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| Former Kolon Chairman Lee Woong-yeol walks into Seoul Central District Court to attend a hearing, May 16. Yonhap |
By Kwak Yeon-soo
Shares of Kolon Corp. and its bio-pharmaceutical units plunged Tuesday as the Ministry of Food and Drug Safety canceled the license for its gene therapy drug Invossa over the mislabeling and false reporting of an ingredient used.
The holding company of the mid-tier textile- and pharmaceutical-centered conglomerate saw its shares close at 17,200 won ($14.5), down 9.71 percent from the previous day. This was its lowest stock price since Nov. 16, 2012.
The Korea Exchange announced the suspension of trading for Kolon Life Science and Kolon TissueGene, the drugmaker's U.S. biopharmaceutical affiliate, after the drug authorities announced the revocation of Invossa's license.
The suspension was effectuated after the two companies' stock prices fell dramatically during midday trading.
Kolon Life Science suffered a 9.73 percent drop to 25,500 won while Kolon TissueGene plunged by 16.04 percent to 8,010 won.
"Because the companies are now considered dangerous for investors, the fall in their stock prices triggered a temporary suspension in trading," a Korea Exchange monitoring official said.
The market cap of Kolon TissueGene, which stood at around 2 trillion won before the Invossa fiasco in late February, dropped to 489 billion won as of Tuesday.
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| Kolon Life Science headquarters in western Seoul / Yonhap |
A material used in Invossa came from kidney cells instead of from cartilage as stated in a document submitted for approval by the drug maker, according to the ministry.
The regulatory body has also requested a criminal investigation and will upgrade its drug review process to prevent similar incidents.
Market analysts remained cautious over the announcement, although saying it may bring negative sentiment to other pharmaceutical companies.
"It's really risky to comment on the Invossa case because it's such a grave matter," said Seon Min-jeong, an analyst at Hana Financial Investment. "This case may not affect other pharmaceutical companies in the short term, but whether or not it will have negatively impact investor sentiment on the bio-pharma sector is hard to tell."
Korea Pharmaceutical Bio-Pharma Manufacturers Association released a statement, saying "In all cases, the safety of medicinal use is of paramount importance and strict ethical guidelines need to be adhered to. However, Kolon Life Science's Invossa fiasco devalued this principle. We hope this does not lead to losing overall trust in the industry."
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