[5-Year Botox War] Medytox Wins... US ITC Rules "Daewoong Pharmaceutical Infringed Trade Secrets" (Summary)

US ITC Preliminary Ruling... Daewoong Pharmaceutical's 'Nabota' Recommended for 10-Year Import Ban
Medytox "Strain Theft Proven" VS Daewoong Pharmaceutical "Clear Misjudgment"

[Asia Economy Reporter Cho Hyun-ui] Medytox and Daewoong Pharmaceutical, who have been engaged in the 'Botox War' for five years, appear to have Medytox as the winner. The U.S. International Trade Commission (ITC) concluded that "Daewoong Pharmaceutical infringed trade secrets," giving Medytox the upper hand for now. Medytox has claimed that Daewoong Pharmaceutical stole its botulinum strain, while Daewoong Pharmaceutical has firmly denied this, stating it is a different strain.

◆ U.S. ITC Sides with Medytox = The ITC issued a preliminary ruling recommending a 10-year import ban on Daewoong Pharmaceutical's botulinum toxin product, 'Nabota.' This means the product will be excluded from the market as it is the result of unfair competition violating Section 337 of the Tariff Act.

The final ruling is scheduled for November. The ITC commission will make a final decision by either overturning, modifying, or upholding the preliminary ruling in whole or in part, followed by the President’s approval or veto to finalize the decision.

Since 2016, Medytox and Daewoong Pharmaceutical have been disputing the origin of the botulinum strain used in their botulinum toxin products, commonly called 'Botox.' Medytox has alleged that a former employee stole the entire manufacturing process and technical documents of the botulinum toxin and handed them over to Daewoong Pharmaceutical. Medytox filed civil and criminal lawsuits domestically and, in January last year, filed a complaint with the ITC against Daewoong Pharmaceutical and Evolus, the U.S. distributor of Nabota.

◆ "Strain Theft Proven" VS "Clear Misjudgment" = Although the ITC preliminary ruling is not binding, it is rarely overturned in the final ruling, so this decision is expected to determine the fate of both companies. Medytox stated, "Daewoong Pharmaceutical’s claims have been proven false," while Daewoong Pharmaceutical called it a "clear misjudgment" and announced plans to proceed with an appeal.

A Medytox representative said, "This ruling clearly proves that Daewoong Pharmaceutical stole Medytox’s strain and manufacturing technology," adding, "It has been objectively proven that Daewoong Pharmaceutical has falsely informed regulatory authorities and customers in multiple countries about the origin of the strain and manufacturing process for years."

On the other hand, a Daewoong Pharmaceutical representative said, "It appears the administrative judge mistakenly accepted false documents and testimonies submitted by Medytox as truth," and added, "The allegations of technology theft, jurisdiction, and trade secret recognition are clear misjudgments, so we will actively clarify these points and ensure victory in the final ruling."

◆ Fierce Battle Over the 'Global Big Market' U.S. = The reason the two companies have been in conflict for years is that securing the U.S. market, which accounts for more than half of the global botulinum toxin market, is crucial. The U.S. botulinum toxin market is worth about 2 trillion KRW, more than 12 times the domestic market size of 150 billion KRW. Daewoong Pharmaceutical’s Nabota received FDA approval in February last year, while Medytox has yet to enter the U.S. market. Medytox faced its biggest crisis since its founding last month when its domestic product approval was revoked due to document manipulation and other reasons.

Medytox is expected to seek recovery through claims for damages following this preliminary ruling. Medytox plans to submit the ITC ruling documents to ongoing civil and criminal lawsuits in Korea. A Medytox official said, "We are confident that domestic courts and prosecutors will reach the same conclusion as the ITC ruling."

With Medytox gaining the upper hand, the domestic botulinum toxin industry could be affected comprehensively. The Ministry of SMEs and Startups may resume administrative investigations into the origin of Daewoong Pharmaceutical’s strain, and Medytox, which was the first to introduce Botox products domestically, may demand investigations into the strain origins of other companies besides Daewoong Pharmaceutical. Since Korean companies are leading the global botulinum toxin market, this preliminary ruling is being closely watched by the industry as it could influence future market dominance.