Amid the slump of biopharmaceutical stocks, some companies have set out to buy back their shares, which analysts regard as a move to appease shareholders by stabilizing stock prices.
For instance, Celltrion Healthcare, a comprehensive healthcare company, said Friday that it had decided on a buyback plan to stabilize share prices and lift shareholder value. It plans to buy back 630,000 shares valued at about 40 billion won ($34.5 million) on the main bourse of the Kospi market until May 18.
“As the stock market remained sluggish, we thought the company’s stock prices against were underrated compared to its fundamental value and decided on an additional buyback,” a Celltrion Healthcare official said. “We will continue to manage the company responsibly to upgrade corporate and shareholder values.”
Celltrion Healthcare also bought back 673,584 shares, spending about 50 billion won last month. The company’s purchase of its stocks has totaled 1,303,584 shares this year alone. When it completes the buyback process in May, Celltrion will hold 3,713,913 shares of its stocks.
Last month, Celltrion Healthcare CEO Kim Hyung-ki spent about 700 million won buying 10,000 shares of his company’s stock on the market.
Medytox, a botulinum toxin product maker, also announced a buyback plan on Friday. The company plans to buy 43,821 shares until May 18 at a total cost of about 5 billion won.
The company said it would hold the shares at least for more than six months after the date of the final purchase.
Explaining the background of the buyback decision, a Medytox official said it was aimed to “stabilize stock prices and enhance shareholder value.”
On Feb. 19, HK inno.N announced a buyback plan, the first such announcement since the company was listed on the secondary Kosdaq market in August 2021.
The company said it was closely watching the unstable global business and stock market trends and decided to buy back its shares as part of its “shareholder-friendly” management.
“From now on, we will positively examine various other stock price-supporting measures besides shares’ buyback,” HK inno.N CEO Kwak Dal-won said.
Market watchers attributed the successive announcements of stock buyback plans to the ongoing slump of biopharmaceutical stocks.
“The downward trend of stock prices is not a problem of a few companies but the entire industry’s issue,” an industry executive said. “That has forced companies to try to stabilize their stock prices through buying back own shares.”
However, an official at a local biotech company responsible for his company’s IR division expressed an envious feeling. “The situation is relatively good in these companies that can buy back shares,” the official said.
The official pointed out that stock buyback is possible only when companies have earned surpluses.
“In other words, only those that could accumulate retained earnings through successive sales since their founding can buy back their shares,” he said. “Many biotech firms still in the research and development stage cannot buy back shares if they want to because they are suffering losses.”