The Disconnect Between K-Bio's Technology Exports and Stock Prices

While the KOSPI index has surpassed 8000 this year, the pharmaceutical and bio sectors have been relatively sluggish. Despite a series of multi-trillion won technology export deals and clinical trial successes being announced, the stock prices of major companies have failed to meet expectations. Some stocks have even seen their gains reversed after contract announcements. However, positive outlooks suggest that investor sentiment could improve in the second half of the year with upcoming major conferences and further contract news.

Reasons for Sluggish Stock Performance

Recently, the KRX Healthcare Index closed at 4130.54, down 3.42% from the previous day, and is more than 1000 points lower than its level of 5403.37 on March 3rd, approximately three months ago. The KRX Healthcare Index comprises the 67 stocks with the largest market capitalization in the pharmaceutical and bio sectors. Notably, the Korean stock market has recently seen gains driven by semiconductor stocks like Samsung Electronics and SK Hynix, AI-related stocks, power equipment stocks, and some defense industry stocks. In contrast, the pharmaceutical and bio sectors have often seen their stock prices stagnate or even decline, despite successful technology export deals.

Despite Technology Export Achievements

In reality, pharmaceutical and bio companies such as Hanmi Pharmaceutical and Oscotec have not seen their stock prices meet expectations, even after signing large-scale technology transfer agreements. Hanmi Pharmaceutical signed a deal worth $1.26 billion (approximately 1.9 trillion won) with global pharmaceutical giant Eli Lilly. However, after the contract announcement, the stock price gave back its gains, closing at 494,000 won on the 5th. Oscotec faced a similar situation; despite its contract with Ajiot, its closing price on the 5th was only 41,750 won.

New Market Trends

This sluggish stock performance has been ongoing since the beginning of the year. In the past, multi-trillion won technology export deals were major drivers for stock prices. However, the current market is placing more emphasis on actual cash inflows and the probability of new drug success rather than the size of the contract. This is because technology export contracts are typically composed of upfront payments, milestone payments, and sales royalties, and the announced contract value does not immediately translate into company revenue.

Hopes for the Second Half

Securities firms are focusing on additional events in the second half of the year. Kim Sun-ah, a researcher at Hana Securities, stated, "While the technology transfer achievements of Hanmi Pharmaceutical and Oscotec, and the investment in OliX are all significant, the stock prices are not receiving much attention. However, there are still many positive catalysts to look forward to." For instance, the DD01 treatment developed by D&D Pharmatech has shown excellent results in Phase 2 clinical trials, and technology transfer discussions with global pharmaceutical companies are anticipated.

Ultimately, the outlook suggests that the rebound of the pharmaceutical and bio sectors in the second half will depend not just on expectations, but on the actual occurrence of additional technology transfers, clinical data releases, and approval events. DB Securities estimates that the cumulative value of technology exports by domestic pharmaceutical and bio companies has exceeded 12.9 trillion won this year, suggesting a possibility of surpassing last year's annual total.