Will Diagnostic Kit Stocks Shine Again?

COVID-19 Third Wave... Continued Demand for Testing

On the 26th, when the number of new confirmed cases of the novel coronavirus infection (COVID-19) in South Korea exceeded 500, citizens lined up to receive diagnostic tests at the screening clinic of the Gangseo-gu Public Health Center in Seoul. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Park Jihwan] As the third wave of the novel coronavirus infection (COVID-19) in South Korea intensifies, attention is focused on whether diagnostic kit stocks, which have struggled recently due to vaccine expectations, will rise again.

According to the Korea Disease Control and Prevention Agency's Central Disease Control Headquarters on the 26th, as of midnight, the number of confirmed COVID-19 cases in South Korea increased by 583 compared to the previous day. There were 553 new domestic cases and 30 imported cases, bringing the total cumulative confirmed cases to 32,318. The global situation is similar. According to Worldometer, after reaching 10 million cumulative confirmed cases worldwide in 179 days, the time taken to increase by another 10 million has shortened to 44 days, 38 days, 32 days, and 21 days respectively. It took only 16 days to go from 50 million to 60 million cases.

Although the demand for diagnostic kits is surging worldwide due to the increase in confirmed cases, the stock prices of domestic diagnostic kit companies have recently shown a clear downward trend. This is due to the announcement of highly effective vaccine clinical results by pharmaceutical companies Pfizer and Moderna in the U.S., followed by AstraZeneca.

The stock price of Seegene, the leading COVID-19 diagnostic kit company, fell 32.3% from 262,500 KRW at the end of last month to 177,600 KRW the day before. During this period, other diagnostic kit stocks such as Access Bio (-31.8%), Sugentech (-24.6%), and EDGC (-19.7%) also showed weakness.

The securities industry analyzes that the recent stock price decline of diagnostic kit stocks is excessive compared to their performance. In Seegene's case, its third-quarter sales reached 326.9 billion KRW and operating profit was 209.9 billion KRW, soaring 941% and 2968% respectively compared to the same period last year. The industry expects Seegene to achieve an operating profit of around 800 billion KRW next year. Sun Minjung, a researcher at Hana Financial Investment, explained, "The development of COVID-19 vaccines does not mean the end of the virus," adding, "Looking at cases like China, the best prevention could be large-scale testing."

Experts believe that regardless of the development of COVID-19 vaccines and treatments, the demand for diagnostic kits will inevitably expand until next year. Along with the existing 'molecular diagnostic method' market, the demand for 'rapid antigen tests' that can determine infection status in a short time and 'antibody diagnostic kits' that can check for neutralizing antibody production in vaccinated individuals is also expected to grow significantly.