Celltrion and other biotech shares plunged on August 13 after US investment bank Goldman Sachs reported negatively on biosimilars (a biologic medical product that is almost an identical copy of an original product) producer, Celltrion.
Celltrion closed at 260,500 won (US$217) on the securities market, down 4.23% from the previous trading day.
The plunge is attributable to Goldman Sachs’ lowering of Celltrion’s target price to 147,000 won (US$122.5), which is almost half of its current price, amid heightened insecurity including the drop of the Turkish lira.
According to a report by Kim Sang-soo, a researcher in Goldman Sachs, "In Europe, Celltrion’s Remsima has 54% and Truxima has 27% of market share, respectively, but this will not happen in the US. In the US, biosimilars are less attractive, have less institutional support, and partner companies are not active in marketing.”
Kim downgraded Celltrion by saying, "Celltrion's products are not the first biosimilars in the pharmaceutical industry.”
"The global biosimilars market will grow from US$1 billion in 2017 to US$14 billion in 2025, but price competition will be intensified as Chinese and Indian pharmaceutical companies join the competition, pushing down the biosimilars price in the European market.”
As a result, market sentiment towards Celltrion, the leader of the biotech stocks, and other bio shares cooled down.
In fact, Samsung Biologics, which is the second largest biopharmaceutical company in market capitalization, dropped 3.88% to 446,000 won (US$ 372) and other bio shares also fell including Celltrion Healthcare (-4.37%), Shillajen (-8.46%), Viro Med (-3.01%), Celltrion Pharm (-4.92%), Kolon Tissue Gene (-5.73%) and Hugel (-5.32%).