TissueGene, a U.S.-based biopharmaceutical affiliate of the Kolon Group, saw its stocks trade low on Monday, the first day they were floated on the tech-heavy Kosdaq.

TissueGene’s shares started off with 52,000 won ($46.6) per share on Monday morning. However, the stock price fell to around 43,500 won as of 11:50 a.m. Although it was higher than the initial public offering price, the performance was weaker than expected, analysts said.

The company set the initial public offering price at 27,000 won, based on an estimated demand from institutional investors last month. A total of 655 institutional investors have made requests for how many shares they will buy for how much. Their participation had a 299.49-to-1 competition rate. The combined deposits for promised purchases amounted to about 6.06 trillion won, the second largest after the IPO of Netmarble Games, a mobile game publishing company, earlier this year.

The decline in TissueGene’s shares on the day of Kosdaq debut was attributed to weaker investment sentiment in the pharmaceutical and biopharmaceutical industries, analysts said.

Many local drugmakers have started to expand to overseas markets, including the U.S. and EU, with large-sized sales contracts with multinational pharmaceutical firms. The following cancellations of some contracts and sluggish performances of pharmaceutical and bio-businesses cooled down investors’ zeal on these stocks, they said.

Indeed, shares of drugmakers and biopharmaceutical firms recently plummeted after blockbuster contracts involving Hanmi Pharm, Dong-A ST and Yuhan were canceled one after another.

“It may be too early to say this, but I think local drugmakers and biopharmaceutical firms have lost power to drive an explosive growth that they used to have in the past,” said an analyst, who wished not to be named. “When the two industries enjoyed an investment boom, they received much attention due to their expansion in the global market and the robust exports of cosmetic raw materials to China. It is now hard to see them in the same way.”

The local pharmaceutical and biopharmaceutical sector should be now regarded as having the same investment level with other sectors on Kospi and Kosdaq, he added.

Established in 1999, TissueGene is a subsidiary of Kolon Life Science, the owner of rights to sell new cell gene therapy Invossa for osteoarthritis in the U.S. and Europe. With an aim to get an FDA’s approval in 2022, the company has been carrying out clinical trials on Invossa in the U.S. since 2006. The phase 3 clinical test is expected to finish by 2021. In Korea, the company gained a sales approval for Invossa in July and plans to launch the product later the month.

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