With pharmaceutical and medical device stocks tumbling in Seoul, share prices of those that went public this year have also plunged.

Pharmaceutical firms and medical device manufacturers that had initial public offering (IPO) this year include Arlico Pharm (listed on Feb. 12), Dongkoo Bio & Pharma (Feb. 13), Enzychem Lifesciences (Feb. 21), Osteonic (Feb. 22), Sejong Medical (May 29), OliX Pharmaceuticals (July 18), and Union Korea Pharm (July 26).

Stock prices of Arlico Pharm, Osteonic, and Dongkoo Bio & Pharma plummeted by 47 percent, 41 percent, and 41 percent, respectively on Monday, compared to their IPO prices. Sejong Medical and OliX suffered 38 percent and 19 percent declines, over the same period. Union Korea Pharm and Enzychem dropped 5 percent and 4 percent, respectively.

Analysts attributed the stock falls to the Financial Supervisory Service’s stricter regulation on corporate accounting. The more stringent rules are also making it more difficult for small companies to benefit from the “technology exception policy,” which makes listing easier for firms with technological growth potentials.

“Companies that enjoyed the technology exception system have failed to keep their clinical trials schedules. With Samsung BioLogics’ accounting issue surfacing together, the regulator’s review for technology exception system has become stricter,” said an official at a brokerage.

When a company applies for listing, the Korea Exchange usually notifies approval or disapproval to the firm within 45 business days, according to the official. However, diagnostic device maker CytoGen has not received a response from the Korea Exchange even after 90 days since applying for IPO, he said.

“I guess that the regulator tightened assessment rules not only on technologies but marketability and accounting,” he added.

Among the 2018-listed firms, Enzychem, Osteonic, Icure Pharm, and OliX took advantage of the technology exception policy to go public on KOSDAQ. Enzychem moved from KONEX to KOSDAQ in February.

hwz@docdocdoc.co.kr

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