[Edaily Reporter Kwon Oh Seok ] Financial regulators have rolled up their sleeves to curb the controversy over “rosy disclosures” that are rampant in the pharmaceutical and biotech industries. On the 30th, the Financial Supervisory Service (FSS) announced a comprehensive plan to transform obscure pharmaceutical and biotech disclosures into information that investors can understand and to standardize guidelines for media coverage and investor relations (IR) in general. Given that the pharmaceutical and biotech industries are effectively the backbone of the KOSDAQ market, the market is growing increasingly optimistic that this move could directly lead to structural improvements in the KOSDAQ market and the restoration of investor confidence.

According to the comprehensive measures announced that day, when determining the offering price during an IPO, companies must explain the key assumptions used to calculate enterprise value—such as the expected market size, the probability of clinical trial success, approval and review risks, and development period and costs—in a standardized manner. This is because enterprise value is determined by highly volatile future events, such as the success of clinical trials or the conclusion of technology transfer agreements.
Details of technology transfer agreements must be disclosed in detail, including △upfront payments △development milestones △approval and sales milestones △royalties. Officials explain that this will allow stakeholders to understand the substance of the agreement by distinguishing between funds received now and those to be received in the future, in addition to the contract’s overall size. Disclosures will be improved to allow verification of the full history—including development discontinuation, technology transfer, approval, and sales—not only for products currently in development but also for all product lines previously announced as being in development. Furthermore, key information must be provided first through official disclosures, and the media should refrain from using exaggerated or subjective expressions such as “dream” or “miracle.”
While the pharmaceutical and biotech industry agrees with the direction of these disclosure improvements, it is calling for a balance with the protection of trade secrets. An official from the Korea Pharmaceutical and Bio-Pharma Association stated, “Enhancing investor understanding through disclosures is clearly necessary to build trust in the capital market,” but added, “If detailed technical information or the contents of negotiations are disclosed excessively, key information of individual companies could be unduly exposed; therefore, a balance is needed to protect trade secrets while conveying core information essential for investment decisions in an easily understandable manner.”
Experts believe this disclosure reform will contribute to improving the KOSDAQ market’s fundamentals and restoring confidence. The pharmaceutical and biotech sectors are central to KOSDAQ’s growth, with companies such as Alteogen Inc.(196170)—currently the top-ranked firm by market capitalization on KOSDAQ—as well as HLB INC.(028300), PharmaResearch(214450), and ABL Bio Inc.(298380) all ranking among the top 10 by market capitalization. Analysts suggest that increased disclosure transparency, which would alleviate information asymmetry, could breathe new life into the stagnant KOSDAQ market.
On that day, the KOSDAQ index closed at 644.78, down 2.70% from the previous trading day, breaking below even the 650 mark. Amid efforts by financial authorities to tighten delisting criteria and introduce a segment-based promotion and demotion system, some observers suggest that improving the disclosure system could serve as a “catalyst” for revitalizing the market.
Hwang Se-woon, a senior research fellow at the Korea Capital Market Institute, stated, “Disclosure is one of the most important channels for providing corporate information. For information of great significance, it is reasonable to use the disclosure channel, which ensures it is conveyed simultaneously to all investors,” adding, “This will have a positive impact on improving trust in the KOSDAQ market.”