November 10, 2016 / 4:20 AM / 3 years ago

Samsung BioLogics shares rally on debut as pharma stocks cheer Trump win

SEOUL (Reuters) - Shares in Samsung BioLogics Co (207940.KS), Samsung Group’s contract biotech drug manufacturing arm, rallied to rise 5 percent in their debut on Thursday, mirroring the sector’s jump overnight after Donald Trump’s U.S. presidential election.

The stock was trading up 5.2 percent at 142,000 won as of 0324 GMT after opening slightly weaker versus the IPO price of 136,000 won and hitting the day's low of 125,500 won. The wider market .KS11 was up 1.9 percent.

Fund managers said the stock price gains of BioLogics, which raised 2.25 trillion won ($1.97 billion) in South Korea’s second-largest ever share sale, reflected the removal of sector-specific uncertainties following Republican Trump’s presidential win.

“Pharmaceuticals and biosimilar shares are rising across the board as the perceived risk of Hillary Clinton becoming the U.S. president has been removed,” said Kim Hyun-su, fund manager for IBK Asset Management, adding that Clinton had expressed a relatively firm stance on lowering drug prices, seen as a downside risk for the sector.

South Korea’s Hanmi Pharm Co Ltd (128940.KS), which signed an up to $4.2 billion deal with Sanofi SA (SASY.PA) late last year to develop diabetes treatments, saw its shares jump 9.5 percent on Thursday. And Celltrion Inc 068270.KQ, which develops lower-cost copies of complex biotech drugs called biosimilars, climbed 4.2 percent.

The strong showing was also helped by a remarkable snapback in Asian shares overall on Thursday from the losses sustained the previous day on Trump’s unexpected win.

Samsung BioLogics’ IPO had priced at the top of an indicative range, making the shares vulnerable.

“The IPO price reflected all of the upside such as future orders expected to be won, but not the risks, such as unforeseen changes,” said Shin Jae-hoon, analyst at eBEST Investment & Securities, referring to the weak opening of Samsung BioLogics’ shares.

The IPO injected 1.5 trillion won in fresh capital to Samsung Group’s [SAGR.UL] biopharmaceuticals arms as South Korea’s biggest conglomerate seeks new sources of revenue.

With the funds, BioLogics plans to become the world’s biggest contract maker of biotech drugs, while also providing more capital to subsidiary Samsung Bioepis, which develops biosimilars.

BioLogics and Bioepis are central to Samsung Group’s pharmaceuticals push, championed by de facto leader Jay Y. Lee.

Reporting by Joyce Lee; Editing by Stephen Coates and Muralikumar Anantharaman

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