COVID-19 vaccines spur Korean cold chain firms' growth

Korea Superfreeze's plants in Pyeongtaek, Gyeonggi Province / Courtesy of Korea Superfreeze

By Nam Hyun-woo

The ongoing development of COVID-19 vaccines by global pharmaceuticals is spurring expectations on logistics and equipment firms related to cold chain services, as those vaccines are anticipated to require low-temperature storage and transport to ensure desired efficacy when administered.

According to the Korea Exchange, the stock price of Dong-A Socio Holdings gained 17.3 percent from Nov. 2 to Monday.

Dong-A Socio Holdings is parent to Yongma Logis, which is a logistics unit specialized in cold chain transport of drugs. Yongma Logis assumes its share in the domestic cold chain-requiring drug transport market stood around 60 percent in 2018 and will grow to 70 percent this year.

The rally came amid pharmaceutical giant Pfizer's announcement on Nov. 9 that its COVID-19 vaccine showed efficacy and Moderna also said Monday its coronavirus vaccine is effective. However, they added their vaccines must be stored at low temperatures ― minus 70 degrees Celsius for Pfizer's vaccine and minus 20 degrees for Moderna's vaccine.

Though Moderna's temperature requirement is less difficult to meet ― general freezers for cold chain transport and storage can lower the temperature to minus 20 degrees Celsius ― industry officials said vaccine developments are boosting the general demand for cold chain in and outside of Korea.

"Yongma Logis has established logistics systems that can sort products at fixed temperature and monitor temperature changes in real time," Hi Investment & Securities analyst Lee Sang-hun said. "The company is anticipated to benefit from boosted demand for cold chain logistics following the COVID-19 pandemic."

Along with Yongma, GC LabCell is also drawing investors' attention for its bio logistics business. The company said its logistics service is based on Internet of Things technology enabling it to monitor a product's location, temperature and other status in real time.

Along with GC LabCell, Korea Superfreeze is among the frequently mentioned cold chain firms.

The company claims it is the only firm in Korea capable of transporting drugs at below minus 70 degrees Celsius, thus using its service will be the only option for delivering Pfizer's vaccine in Korea. However, this may not be the case, because Pfizer dropped hints at rolling out a vaccine in powder form next year.

If Pfizer's vaccine gets approval for its commercialization, Korea Superfreeze expects it will be able to deliver the vaccine in Korea from the second quarter of next year at the earliest. The company's No. 2 shareholder is SK Holdings with a 20 percent stake.

Along with logistics companies, firms making equipment for freezers and dry ice are also garnering attention.

IlShin Bio, which manufactures freezers for drugs, gained 29.89 percent to 8,170 won on Nov. 10 on expectations for Pfizer's vaccine. The company's shares were traded around 2,000 won in July but have been hovering over 6,000 won throughout this month.

Taekyung Chemical, which is Korea's leading dry ice maker, showed 22.45 percent and 30 percent jumps on Nov. 10 and Nov. 12, respectively.

"Global cold chain biopharmaceutical logistics firms such as Cryoport showed a noticeable growth in their share prices, raising expectations for the biopharmaceutical cold chain industry," Kiwoom Securities analyst Huh Hye-min said.

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