[Real Asset Strategies] Pharmaceuticals and Biotech Set for Rebound, 2026 Outlook 'Bright'

Global Healthcare Emerging from Downturn
Policy, Interest Rates, and Technology Align... Growth Expectations Rise
Anticipated Benefits from U.S. Biosecure Act
Outlook Bright for Obesity Treatments and RNA Therapeutics Markets

The pharmaceutical and biotech sector, which had experienced a prolonged slump, is once again attracting market attention. The global healthcare index, after several years of stagnation, has entered a rebound phase. In Korea, expectations for recovery are rising as supply-demand dynamics, technology, and policy environments converge in the pharmaceutical and biotech industry. As a result, the market is now recommending an increased allocation to the pharmaceutical and biotech sectors.

Pharmaceutical and Biotech Sectors Poised for Growth Next Year

At the beginning of this year, the pharmaceutical and biotech sector suffered from weak stock returns when the United States implemented pharmaceutical tariff policies and price cuts under the Inflation Reduction Act (IRA), disrupting the pricing strategies of global pharmaceutical companies. However, from the second quarter onward, the market began to stabilize as global pharmaceutical giants and the U.S. administration engaged in negotiations over tariffs and drug price reductions.

The domestic market also began to rebound. In particular, the KOSDAQ, where many of the top market capitalization stocks are biotech companies, showed a high correlation between the index and the sector. Compared to January of this year, the KOSDAQ pharmaceutical index had grown by more than 130% as of November.

Kim Seungjin, a researcher at Mirae Asset Securities, stated, "The sector showed a positive stock trend as ▲ policy risks were resolved, ▲ interest rates were lowered, and ▲ business development activities (M&A, licensing deals) increased in preparation for drug price cuts and patent expirations." He added, "We expect that the pharmaceutical industry value chain (commercialization, production, R&D) will continue to level up in 2026, and that the pharmaceutical and biotech sector will remain strong."

The Korean Chamber of Commerce and Industry also expressed expectations for both quantitative and qualitative growth in the biotech sector in its '2026 Industry Outlook Survey.' It projected that from the second half of this year, the global technology export achievements of high-value-added new drug pipelines (such as antibody-drug conjugates, ADCs) would become visible, raising expectations for increased joint development and technology transfer cooperation with multinational pharmaceutical companies next year. In particular, it anticipated benefits from the full-scale operation of large-scale domestic CDMO (contract development and manufacturing organization) facilities and the passage of the U.S. Biosecure Act.

U.S. Biosecure Act Nears Passage... Korea Stands to Benefit

The Biosecure Act, introduced by the United States to keep Chinese biotech companies in check, has been included in the National Defense Authorization Act (NDAA) compromise bill between the House and Senate, making its passage virtually certain. The law prohibits U.S. government agencies and companies receiving government funding from purchasing products or services from Chinese biotech companies designated as "companies of concern." The NDAA is the legislation that sets the U.S. defense budget and policy direction.

Major Chinese companies targeted by the Biosecure Act include WuXi AppTec, WuXi Biologics, and BGI. If the bill passes within this year, Chinese companies could face effective expulsion from the global market. In contrast, countries such as Korea stand to gain from these developments.

Jung Isu, a researcher at IBK Investment & Securities, said, "This legislation is likely to weaken the existing biotech supply chain centered on Chinese CDMO companies," adding, "As global pharmaceutical companies diversify their supply chains, Korean CDMO companies capable of replacing Chinese firms are expected to gain renewed prominence."

Samsung Biologics and Celltrion are cited as beneficiaries of the U.S. Biosecure Act. Samsung Biologics addressed potential conflicts of interest for some global clients by spinning off its biosimilar business. Celltrion acquired Eli Lilly's Branchburg plant in New Jersey for approximately 460 billion won, securing production facilities in the U.S. to eliminate tariff risks.

Kim Seungmin, a researcher at Mirae Asset Securities, explained, "Samsung Biologics, a domestic antibody CDMO specialist, and Yuhan Chemical, a specialist in small-molecule CDMO, are likely to benefit." He added, "Celltrion acquired Lilly's manufacturing facility to expand local production and CMO (contract manufacturing organization) operations in the U.S. as a response to tariffs, and Samsung Biologics is also reviewing various scenarios for entering the U.S. market."

Obesity and RNA Therapeutics Markets in the Spotlight

The market is also focusing on the growth of obesity treatments, which have been a hot topic this year, as well as on companies developing new technologies such as RNA-based gene therapies that are attracting global attention.

According to Samjong KPMG's '2026 Domestic Economic and Industrial Outlook' report, "The biopharmaceutical market, led by obesity and oncology drugs, will continue to see strength in monoclonal antibodies, proteins, and peptides (GLP-1)." The report also noted, "Next year, oral obesity treatments will be launched, and several major clinical results in the obesity field from domestic companies will be announced." Wegovy by Novo Nordisk and Mounjaro by Eli Lilly are examples of GLP-1-based obesity drugs, and several Korean pharmaceutical and biotech companies are also developing GLP-1-based obesity treatments.

Additionally, Samjong KPMG stated, "The clinical and commercial pipelines for cell and gene therapies, as well as DNA and RNA therapeutics, will expand," adding, "This is expected to drive demand for domestic and international CDMOs."

There is also significant interest in Algenomics, which is set to be listed on KOSDAQ on December 18. The company possesses RNA editing technology and, prior to its listing, succeeded in licensing out its technology to a global pharmaceutical company for nearly 2 trillion won, drawing market attention. The company's technological strength lies in its ability to not only cut out mutated RNA, the cause of disease, but also completely replace it.

Lee Myungseon, a researcher at DB Securities, said, "In line with global technology trends, attention should be paid to ST Pharm in the RNA therapeutics field, Algenomics, which is set to go public, ABL Bio for its blood-brain barrier (BBB) penetration technology, Ildong Pharmaceutical, which is developing oral obesity treatments in the obesity and metabolism field, and AprilBio in the autoimmune disease sector."