The Financial Supervisory Service will completely overhaul disclosures by pharmaceutical and biotech corporations so investors can understand them more easily. The move comes amid continued criticism that, despite being a core sector on KOSDAQ, disclosures are excessively complex and uncertain, making investment decisions difficult.
The Financial Supervisory Service said on the 12th that it launched the Task Force (TF) for comprehensive improvement of pharmaceutical and biotech disclosures on the 10th and began work to overhaul the overall disclosure framework. The TF includes experts from academia, related institutions, and brokerages, who will discuss improvement tasks for about three months and prepare disclosure guidelines in the first half.
Although the pharmaceutical and biotech sector is a core industry on the KOSDAQ market with high shares of market capitalization and listings, there is continued criticism that disclosure information remains hard to understand. Information directly tied to corporate value—such as new drug development, clinical trials, and technology transfer—is presented with complex structures and technical terms, reducing accessibility for retail investors.
In particular, for pharmaceutical and biotech corporations, corporate value is determined more by future research and development (R&D) outcomes and commercialization potential than by current results. Because "future information" such as clinical stages and pipelines is key, disclosures are hard to interpret, and discrepancies between disclosures and actual results can distort investment decisions, critics said.
To address these structural problems, the Financial Supervisory Service plans to focus not on merely adding disclosure items, but on redesigning the way information is communicated to be investor-friendly. The key is turning "difficult disclosures" into "understandable disclosures."
First, at the initial public offering (IPO) stage, improvements will center on the securities registration statement to make clearer the key assumptions and estimates used to set the offering price. In particular, the plan will encourage detailed explanations of what premises those assumptions rest on and how changes in those premises would affect future revenue and corporate value.
After listing, business reports and other filings will be revised to provide research and development status and pipeline information in a more structured manner. Whereas clinical stages were previously presented as a simple list, going forward, each pipeline's current stage, future timetable, key risks, and expected outcomes will be included so investors can grasp the overall picture.
Work will also proceed in parallel to narrow the information gap between media reports and disclosures. As some corporations have presented more optimistic outlooks in press releases than in disclosures, causing confusion for investors, system improvements will be pursued to ensure consistency between disclosures and externally released information.
An official at the Financial Supervisory Service (FSS) said, "The pharmaceutical and biotech industry, by its nature, involves inherently difficult information and high uncertainty," adding, "We will comprehensively improve the disclosure structure and expressions so investors can understand key information more intuitively."