Top 10 biotech companies on the secondary KOSDAQ market posted significant operating income declines during the first three quarters this year.
The poor earnings results stemmed from stricter accounting rules, recently imposed by the Financial Supervisory Service. Under the new rules, biotech firms had to mark R&D costs as expenses, instead of an intangible asset.
The top 10 pharmaceutical and biotech firms on KOSDAQ in terms of market capitalization are Celltrion Healthcare with 11.22 trillion won ($9.93 billion) market cap, SillaJen with 5.26 trillion won, HLB with 3.37 trillion won, Medytox with 3.2 trillion won, ViroMed with 3.04 trillion won, Kolon TissueGene with 2.68 trillion won, Celltrion Pharm with 2.29 trillion won, Genexine with 1.58 trillion won, Hugel with 1.33 trillion won, and Komipharm International with 1.25 trillion won.
Except for Medytox, nine out of the 10 companies recorded a drop in operating profit during the three quarters this year from a year earlier. Out of the nine firms, seven posted operating losses.
Among the 10, ViroMed’s operating loss grew the most. Its operating loss until the third quarter this year widened by 6.88 billion won from a year earlier and hit 12.1 billion won. Kolon TissueGene’s operating loss also increased by 6.27 billion won year-on-year to reach 1.2 billion won.
SillaJen’s operating loss grew by 9.9 billion won to 47 billion won this year, and that of HLB, by 1.9 billion won to 15.8 billion won.
Celltrion Pharm’s earnings turned from operating profit of 7.3 billion won in the first nine months to operating loss of 1.7 billion won this year. Komipharm International’s operating income of 200 million won last year turned to operating loss of 3.6 billion won this year.
In stark contrast, Medytox recorded a 7.9 percent expansion in operating profit to 6.95 billion won from 6.45 billion won during the same period.
“Many of them haven’t released any product yet, so it is too early to evaluate their achievement just by looking at operating profit,” an official at a biotech firm said. “Rather than operating profit, we should predict the success probability of their pipelines and estimate expected profits in the long-term view.”
Even if a company signed a licensing-out deal, its profit could fluctuate depending on milestone payments or monthly sales, the official went on to say. “It is difficult to assess a biotech firm only by its balance sheet if the company focuses on developing pipelines without many released products,” he added.
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