South Korean pharmaceutical and biotech companies have surpassed ₩21 trillion (approximately $15.5 billion) in out-licensing contract value this year, yet related stocks are struggling to gain traction. Despite AriBio’s ₩7 trillion-range licensing deal and back-to-back trillion-won agreements from Hanmi Pharmaceutical and Alteogen, investment sentiment across the sector remains frozen.

According to the Korea Pharmaceutical and Bio-Pharma Manufacturers Association on the 4th, South Korean pharma and biotech companies signed a total of 13 out-licensing deals from January through the 2nd of this month. Among these, the 11 deals with disclosed contract values total approximately ₩21.6637 trillion (approximately $16.0 billion). Given that last year’s disclosed annual out-licensing total was around ₩27.6598 trillion (approximately $20.4 billion), observers note that additional deals over the remaining four months could push this year to a record high.

However, the disconnect between deal-making achievements and stock performance is stark. The KRX Healthcare Index, which tracks the overall performance of South Korean pharma and biotech stocks, closed at 3,742.69, down 77.48 points (2.03%) from the previous session. The cumulative decline since the start of the year stands at 23.07%, with a 7.09% drop in the second half alone.

A String of Trillion-Won Deals

The largest out-licensing deal this year came from AriBio, which signed an agreement with China’s Fosun Pharma in May. The deal grants global exclusive rights to AR1001, an oral Alzheimer’s disease treatment candidate, with a maximum contract value of $4.7 billion (approximately ₩7 trillion / approximately $5.2 billion). AriBio will initially receive $60 million (approximately ₩90 billion) as an option fee for clinical development.

Alteogen has signed four contracts this year alone using its subcutaneous (SC) formulation conversion platform ALT-B4. The company struck a ₩420 billion (approximately $309.8 million) deal with GSK subsidiary Tesaro in January, a ₩867.5 billion (approximately $639.8 million) agreement with Biogen in March, and a ₩521.9 billion (approximately $384.9 million) contract with an undisclosed global pharmaceutical company last month. On the 2nd of this month, Alteogen added an option and license agreement with Switzerland’s Novartis worth up to $3.223 billion (approximately ₩4.4165 trillion / approximately $3.2 billion). Total contract value from ALT-B4 deals this year alone reaches approximately ₩6.2 trillion (approximately $4.6 billion).

Hanmi Pharmaceutical also closed two major deals. In June, the company transferred sonepglutide, a gastrointestinal disease treatment candidate, to U.S.-based Eli Lilly for up to $1.26 billion (approximately ₩1.8973 trillion). Last month, Hanmi signed a deal with Roche subsidiary Genentech to transfer global development, manufacturing, and commercialization rights — excluding South Korea — for HM17321, an obesity and metabolic disease treatment candidate, in a contract worth up to $2.3 billion (approximately ₩3.5 trillion).

Other notable deals include Curacle and Maptix out-licensing MT-103, a retinal disease treatment candidate, for approximately ₩1.5636 trillion (approximately $1.2 billion), and Oscotec transferring sevidoflenib, an autoimmune disease treatment candidate, for approximately ₩1 trillion (approximately $737.6 million). NeoImmuneTech transferred NT-I7, an immune reconstitution therapy candidate, for approximately ₩366.9 billion (approximately $270.6 million).

The Gap Between Contract Value and Actual Cash Inflow

It is important to note that contract totals do not translate directly into cash on company balance sheets. The vast majority of contract value consists of milestone payments that are only received if clinical development, regulatory approval, and commercialization proceed as planned. While the total value of the 11 disclosed deals exceeds ₩21 trillion, the combined upfront payments from the 7 deals that disclosed such figures amount to just ₩574.4 billion (approximately $423.7 million).

The concentration of total contract value in a handful of mega-deals also warrants attention. Since many contracts represent maximum potential value contingent on meeting all development, approval, and commercialization milestones, analysts caution that investors should examine upfront payment sizes and subsequent clinical progress alongside headline figures.

Industry observers see potential for out-licensing to reach ₩30 trillion (approximately $22.1 billion) this year, citing a packed calendar of global conferences and technology partnering events in the second half, as well as companies like D&D Pharmatech and LigaChem Biosciences being mentioned as additional technology transfer candidates.

Liquidity Deterioration Weighs on Stocks — Catalyst-Rich Names to Lead Any Rebound

Securities analysts attribute the weakness in South Korean biotech stocks to deteriorating market liquidity and reduced capital availability amid high interest rates, rather than any fundamental technology concerns. As funds have concentrated in semiconductor and large-cap names in the South Korean equity market, liquidity in the KOSDAQ and biotech sectors has weakened. The unwinding of credit and leverage positions has also concentrated selling pressure on high-volatility biotech stocks.

Kim Sun-ah, an analyst at Hana Securities, noted that “rising interest rates have acted as resistance, limiting the upside for biotech stocks.” She expects stock performance to differentiate going forward, with companies that convert out-licensing deals into tangible results standing out. Companies that progress into clinical development and receive milestones after technology transfers, as well as those whose royalties and earnings from global sales become increasingly concrete, are likely to attract attention.

“When the market rebounds, stocks that had positive catalysts will inevitably respond fastest and post the strongest gains,” Kim said.

The Patent Cliff Creates Opportunity

South Korean biotech’s out-licensing success is also tied to shifts in the external environment. As major global pharmaceutical companies face patent expirations on key drugs, they are actively seeking new drug candidates from external sources. A Korea Pharmaceutical and Bio-Pharma Manufacturers Association official explained, “As South Korean companies strengthen their competitiveness through R&D investment, demand from overseas pharmaceutical companies seeking to in-license technology is increasing.”

However, some observers express regret that South Korean companies often fail to carry promising drug candidates through to full development. By transferring assets to overseas pharmaceutical companies at intermediate development stages, South Korean firms may receive upfront payments and milestones, but the ultimate commercial rewards accrue to foreign companies. Some voices in the industry argue that South Korean companies need to strengthen their capabilities to independently develop blockbuster drugs.

Meanwhile, in the global biotech market, Moderna’s cancer vaccine clinical success has served as a catalyst for investment sentiment. Moderna’s stock surged 177% in a single day after intismelan, the cancer vaccine being developed in combination with Merck’s (MSD) immuno-oncology drug Keytruda, demonstrated recurrence-prevention efficacy in a Phase 3 trial for skin cancer patients. However, experts advise against chasing Moderna’s already-soaring stock and instead recommend focusing on adjacent value-chain plays.

Ha Heon-ho, an analyst at Shinhan Securities, said, “Moderna has risen sharply in a short period, making entry at current levels burdensome. Investors should shift their attention to surrounding names that could benefit alongside Moderna’s cancer vaccine.” Given that Keytruda is the core partner drug for the cancer vaccine, some analysts suggest that Alteogen — which holds SC formulation conversion technology for Keytruda — stands to benefit most directly among South Korean companies.

Jung Yi-su, an analyst at IBK Securities, noted, “The expansion of the cancer vaccine adjuvant therapy market directly translates into expanded treatment indications for Keytruda and increased prescriptions of Keytruda Qurex, which incorporates Alteogen’s SC formulation technology.”