"Demanding Swift Rectification"... Korean Pharmaceutical Association Condemns Pharmaceutical Companies
Ilyang Pharmaceutical Halts Sales Just Five Days After Launch
Fair Trade Commission: "Investigation Will Proceed If Violations Are Found After Fact-Finding"
Health functional foods (HFF) that were stocked at the lifestyle goods store Daiso had their sales halted just five days after launch, and the Fair Trade Commission (FTC) is reportedly investigating whether there was a violation of the Fair Trade Act.
According to a report by Money Today on the 9th, the FTC has recently been verifying facts with industry insiders to determine if there is any possibility of a Fair Trade Act violation related to Ilyang Pharmaceutical’s withdrawal from Daiso.
Daiso began selling about 30 types of HFF products from Ilyang Pharmaceutical and Daewoong Pharmaceutical at over 200 stores nationwide starting from the 24th of last month. The products supplied by Ilyang Pharmaceutical to Daiso included ▲Vitamin C chewable tablets ▲Saw Palmetto Zinc ▲Popping Vitamin C ▲W Probiotics ▲Vitamin D 2000 IU ▲Calmadi Zinc Manganese ▲Eat & Q ▲Low Molecular Collagen 1250 ▲Vitamin C 1000mg, among others. According to Daiso’s policy, these products were launched at two uniform prices of 3,000 KRW and 5,000 KRW for a one-month supply, which was about one-sixth the price of the same products sold on the company’s own online mall. The pharmaceutical companies explained that they were able to lower the prices by reducing secondary ingredients and content while minimizing packaging costs.
In response, some pharmacists began discussing a 'general over-the-counter (OTC) boycott' against specific pharmaceutical companies. Kwon Young-hee, the president-elect of the Korean Pharmaceutical Association, also held meetings with these pharmaceutical companies on the 26th and 27th and issued a statement on the 28th, strongly condemning the marketing tactics that appear to supply lifestyle goods stores at prices cheaper than pharmacies by exploiting the trust built over decades through distributing HFFs to pharmacies. She urged for swift corrective action.
A health functional food product is displayed at a Daiso store in the Seoul metropolitan area. Photo by Kim Heungsoon
Ultimately, Ilyang Pharmaceutical decided to halt sales of nine types of its HFF products stocked at Daiso on the 28th of last month. They stated that they had "no separate position," but opinions were raised that the Korean Pharmaceutical Association might have pressured the pharmaceutical companies to restrict HFF sales by leveraging their status. According to Article 45 of the Fair Trade Act, one must not unfairly use their trading position to transact with the other party or interfere with the business activities of other operators. An FTC official reportedly stated, "Typically, the process involves fact-finding and, if there is suspicion of a legal violation, an investigation is initiated," adding that this case will proceed accordingly.
Consumer groups have voiced opposition against the pharmaceutical companies and the Pharmaceutical Association. The Korea Consumer Organization issued a statement on the 7th, pointing out that "the HFF products sold at Daiso differ in ingredients, content, and origin, and unlike existing products sold in 36-month supplies, these are sold in one-month units to reduce the price burden." They criticized that "an organization representing the interests of a specific professional group opposed the sales and announced a boycott against the pharmaceutical companies, which ultimately led to one pharmaceutical company announcing the withdrawal of HFF sales."
They further stated, "This is clearly an unfair measure restricting consumers’ right to choose," and "limiting legitimate distribution for unjust reasons undermines fair market order and infringes on consumer rights." They emphasized, "We believe that a market environment where products of various prices and qualities coexist and fair competition is freely conducted benefits both consumers and businesses," and stressed, "Unfair trade practices that disrupt market order and restrict consumer choice must be strongly prevented."
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