Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
Orion stock price plunges after firm's biotech investment
The headquarters of confectionary company Orion in Seoul's Yongsan District / Courtesy of Orion
By Yi Whan-woo
Orion, a leading confectionary company, experienced a more than a 20 percent fall in its stock price, after the firm decided to expand into the biotech industry.
The KOSPI-listed company retreated 20.7 percent as of Friday, after it announced that it invested 550 billion won ($416.2 million) to acquire a 25 percent stake in pharmaceutical company LegoChem Bio, Jan. 15.
It was Orion’s first major M&A deal in the biotech sector, under its long-term strategy announced in 2020 to nurture next-generation growth engines.
As the largest shareholder of LegoChem Bio, Orion said that its management and operating systems remain unchanged upon incorporation of the pharmaceutical company.
Investor sentiment, however, weakened as it remains uncertain whether Orion can create synergy between its confectionary and biotech businesses.
The company ended at 92,800 won, Friday, up 1.42 percent from the previous day’s close, but far below Jan. 15 when it finished at 117,100 won.
The company fell as low as 89,700 won thereafter.
Retail investors were skeptical about Orion's upcoming performance on their online chat forum.
"I am bracing for the possibility of a further price fall," a user wrote.
Another user, apparently in a cynical tone, wrote, "I look forward to seeing expensive biotechnology being used to make Choco Pies," referring to Orion's signature chocolate-coated cake with marshmallow filling.
Joo Young-hoon, an analyst at NH Investment & Securities, said, “Investors are mainly concerned over whether the confectionary company can have stable cash flow after making a massive investment into an entirely new industry."
In China, in October 2020, Orion formed a joint venture with Shandong Lukang Pharmaceutical Group Medicine, focusing on vitro diagnostic trials for colorectal cancer.
Orion also founded Orion Biologics, a joint venture with HysensBio, in December 2022.