Samsung Active Lists "KoAct China Biohealthcare Active" ETF

Structural Growth Expected for "China Bio" Investments
Building a Global Biohealthcare ETF Lineup

On January 27, Samsung Active Asset Management announced the listing of the new "KoAct China Biohealthcare Active" ETF, which will focus its investments on promising Chinese biohealthcare companies leading the global market for innovative therapeutics and medical devices.

Currently, major global pharmaceutical companies are grappling with the issue of revenue loss due to the expiration of patents on key drugs, commonly referred to as the "patent cliff." In the past, these companies primarily replenished their pipelines by acquiring assets from small and medium-sized biotech firms in the United States. However, it is now expected that they will gradually increase their reliance on Chinese biotech companies.

According to Morgan Stanley, in the first half of last year, Chinese biotech companies accounted for approximately 39% of the total global technology export (licensing out) value. This indicates that the technological capabilities of Chinese biotech firms have already been validated in the global market and that major global pharmaceutical companies are choosing China as an essential partner to recover their losses.

Since the 2000s, the Chinese market had focused on exporting generics and active pharmaceutical ingredients. However, after 2012, China significantly increased its proportion of research and development (R&D) investment, successfully transforming its industry. Currently, Chinese companies are rapidly expanding their pipelines in next-generation innovative therapeutics, securing global competitiveness and entering into numerous technology export contracts with major pharmaceutical companies worldwide.

The "KoAct China Biohealthcare Active" ETF includes holdings such as BeOne Medicines (10%), WuXi AppTec (10%), and Jiangsu Hengrui (9.8%). Given the close interconnection between the U.S. and Chinese biotech ecosystems, decoupling is considered difficult, and it is expected that Chinese biotech companies will continue to expand into global markets.

In particular, unlike passive products, the "KoAct China Biohealthcare Active" ETF employs an active strategy, flexibly adjusting its portfolio in response to rapidly changing trends. The fund aims to achieve excess returns by carefully evaluating factors such as clinical success potential, capital-raising ability, technological competitiveness, and marketability.

Jo Hangil, manager at Samsung Active Asset Management, stated, "Technology export contracts with major global pharmaceutical companies will continue not only in oncology but also across various technological modalities (therapeutic approaches). We will actively seek out hidden alpha stocks through one-on-one meetings with management teams of local Chinese companies both online and offline."

Meanwhile, with the listing of this China bio ETF, Samsung Active Asset Management has completed its global bio sector ETF lineup, which now includes the "KoAct Biohealthcare Active" investing in domestic bio companies and the "KoAct US Biohealthcare Active" targeting U.S. bio companies.

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