COVID-19 test kit market heats up

By Lee Min-hyung

Korea' biopharmaceutical industry has drawn a media frenzy here for companies' timely development of COVID-19 test kits.

Most market players, which did see much of the spotlight before the outbreak of the coronavirus pandemic, have achieved outstanding growth, intensifying competition in the new industry with huge potential amid fears over the potential outbreak of other global pandemics

As the market rivalry heats up, more and more “bio” companies are jumping on the bandwagon. Some of the first movers in the industry, such as Seegene and LabGenomics, are solidifying their position in the global COVID-19 test kit industry.

But it remains unclear whether latecomers will be able to report solid earnings in the market from the mid- to longer-term perspective even after the virus comes under control.

According to the Ministry of Food and Drug Safety, 92 Korean companies have received a license to export 166 types of COVID-19 diagnostic kits as of Sept. 15, with 16 of them receiving emergency use authorization from the U.S. Food and Drug Administration (FDA).

The overseas response has also been overwhelming, with Korean firms ― as of the end of August ― exporting test kits to around 150 countries since the outbreak of the pandemic earlier this year. The kits can test more than 196 million people.

Due to the unexpected pandemic factor, the companies have enjoyed a heyday, with their shares reporting three-digit growth in less than a year.

Seegene, one of the biggest COVID-19 test kit manufacturers here, said Monday it would supply its kits to overseas markets for a maximum of two years with the focus being on underdeveloped nations.

Toward this end, the company has teamed up with UNICEF. Seegene has recently signed a supply contract with the global humanitarian aid organization to supply its real-time reverse transcriptase polymerase chain reaction (RT-PCR) COVID-19 test kits. In April, the FDA granted a use authorization for the product.

“The latest contract will serve as a milestone for us to win more contracts globally,” Kim Sung-yeol, vice president of the firm's global business unit, said. “We hope more Korean firms build a bridgehead in the overseas public procurement market.”

The company reported 168.9 billion won in operating profit in the second quarter, a 50-fold growth compared with a year ago, establishing its position here as the emerging blue-chip biopharmaceutical stock.

A company official said it does not have any plans to diversify its revenue streams into other items, as the firm's expertise has been in developing virus test kits over the past two decades.

“We export the COVID-19 test kits to more than 70 countries and will keep our focus on developing the kit,” the official said.

LabGenomics is another leading player in exports. The company's stock was traded at around 4,000 won per share, but surged to as high as over 50,000 won as of early August on a rosy market response to its COVID-19 test kits in countries such as the U.S.

But concerns are some late movers and relatively smaller kit developers may end up losing their competitiveness in the market amid the fierce rivalry with bigger firms. Korean companies exported test kits worth 162.3 billion won in July, down 18.6 percent from the previous month, according to data from the Korea Customs Service. The figure is on a decline after hitting the ceiling when the global spread of the pandemic reached its peak.

For this reason, small- and medium-sized kit developers are busy developing their next platforms, bracing for the post-coronavirus world.

“Most small companies recently tapped into the COVID-19 test kit market, as part of efforts to diversify their revenue streams and raise their global profile by developing the kit and winning a license from authorities here and abroad,” an official from a small-sized company said on condition of anonymity.

For instance, Plexense, a local COVID-19 antibody kit developer, has expertise in developing and producing cost-effective immunoassay kits for clinical and biological testing. The company also succeeded in raising its profile by developing COVID-19 test kits and is awaiting their possible export to Columbia.

The company plans to continue enhancing its research and development capabilities for the development of similar kits even after the COVID-19 pandemic is over.