Pharmaceutical and biotech stocks, which had been left out of the long rally, are emerging as the new leaders of the KOSDAQ market. As established bellwethers such as semiconductors paused to catch their breath, a string of major technology transfer deals and global clinical trial successes broke, sharply reversing investor sentiment. Still, experts said that because the sector tends to surge and plunge on single events such as clinical results and technology transfers, diversification and disciplined management are essential.
According to the Korea Exchange (KRX) on the 20th, the KRX Healthcare Index, composed of core pharmaceutical and biotech stocks, rose 6.89% so far this month (Nov. 3–19). It posted the highest gain among KRX indexes. During the same period, the KRX Semiconductor Index, which had been the leading theme, fell 6.08%, and considering that the KOSPI Index (-4.33%) and the KOSDAQ Index (-3.23%) also declined, the outperformance stands out.
Buoyed by gains in individual stocks, related exchange-traded funds (ETFs) also enjoyed a tailwind. Half of the top 10 ETFs by price gains this month were pharmaceutical and biotech products.
Samsung Active Asset Management's "KoAct Bio Healthcare Active" ETF climbed 20.11%, recording the biggest move. It was followed immediately by the "TIMEFOLIO K-Bio Active" ETF (18.07%), the "HANARO Bio Korea Active" ETF (14.97%), and the "RISE Global Obesity Industry TOP2+" ETF (13.19%), which ranked second to fourth.
Recently, expectations over major technology transfers and global clinical results have improved buying sentiment across the biotech sector. Earlier, ABL Bio, a company specializing in bispecific antibodies, said on the 12th that it had signed a technology transfer deal worth up to 3.8 trillion won with global drugmaker Eli Lilly, setting the tone for the sector. Wi Hae-joo, a Korea Investment & Securities analyst, noted, "ABL Bio's technology transfer disclosure is raising expectations for biotech performance."
Clinical data releases are also pending. Hanmi Pharmaceutical transferred to MSD a metabolic dysfunction-associated steatohepatitis (MASH) treatment, for which it will announce global clinical results, and D&D Pharmatech will release liver biopsy results for its MASH therapy. LigaChem Biosciences is slated for the first half of next year to announce data demonstrating the efficacy of an Antibody-Drug Conjugate (ADC) it is co-developing with NextCure. Major oncology and neurology conferences, including the American Society of Hematology (ASH) and the American Epilepsy Society (AES), are also scheduled for next month.
However, experts strongly recommend diversification through ETFs instead of individual stocks, saying, "Biotech stocks tend to soar or plunge on single events, such as technology transfers and clinical results." That is because technology transfer terms are usually undisclosed, and stock prices often get cut in half when trials fail.
Yeo Noreh, an analyst at Hyundai Motor Securities, said, "Bio corporations can face funding challenges when interest rates rise, and if they fail in clinical trials, the value of their pipelines can disappear, posing a significant risk of a sharp decline in corporate value."