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Biopharma firms are all the rage on the Kosdaq

Progress abroad is impressive, but prices could be a bubble
Nov 22,2017
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The biopharmaceutical industry is so hot with investors on the stock market that some believe a cooling down is needed.

Investors are paying attention to a series of promising developments in the industry. On Monday, Samsung Bioepis announced that it received final approval for the sale of its anti-cancer drug Ontruzant in Europe. Ontruzant is the biosimilar of Swiss company Roche’s breast and stomach cancer drug Herceptin. Herceptin is a major drug with global sales last year amounting to 6.78 billion Swiss francs ($6.83 billion). The two biggest markets were the United States (2.51 billion Swiss francs) and Europe (2.06 billion Swiss francs).

Biosimilars are biological products that are approved based on proof that they are highly similar to other previously approved products. The drugs have no clinically meaningful differences in terms of safety or effectiveness from the reference product, but they cost less.

“Our global research and development capability has been recognized through our first approval of the anti-cancer drug along with an autoimmune disorder treatment drug,” said Samsung Bioepis CEO Christopher Hansung Ko.

Samsung Bioepis had already succeeded in getting approval to sell three biosimilar drugs in Europe. This was its first approval for a cancer treatment.

And Samsung Bioepis isn’t the only Korean biopharmaceutical company succeeding in the global market.

Celltrion, the biopharmaceutical company with the largest market cap on the Kosdaq, has gotten approvals to sell its biosimilar monoclonal antibody medication Remsima in 79 countries including the United States.

The drug’s market share in Europe exceeds 40 percent.

Other biopharmaceutical companies including SillaJen, ViroMed, Genexine and TissuGene are rising and investors are showing keen interest.

Their stock prices have been rising rapidly, helping the secondary Kosdaq market to surge. On Tuesday, the Kosdaq got closer to a record set 10 years ago. The market closed half a percent higher than the previous trade at 789.38, edging closer to its all-time record of 794.08 set on Nov. 7, 2007.

The price of shares in Samsung Biologics, the parent company of the unlisted Bioepis, has more than doubled since the beginning of the year from 156,500 won ($143.29) to 392,000 won. During the same period, Celltrion’s shares have more than doubled from 108,200 won to 222,700 won.

SillaJen, which was listed on the market last Dec. 6, currently has the third largest market cap on the Kosdaq trailing after Celltrion and its marketing affiliate Celltrion Healthcare, while TissuGene, which started trading earlier this month, currently ranks fourth.

The combined market cap for biopharmaceutical companies currently accounts for 31 percent of the entire Kosdaqu, more than IT hardware companies (10 percent) and software companies (9 percent).

But some warn that biopharmaceutical shares are overpriced.

In fact, Celltrion’s Remsima treatment - despite strong popularity in the European market - only holds a 1.7 percent market share in the U.S., where it is being sold as the cheaper version of Johnson and Johnson’s Remicade. Samsung Bioepis’ Renflexis, another replica of Remicade that has been on sale in Europe since August, only has a market share of 1 percent.

The biopharmaceutical industry says its recent achievements are more than many expected.

“There’s a saying that one has to consider a minimum 10 years when investing in the biopharmaceutical industry,” said an industry official. “But the results are coming out faster than expected.”

The industry insider said that the current momentum will help establish confidence in the biopharmaceutical industry and lead to increasing investment.

According to the Korea Venture Capital Association, investments in medical and biopharmaceutical start-ups amounted to 468.6 billion won last year, which accounted for 21.8 percent of the total venture capital investments made.

The Biotech Policy Research Center said 443 new biopharmaceutical start-ups were launched last year. That’s double the number of start-ups launched in 2000, the previous record for a calendar year.


BY LEE CHANG-KYUN, LEE HO-JEONG [lee.hojeong@joongang.co.kr]