While the domestic pharmaceutical and biotech sector has been stuck in a prolonged slump, global institutional investors are selectively channeling funds into some corporations, drawing market attention. Industry watchers said the inflow of overseas money is more than just increased investment and signals the technological competitiveness and growth potential of K-bio.
According to the securities industry on the 10th, the KOSDAQ pharmaceutical index has fallen about 41% compared with late March. As expectations for U.S. interest rate cuts have weakened and funds have continued to flock to semiconductor and artificial intelligence (AI) stocks in the domestic market, investor sentiment toward pharmaceutical and biotech names has deteriorated sharply.
Still, even in this bearish market, global institutional investors have steadily increased investment in domestic biotech corporations.
BlackRock, the world's largest asset manager, recently raised its equity in Yuhan to 5.07% from 4.36%, together with 12 affiliated parties through a fund adviser under the same group. It acquired an additional 0.71 percentage point through on-exchange purchases and disclosed the purpose as simple investment.
Yuhan, following its lung cancer drug "Leclaza (ingredient name Lazertinib)," is developing five next-generation drug candidates: ▲ allergy treatment (YH35324) ▲ HER2 bispecific antibody anticancer drug (YH32367) ▲ HER2 targeted anticancer drug (YH42946) ▲ EGFR bispecific antibody (YH32364) ▲ metabolic dysfunction–associated steatohepatitis (MASH) treatment (YH25724).
BlackRock is also expanding investment in other domestic biotech corporations. In March, it bought a 5.01% equity stake in HLB to become the No. 2 shareholder after Chair Jin Yang-gon, and as of the previous day, it had increased its holding to 6.05%.
HLB faces a U.S. Food and Drug Administration (FDA) decision on its liver cancer drug "Rivoceranib" on July 23. Rivoceranib, a targeted anticancer therapy developed by HLB's U.S. subsidiary Elevar Therapeutics, is seeking approval in combination with China's Hengrui Pharma immune checkpoint inhibitor "Camrelizumab."
Funds from U.S.-based asset manager Kopernik Global Investors are flowing into Chong Kun Dang pharmaceutical. Since securing a 5.02% equity stake last November to become a major shareholder, Kopernik has continued on-exchange purchases, recently increasing its holding by 1.16 percentage points to 7.21% from 6.05%.
Recently, the biotech industry has increasingly tapped convertible bonds (CBs) for funding, and overseas institutions are actively participating.
Among CBs issued by biotech corporations this year, the largest was D&D Pharmatech's April CB, in which Boston-based asset manager Weiss Asset Management invested 50 billion won. The proceeds are slated for clinical development of the MASH treatment "DD01" and the next-generation antifibrotic candidate "TLY012."
Weiss Asset Management also invested 30 billion won in a 145 billion won convertible preferred share (CPS) round last December for Orum Therapeutics, a developer of antibody-degrader conjugates (DAC).
DAC is a next-generation platform that combines antibody-drug conjugate (ADC) and targeted protein degrader (TPD) technologies to selectively eliminate specific proteins inside cancer cells. Orum Therapeutics is developing the acute myeloid leukemia drug candidate "ORM-1153" and the small cell lung cancer candidate "ORM-1023."
Overseas funds are also flowing into unlisted biotech corporations. U.S. investment manager GordonMD Global Investments last year formed "GP-MLB," a co-investment platform with domestic venture capital firm Partners Investment. The two invest in domestic biotechs on a 1-to-1 matching basis and recently selected Curogen, a developer of autoimmune disease treatments, as their first investment.
Flagship Pioneering, one of the world's largest biotech venture capital (VC) firms, is also said to be reviewing investment and partnership opportunities with domestic biotech corporations.
Industry officials view the inflow of global funds not as simple bargain hunting but as reflecting assessments of K-bio's technological competitiveness and growth. In fact, as domestic corporations have continued technology out-licensing and global partnerships, analysts said overseas investors' interest has been rising. Experts emphasized that to attract more foreign capital, it is crucial to deliver sustained technological results and to prove corporate competitiveness.
Seo Geun-hee, a researcher at Samsung Securities, said, "Overseas institutional investors analyze and invest in corporations from a mid- to long-term perspective rather than for short-term trading gains," and added, "Deciding to invest in domestic biotech corporations regardless of current market conditions means they highly value the growth potential of Korea's pharmaceutical and biotech industry overall."
Seo added, "If early investment results are confirmed, a virtuous cycle could emerge in which interest expands to other corporations," and said, "Ultimately, the most important thing is to consistently demonstrate growth potential and competitiveness to overseas investors."