Disclosure requirements for pharmaceutical and biotechnology companies in Korea will become more specific at each stage of listing. The key changes involve clarifying the basis for corporate valuation during IPO pricing and transforming post-listing business reports into "investor-friendly" formats that present R&D status and future risks in an easily understandable manner.
The Financial Supervisory Service (FSS) announced on January 12 that it held its first meeting on January 10 with the launch of the "Pharma-Bio Disclosure Comprehensive Improvement Task Force." The task force comprises eight members including FSS officials, academics, industry representatives, and market experts.
The pharmaceutical and biotechnology sector accounts for a significant portion of the KOSDAQ market. According to the FSS, pharma-bio companies represented 29.9% (183.2 trillion won) of the KOSDAQ market as of last year. The sector also accounted for 47% (14.6 trillion won) of the initial public offering (IPO) market.
Despite this significance, critics have pointed out that pharma-bio companies are difficult for retail investors to understand due to the specialized nature and uncertainty of key information such as clinical trials and technology transfers. Corporate value is reflected more by future R&D outcomes than current performance, and the high complexity of interpreting disclosed information creates significant uncertainty in investment decisions.
In response, the FSS decided to comprehensively improve disclosure expressions, information structure, and documentation standards through the task force so that investors can understand core information about pharma-bio companies more intuitively.
At the listing stage, the disclosure approach centered on estimates will be reformed. The plan focuses on making the basis for corporate valuation more clearly visible in securities registration statements. The FSS will encourage companies to clearly explain what assumptions underlie the bases used in IPO pricing and how changes to those assumptions would affect future revenue.
After listing, improvements will ensure that R&D status and key information are conveyed more systematically through business reports. Previously, clinical stages were simply listed as Phase 1 → Phase 2 → Phase 3, or individual developments were mentioned in fragmented ways. Going forward, current status, future schedules, major risks, and expected outcomes will be presented in a "story format" that allows investors to understand the overall flow of a company's business.
The initiative will also focus on reducing gaps between media reports and official disclosures. An FSS official said, "In some cases, press releases used more positive expressions or excessively emphasized expectations compared to official disclosures, potentially causing confusion for investors." The FSS plans to work with the Financial Services Commission (FSC) and exchanges to develop improvement measures that ensure consistency among information companies release externally and minimize factors that could hinder rational investor judgment.
The FSS plans to establish a "disclosure guide" for pharmaceutical and biotechnology companies within the first half of this year.