Pharmaceutical Bio Stocks "Performance Must Be Realizable... Selective Company Investment Needed in Second Half"

Pharma and Bio Relatively Overlooked in Corporate Value-Up
Focus on Global Clinical Trials, Royalties, and Milestones
"Drug Supply Chains to Be Reshaped Amid US-China Hegemony Competition"

As the pharmaceutical and bio sectors generally show sluggish movements compared to other industries, experts are increasingly voicing the need to establish selective investment strategies targeting companies that can visualize performance improvements. Rather than harboring vague expectations for new drug development, attention should be paid to companies expanding their market reach globally.

According to the Korea Exchange on the 4th, the KRX 300 Healthcare Index, composed of stocks in the healthcare sector including pharmaceuticals and bio, fell 8.42% over the past month, showing the lowest returns among all industries. In particular, HLB hit the lower limit as it failed to clear the U.S. Food and Drug Administration (FDA) approval hurdle for a new drug, and large-cap stocks such as Samsung Biologics and Celltrion also showed weakness, which had a significant impact.

Although the pharmaceutical and bio sector has shown relatively poor performance due to being somewhat neglected in the government’s corporate value-up policies, analysis suggests that the second half of the year will be a time of opportunity. It is expected to be a period when companies that can deliver global results yet remain undervalued will stand out. Jang Min-hwan, a researcher at Hi Investment & Securities, said, "Investors should focus on companies whose competitiveness is confirmed based on data and clinical results and whose momentum in the market is clear but not fully reflected in the stock price." He added, "Investors need to analyze the global market share and sales expansion potential of individual companies as well as their development strategies for new pipelines." He further noted, "In particular, Yuhan Corporation is expected to drive performance and stock price through FDA approval of Lazertinib and royalties and milestone technology fees. Also, HanAll Biopharma is likely to see positive trends depending on the clinical trials of its U.S. partner Immunovant, which is developing Batoclimab for chronic inflammatory demyelinating polyneuropathy (CIDP) and myasthenia gravis (MG)."

Among the pharmaceutical and bio industry, large companies that have shown particularly weak stock prices are expected to gradually improve their stagnant profitability. Heo Hye-min, a researcher at Kiwoom Securities, said, "In the recent biosimilar market, competition is intense, so direct sales companies that can enhance cost competitiveness have an advantage." He added, "Celltrion’s direct sales network is stabilizing, and the portfolio of autoimmune disease products is expanding, which will create synergy with direct sales." He explained, "In particular, Jimpent is a high-margin product, and with insurance listing and prescriptions starting this year, significant market expansion is expected in 2025. Additionally, performance improvements are anticipated due to market penetration of Humira biosimilars and the launch of new products such as Stelara, Eylea, and Xolair biosimilars."

Furthermore, as the likelihood increases that the U.S. will legislate the Biosecurity Act, which includes trade restrictions on some Chinese bio companies, most pharmaceutical supply chains are expected to be established outside China, leading to increased demand for domestic contract development and manufacturing organizations (CDMOs). Jung Yoo-kyung, a researcher at Shin Young Securities, said, "The bio industry is also unlikely to escape the weakness of Chinese healthcare companies amid the U.S.’s hegemonic stance." She forecasted, "In the second half, a widening gap between the rich and the poor will be prominent, centered on stocks with excellent pipelines and technologies or those benefiting from U.S. allies." She added, "Samsung Biologics is expected to show a bottom-to-top performance trend with the full operation of its 4th plant and improvement in the CDMO market following the enactment of the Biosecurity Act. Although the increase in operating profit impairment due to higher purchase price allocation (PPA) amortization expenses is a burden, it is expected to achieve double-digit sales growth this year and record its highest performance."

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