[Desk’s View] The hair loss coverage mirage

The government has announced that it will review expanding National Health Insurance (NHI) reimbursement to hair loss drugs. The market responded immediately. Hair loss-related stocks surged, and some even hit the daily upper limit.

What followed was a familiar scene. Companies marketing hair loss treatments rushed to issue press releases. Existing products were thrust back into the spotlight. Production facilities and raw-material supply capabilities secured years ago were once again put forward.

It is natural for companies to promote themselves when market interest rises. The problem is that, in the process, the line between expectation and reality becomes unclear.

The phrase appearing most frequently in the market these days is “hair loss beneficiaries.” However, a company that possesses a hair loss treatment is not necessarily the same as a company that will emerge as a winner in the hair loss market. Likewise, a company related to hair loss and a company that will benefit from hair loss reimbursement are not synonymous. The market is treating the two as though they belong to the same category. That is where the illusion begins.

Currently, South Korea’s hair loss treatment market is woven around generic versions of finasteride and dutasteride. Numerous pharmaceutical companies are already competing in this space.

If reimbursement does expand to these treatments, the market itself may grow. Patient access may also improve. However, market expansion does not automatically translate into improved profitability for every company.

The generic drug market is ultimately a battle for market share. Even if the number of patients increases, the number of competitors remains unchanged. Price competition also remains unchanged. For that reason, the argument that a company’s value should be re-evaluated simply because it sells hair loss drugs is unreasonable at best.

Even more concerning is the level of excessive optimism. The policy remains under review. The scope of reimbursement has not been determined. Eligibility criteria have not been finalized. Budget projections have not yet entered full-scale discussion. Nevertheless, the market is already behaving as though hair loss treatments are being reimbursed.

In reality, this is not the first time such a phenomenon has occurred. Whenever a new theme emerges, whether COVID-19 treatments, obesity drugs, or artificial intelligence (AI)-based drug development, similar patterns have emerged. Companies emphasized their connection to the trend, and investors reflected future expectations in stock prices.

The problem arises when expectations run ahead of implementation. Recently, generic products that have been on the market for years are once again being packaged as growth stocks, while manufacturing facilities established long ago are being introduced as though they represent entirely new business opportunities. The fact is, no new approvals have been granted. No breakthrough technologies have emerged. No business models have fundamentally changed. The only thing that has changed is policy expectations. No finalized policy. No increased earnings.

True competitive advantages lie elsewhere.

Next-generation formulation technologies, such as long-acting injectable therapies, capabilities in developing treatments based on novel mechanisms of action, global clinical-development expertise, manufacturing platforms, and production competitiveness, are the factors that can genuinely enhance corporate value. Merely possessing a single hair loss treatment product is unlikely to justify the same level of valuation.

Markets often react to specific keywords. Corporate value, however, is determined by competitiveness, not keywords.

The government’s reimbursement review for hair loss treatments is surely a significant step. It is an issue that requires consideration of both patients’ quality of life and the role of the national health insurance system. Investment decisions, however, are a separate matter.

There remains a considerable distance between selling a hair loss drug and becoming a winner in the hair loss market. What the market needs now is not promotion that fuels expectations. It is not the heat responding to the word 'hair loss,' but the verification of corporate competitiveness. Policy expectations will eventually fade, but a company's true capability remains, ultimately reflected in its performance and numbers.