised SK Bioscience's target price from 83,000 KRW to 90,000 KRW, reflecting the results of this general vaccine CDMO contract. On the day, SK Bioscience closed at 81,900 KRW, up 5.41% from the previous day.

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