The Korean securities industry is revising upward the stock price targets for traditional pharmaceutical companies, pointing to licensing deals and export growth.

As per the investment banking (IB) sector, domestic securities firms are upwardly adjusting target prices for major traditional pharmaceutical companies, including JW Pharmaceutical, Chong Kun Dang, GC, Hanmi Pharm, and Yuhan Corp.

JW Pharmaceutical

IBK Investment & Securities raised the target price of JW Pharmaceutical from the current price of 29,300 won ($22.28) to 40,000 won ($30.42).

JW Pharmaceutical, a prominent IV fluid manufacturer and distributor in Korea, specializes in ethical drugs (ETC), commonly referred to as prescription drugs. Key products such as Livalo (hyperlipidemia treatment), Hemlibra (hemophilia A treatment), and Actemra (autoimmune disease treatment) make up 7 percent of total sales, ensuring a foundation for stable sales growth, according to IBK Investment & Securities analyst Lee Seon-kyoung.

Lee highlighted that JW Pharmaceutical's strength lies in the fact that key products propelling sales growth, including Livalo, Hemlibra, and Actemra, have been licensed directly from the headquarters of multinational pharmaceutical companies.

"In contrast to other domestic pharmaceutical companies that secure domestic rights through co-promotion with Korean branches of global pharmaceutical companies, JW minimizes the risk of sales decline resulting from failed contract renewals by directly securing domestic rights from the headquarters of multinational pharmaceutical companies,” Lee said. “Therefore, it is necessary to pay attention to the fact that they can continue stable sales growth without the risk of contract renewal and can secure a higher operating profit margin compared to co-promotion, thus leading to increased sales of introduced products.”

Chong Kun Dang

SK Securities raised the target price of Chong Kun Dang from the existing 126,200 won to 160,000 won, attributing this upward adjustment to the recent technology transfer of CKD-510, a small molecule histone deacetylase 6 (HDAC6) inhibitor, to Novartis last month.

“As the development indications and timeline for CKD-510 become clearer, we expect the value of the CKD-510 pipeline from the technology transfer to be fully reflected,” SK Securities analyst Lee Dong-geun said. “The upfront payment from this deal is expected to be reflected in the fourth quarter earnings of 2023.”

Following the successful technology transfer of CKD-510, key uncertainties have been resolved, and the resulting operational value is estimated to be approximately 1.8 trillion won. This surpasses the current enterprise value of Chong Kun Dang, SK Securities' Lee said.

GC

Shinhan Investment raised the target price of GC from 121,000 won to 140,000 won.

Shinhan Investment analyst Jeong Jae-won said, “The U.S. frequently experiences shortages in blood products, and according to data released by GC, the price of blood products in the U.S. is about 4 to 5 times higher than in Korea.”

If GC manages to launch Alyglo, its 10 percent intravenous immunoglobulin, in the U.S., sales will quickly contribute to GC’s performance, Jeong predicted. In the U.S. market, IVIG-SN 10 percent is known to account for over 80 percent of the IVIG market, showing great market potential, he added.

Jeong expected that if the company receives approval for Alyglo in January, the company will post related sales by the end of 2024.

“Sales of Alyglo will start to be reflected significantly from 2025,” Jeong said.

Hanmi Pharm and Yuhan Corp.

Daishin Securities set the target prices for Hanmi Pharm and Yuhan Corp. from the current 315,500 won and 63,300 won to 420,000 won and 92,000 won, respectively.

Daishin Securities analyst Lee Hee-young stressed that she has high expectations for the launch of a domestic obesity treatment by Hanmi Pharm.

“Hanmi has strengths in the continued steady profit growth through the sales of key products like Rosuzet, Amozaltan family, and Rolvedon, and the expected reflection of new drug value with the expansion of its obesity pipeline,” Lee said. “As the high weight loss effect of GLP-1 obesity treatments becomes known, the domestic obesity market is growing rapidly at an annual rate of 16 percent.”

Hanmi is expected to penetrate the domestic market quickly with the fastest obesity pipeline in Korea, its own production facilities, and sales network, offering a reasonable price, Lee added.

Regarding Yuhan Corp., Lee expected high growth from lazertinib, a lung cancer drug. 

“The investment points for Yuhan include that next year the company will be able to reap the benefits of the full-scale domestic sales of lazertinib, the announcement of MARIPOSA OS (overall survival) results and MARIPOSA2 clinical trial results for new patients in 2024, and the announcement of study results of its allergy and nonalcoholic steatohepatitis (NASH) treatments,” Lee said.

Lee further noted that he expects that lazertinib will achieve global sales of 1 trillion won by 2030 with successful clinical trials.