Medical AI Stocks Thrive Amid Market Downturn in October

In October, amidst a broader downturn in the KOSPI and KOSDAQ markets, encompassing pharmaceutical and biotech sectors, stock prices, and market capitalization, medical artificial intelligence (AI) related stocks have emerged as a standout theme within the pharmaceutical and biotech markets.

According to the Korea Exchange's data released on November 2nd, the market capitalization of 47 pharmaceutical and biotech companies in the KOSPI pharmaceutical index decreased from approximately $86.2 billion on January 2nd to about $76.2 billion on October 31st, marking a reduction of roughly $10 billion. The market capitalization of 117 pharmaceutical and biotech companies in the KOSDAQ pharmaceutical index also experienced a decrease, moving from about $29.3 billion on January 2nd to approximately $28.9 billion on October 31st, resulting in a decrease of approximately $420 million.

Within the KOSPI, notable reductions in market capitalization were observed for companies like Samsung Biologics ($6.36 billion), SK Bioscience ($750 million), Daewoong Pharmaceutical ($532 million), and Celltrion ($486 million). Similarly, within the KOSDAQ, market capitalization declined for companies such as Nature Cell ($371 million), Seegene ($275 million), and ST Pharm ($246 million).

Nevertheless, during this period, medical AI stocks demonstrated remarkable performance, recording minimum increases of 173.6% and maximum increases of 368.4% in their stock prices. Market capitalization also exhibited substantial growth, ranging from 217.4% to 665.6%.

Notably, DR Tech, a company specializing in medical AI and digital diagnostic imaging solutions, witnessed its stock price rise from $1.04 on January 2nd to $2.86 on October 31st, marking a notable 173.6% increase. DR Tech is renowned for its 'C-arm' equipment utilized in orthopedic and surgical procedures.

In a similar vein, JLK experienced significant growth, with its stock price surging from $2.49 to $18.05, reflecting a substantial gain of 626%. Its market capitalization also soared from $4.06 to $291.79, an impressive increase of 665.6%, the highest among the mentioned stocks. JLK is the developer of the AI solution for classifying stroke types, known as 'JBS-01K.' The company recently announced that JBS-01K has been granted a non-reimbursable fee of $41.09 and disclosed plans to initiate the FDA approval process, with revenue generation in the United States anticipated from 2024.

Vuno, known for its DeepCARS system, which predicts the risk of cardiac arrest within 24 hours, saw a 339% increase in its stock price. Securities industry analysts also anticipated Vuno's potential return to profitability by the third quarter of the following year.

Lunit, a participant in the "Cancer Moonshot" project in the United States, also witnessed a surge in its stock prices. Its shares increased by 368.4%, and its market capitalization soared by 357.7%. The company's mission is to contribute to the "cancer conquest" through AI applications in diagnosis and the discovery of next-generation cancer biomarkers. Additionally, other companies in the medical AI sector, including Selvas Healthcare, Deepnoid, and Selvas AI, also experienced an upward trend in their stock prices.

Industry experts remain optimistic about the future of medical AI. On October 26th, the Ministry of Health and Welfare held discussions within the Health Insurance Policy Review Committee, laying the groundwork for a health insurance pricing policy for medical AI. This development is expected to encourage companies to enter the market more actively and generate revenue. In a report on the medical AI sector, Hana Securities analyzed, "With the government advancing improvements in digital healthcare systems and support policies, the growth of the medical AI industry is expected to continue."