Stock Price Soars for 'Celltrion 3 Musketeers' as Market Cap Surpasses 80 Trillion Won

[Asia Economy Reporter Koh Hyung-kwang] The combined market capitalization of the three Celltrion companies?Celltrion, Celltrion Healthcare, and Celltrion Pharm?has surpassed 80 trillion won. This scale is comparable to SK Hynix, having increased by more than 30 trillion won just this year. The positive factors behind this include expectations for the development of a COVID-19 treatment, continuous earnings growth, and the restructuring of the governance system through the future merger of the three companies.

According to the Korea Exchange on the 15th, the combined market capitalization of the three Celltrion companies was 81.0414 trillion won based on the previous day's closing price. This is comparable to SK Hynix, which ranks second in market capitalization on the KOSPI with 85.1762 trillion won. Compared to the end of last year, a year ago, their combined market cap increased by 70.1% (33.4142 trillion won). Celltrion is responsible for pharmaceutical research and production, while Celltrion Healthcare and Celltrion Pharm handle overseas and domestic sales, respectively.

◆ Celltrion Pharm’s stock price rose the most = In terms of market cap growth rate, the "younger siblings" Celltrion Healthcare and Celltrion Pharm have far outpaced the "eldest brother" Celltrion. Celltrion’s market cap was 48.2617 trillion won as of the previous day’s closing price, up 107.7% (25.0326 trillion won) from 23.2291 trillion won at the end of last year. During the same period, Celltrion Healthcare increased from 7.6281 trillion won to 24.4717 trillion won, a 220.8% rise (16.8436 trillion won), and Celltrion Pharm surged from 1.3567 trillion won to 8.308 trillion won, a 512.3% increase (6.9513 trillion won). The market caps of the three Celltrion companies have surged from at least double to more than six times compared to the end of last year.

The background of this rapid growth is analyzed to be a combination of expectations for new drug development such as COVID-19 treatments, future earnings growth, and governance restructuring through the merger of the three Celltrion companies.

First, continuous growth is expected in their core biosimilar business. In particular, they have developed a subcutaneous (SC) formulation of Remicade (infliximab) biosimilar Remsima and launched it in Europe. They are also working on developing a high-concentration formulation of Humira (adalimumab), expanding into bio-better (improved drugs) that enhance the convenience of original drugs. According to FnGuide, the average operating profit forecast (consensus) for Celltrion next year is 974.5 billion won, which is 27.5% higher than this year’s estimate of 764 billion won. Celltrion Healthcare’s operating profit estimate for this year is 366.2 billion won, and next year it is expected to increase by 32.7% to 485.9 billion won. Myungseon Lee, a researcher at Shin Young Securities, said, “Celltrion is expected to maintain stable earnings growth next year as well,” adding, “We view positively their aggressive R&D and facility investments, as well as their goal to launch at least one product annually.”

◆ COVID-19 treatment development is key = The momentum related to COVID-19 treatment development has not yet been reflected in the target stock prices in the securities market. Celltrion is currently conducting Phase 2 clinical trials for its COVID-19 antibody treatment candidate CT-P59. Patient recruitment and dosing were completed on the 25th of last month, and conditional approval applications are expected within this year, with emergency use authorization applications overseas anticipated next year. A Celltrion official stated, “We are planning to produce up to 1.5 to 2 million doses annually for large-scale overseas supply in the future,” adding, “We are carefully reviewing detailed annual production plans for next year to ensure there are no disruptions in global supply or existing product inventory.”

The merger card, introduced in the second half of the year, also played a role in increasing the size of these three companies. The merger aims to simplify the governance structure within the Celltrion Group and to quell accounting fraud suspicions that have fueled market distrust. In the securities market, there are expectations that Celltrion’s sales, profits, and inventory will be accurately reflected in financial statements and that the sales structure will become more transparent, which has driven the stock price upward. Dalmi Lee, a researcher at SK Securities, evaluated, “Through the merger, it will be possible to handle development, production, distribution, and sales within a single company, which is expected to improve transaction structures, reduce costs, and enhance business transparency.”