Korean pharmaceutical industry focuses on securing funds to develop new drugs
Encouraged by growing investor interest in the biopharmaceutical industry amid the protracted Covid-19 pandemic, local drugmakers are pushing hard to secure financial resources through the massive bond issuance, said Thursday from market watchers.
Their actions aim to invest in new companies and to strengthen research and development to accelerate the development of new drugs.
According to financial market sources, seven companies – Chong Kun Dang, Chong Kun Dang Holdings, GC, Kwangdong Pharmaceutical, Daewoong Pharmaceutical, Suheung and Samsung Biologics – have issued government bonds worth more than 1,000 billion won ( $ 841 million) this year. .
The 2021 figure represents a big increase from last year, when three companies issued government bonds worth 745 billion won.
Industry insiders are paying close attention to Chong Kun Dang’s large-scale government bond issuance, as the company has been operating debt-free since its inception. The company’s government bond issuance totaled 100 billion won – 80 billion won for three-year bonds and 20 billion won for five-year bonds. It was the first time the company issued government bonds.
The parent company, Chong Kun Dang Holdings, also first issued 50 billion won of corporate bonds in June.
Chong Kun Dang said the public bond issuance was aimed at boosting R&D for double-antibody anti-cancer biologics and clinical trials for the treatment of Covid-19. Previously, the company announced that it would spend $ 25 billion to conduct a Phase 3 clinical trial of Nafabeltan (ingredient: nafamostat), its Covid-19 treatment candidate.
The company also plans to make a large-scale investment of 43.2 billion won over three years in the conduct of Phase 1 and 2 clinical trials of its new biopharmaceutical candidate, CKD-702, a double-antibody anti-cancer bio-drug. ,
GC has raised 200 billion won this year by issuing government bonds, the largest amount since its inception. Daewoong, Suheung and Kwangdong also issued 90 billion won, 43 billion won and 22 billion won in government bonds, respectively.
Among organic companies, Samsung Biologics issued its first public bonds in August.
In a forecast of demand for the issuance of 300 billion won of government bonds, institutional investors have shown interests far above the expectations of the company by placing orders worth more than 1.570 billion won.
Due to the high interest, the company increased the size of its government bond issue from 200 billion won to 500 billion won.
“We will spend all funds raised through public issuances to build our fourth plant,” the company said. “The company has become the world’s leading contract manufacturing organization (CMO) based on its previous three factories, and plans to maintain its leadership position by completing the fourth factory by 2023.”
A local analyst expected more companies to look for ways to raise funds, for example by issuing government bonds, encouraged by the huge success of companies that have already issued government bonds.
“Local biopharmaceuticals have long been an area of insufficient capital inflows due to the perception that the development of new drugs takes a long time and the risk of clinical failure is high,” said Lee Jun-soo, analyst for Prophet Asset Management. “However, as the local biopharmaceutical industry has played a vital role in the fight against the Covid-19 pandemic and some have shown that they can generate revenue by licensing products, these perceptions have changed.”
This has made the biopharmaceutical industry an attractive investment option, added Lee.