Korea Investment: "Concerns Over U.S. Pharmaceutical Tariffs... Preferred Stocks Include Hugel, Kolon TissueGene"

On May 8, Korea Investment & Securities stated that the Korean pharmaceutical and biotech sector is showing weakness due to concerns over import tariffs on pharmaceuticals imposed by the Donald Trump administration in the United States. The firm highlighted Hugel, Kolon TissueGene, and ABL Bio as "preferred stocks" to watch amid the expected market volatility.

Wi Haejoo, a researcher at Korea Investment & Securities, explained in a report titled "Pharmaceuticals & Biotech: Volatility Expands Due to U.S. Policy Uncertainty" released on the same day, "The KRX Healthcare Sector Index has fallen by 0.7% over the past five days, and the share prices of major technology-special listing companies have also declined by 3.9%."

Wi noted that in the domestic stock market, "the share prices of large-cap exporters are falling compared to the first quarter, due to the weaker dollar and concerns over U.S. pharmaceutical tariffs." She added, "Depending on the details of the U.S. pharmaceutical tariff policy to be announced around mid-May, stock price trends may change."

The Trump administration, which has announced plans to unveil a pharmaceutical tariff scheme within the next two weeks, is currently pushing for U.S. drug price reductions and lower healthcare spending, encouraging domestic pharmaceutical production, and aiming for independent regulatory agencies. As a result, global pharmaceutical companies are also facing concerns over declining revenue and profits, as well as increased new drug development costs. Wi commented, "Even in the U.S., the market is more focused on concerns about drug price cuts and import pharmaceutical tariffs than on tax benefits," and predicted, "Volatility is likely to persist for the time being."

In the domestic market, biotech stocks are also on a downward trend due to concerns that new drug development will become more challenging. Wi pointed out that Vinay Prasad, who has been critical of the new drug approval process, was recently appointed as director of the Center for Biologics Evaluation and Research (CBER) at the U.S. Food and Drug Administration (FDA). She explained, "The due diligence period between major domestic biotechs and big pharma may lengthen, and the requirements for technology exports may become more stringent."

Accordingly, Wi stated, "Among the large-cap stocks that have declined due to tariff concerns, we prefer Hugel." She added, "If, as reported by foreign media, the tariff rate on pharmaceuticals imported from Ireland is higher, Letibot (manufactured in Korea) could gain a price competitiveness advantage over Botox (manufactured in Ireland)." She also said, "Among biotechs, we prefer Kolon TissueGene and ABL Bio," explaining, "Although new drug development is becoming more difficult, these companies possess key new drugs and platforms for arthritis and Alzheimer's?aging-related diseases under intensive management by the U.S. CDC?and have high visibility for new drug approvals and technology exports."