Pharmaceuticals and Bio Smiled in the First Half, R&D Is Key in the Second Half

Attention on COVID-19 Vaccine Development Achievements... "Time to Compete with Results"
SK Biopharm IPO Also a Potential Industry-Wide Boon

[Asia Economy Reporter Minwoo Lee] The pharmaceutical and bio sectors, which attracted investment sentiment in the first half of the year due to expectations for the development of treatments and vaccines for the novel coronavirus disease (COVID-19), are expected to undergo a full-scale evaluation of their performance in the second half. As clinical results and clinical trial entries for COVID-19-related vaccines progress, it is analyzed that the winners and losers will be distinguished.

On the 13th, Hi Investment & Securities diagnosed that the pharmaceutical and bio sectors benefited more than they were adversely affected by COVID-19 in the first half. Researcher Jaekyung Park of Hi Investment & Securities explained, "In the stock market, which experienced a sharp drop and rapid rebound due to the global spread of COVID-19, the stock returns of the pharmaceutical and bio sectors significantly outperformed other sectors," adding, "These sectors are relatively insensitive to the economy, so almost no companies saw their performance deteriorate due to COVID-19. Furthermore, expectations for the development of COVID-19 treatments and vaccines increased, and international academic conferences, which were expected to be canceled due to COVID-19, were all held online, creating momentum."

In fact, on the 11th (local time), the domestic stock market also showed a downward trend due to a roughly 6% drop in major U.S. indices amid concerns over a second wave of COVID-19. However, pharmaceutical and bio stocks such as Samsung Biologics and Celltrion group shares rose instead. In particular, Samsung Biologics rose 7.7% in a single day, reaching a new high of 817,000 KRW.

The outlook for the pharmaceutical and bio sectors remains bright in the second half as well. First, clinical results and clinical trial entries for COVID-19 vaccines are expected to continue. However, unlike most sectors that benefited broadly, the second half is expected to see movements based on individual research and development (R&D) news. Previously, many companies competed to announce development plans related to COVID-19, but from the second half, actual competition is expected based on the results.

In fact, U.S. pharmaceutical company Moderna announced plans to enter Phase 3 clinical trials next month, and the Jenner Institute at the University of Oxford in the UK and AstraZeneca will also begin Phase 3 trials in August. AstraZeneca plans to produce enough doses to vaccinate 2 billion people by September to October this year. Domestic pharmaceutical company Genexine will start domestic clinical trials of the COVID-19 vaccine candidate 'GX-19' at Yonsei University Severance Hospital from the 15th. Researcher Park said, "For formal vaccine approval, Phase 3 clinical trials alone require at least one year, so formal approval within this year may be difficult. However, in the case of the Ebola vaccine, emergency use authorization was granted before formal approval, allowing proactive use for close contacts and medical staff," adding, "Similarly, the COVID-19 vaccine is likely to be used in advance through emergency use authorization procedures before formal approval, which could significantly alleviate fears about COVID-19."

The listing of SK Biopharm on the 7th of next month is also considered influential news. SK Biopharm is a company specializing in central nervous system (CNS) therapeutics and has received approval from the U.S. Food and Drug Administration (FDA) for two new drugs in the CNS field. Researcher Park analyzed, "SK Biopharm plans to directly sell the FDA-approved new drugs in the U.S. without partners, marking the first time for a domestic company," adding, "The success of SK Biopharm and the subsequent rally could raise expectations for domestic CNS therapeutic development."