As the government moves to introduce a "promotion and relegation" system that splits the KOSDAQ market into premium and standard tiers, medical device sectors and some new drug development biotech corporations are emerging as the biggest beneficiaries. On the other hand, there are concerns that as funds concentrate on blue-chip corporations, the financing environment for small and midsize biotechs could become even tougher.
According to the industry on the 22nd, the government is pushing a three-tier promotion and relegation system that will reorganize the KOSDAQ market into "premium" and "standard," and classify corporations at risk of delisting into a separate "watchlist." The number of corporations included in the premium tier is likely to be capped at about 70. The Korea Exchange (KRX) also launched the "KOSDAQ segment advisory group" on the 16th and held its first meeting, kicking off full-scale design of the system.
The KOSDAQ promotion and relegation system classifies listed corporations based on market capitalization, results such as sales and profit, and governance. Depending on the evaluation, corporations are included in the premium tier or moved to the standard tier if they do not meet the criteria. The aim is to channel investment toward blue-chip corporations and boost market confidence.
The market expects the new system to inject vitality into the sluggish KOSDAQ market, while also seeing sharp divergences by sector.
In particular, the medical device sector is cited as a major beneficiary. Beauty medical device corporations have been maintaining steady earnings growth on the back of expanding overseas exports and high profitability.
In fact, the profitability of major medical device corporations far exceeds the KOSDAQ average. CLASSYS, Hugel, and PharmaResearch are cited as leading premium candidates that combine high profitability with large market caps. The average operating margin from 2018 to 2025 reaches 49.0% for CLASSYS, 38.6% for Hugel, and 30.8% for PharmaResearch.
These corporations rank near the top of KOSDAQ market capitalization, and CLASSYS and PharmaResearch, along with Seegene, are currently included in the "KOSDAQ global segment." The industry also views corporations such as Koh Young and L&C BIO as having a high chance of joining the premium tier.
Shin Min-su of Kiwoom Securities said, "To anticipate the premium tier under the KOSDAQ promotion and relegation system, which could take effect as early as Oct., it is necessary to refer to the KOSDAQ global segment introduced four years ago," and added, "Given that the system was introduced with a similar purpose, it is worth noting that among medical device companies, Seegene, PharmaResearch, and CLASSYS are included."
Beyond medical devices, some new drug development biotech corporations are also assessed to have a high likelihood of joining the premium tier. In particular, Alteogen, HK inno.N, and ST Pharm are cited as strong candidates.
Alteogen has demonstrated high profitability by signing a series of major technology out-licensing deals on the strength of its subcutaneous (SC) formulation-switching platform "Hybrozyme." HK inno.N is buoyed by growth in its gastroesophageal reflux disease treatment "K-CAB," while ST Pharm is viewed as having strong, stable cash generation through its oligonucleotide contract development and manufacturing (CDMO) business.
LigaChem Biosciences and ABL Bio are also making the premium candidate list on the back of large-scale technology transfer outcomes. However, because these corporations could face short-term operating losses due to increased research and development expenses stemming from expanded clinical development, a key variable will be the extent to which their technology and growth potential are recognized rather than their profitability.
By contrast, some note that the promotion and relegation system will not be a boon for all biotech corporations. If ETFs and institutional funds concentrate in corporations included in the premium tier, relatively small biotechs could drift further from investor attention.
In particular, corporations lacking technology transfer outcomes or earnings could face growing pressures from convertible bond (CB) refixings and early redemptions if share price weakness persists. The industry also raises concerns that while the system could help improve the KOSDAQ market's fundamentals, it could actually worsen the financing environment for early-stage biotech corporations.
An industry official said, "If the premium tier effectively serves as a 'first division' within KOSDAQ, investor preference for blue-chip corporations will become even stronger," and added, "Medical devices and some profitable biotech corporations will benefit, but small and midsize biotechs that continue research and development while in the red could face intensifying polarization pressures."