Daewoong shares up in domestic market after 21-month ban by U.S. trade panel

SEOUL -- A U.S. trade panel ruled in favor of Medytox, a major botulinum toxin (botox) producer in South Korea, and ordered a 21-month ban on products shipped by its domestic rival, Daewoong Pharmaceutical. The ban will take effect following the completion of a 60-day presidential review period.

Medytox welcomed the final ruling by the International Trade Commission (ITC), saying Daewoong was found to have stolen trade secrets. However, South Korean stock market investors showed a different response. Daewoo was up 13 percent to trade at 152,500 won ($139) as of noon on December 17, while Medytox rose 1.57 percent at 219,500 won.

Medytox has been locked in a patent war with Daewoong. Botulism toxins are produced by bacteria of the genus Clostridium. Medytox insisted its botulinum strain "Meditoxin" cannot be found in a natural state because it does not form spores. Daewoong unveiled Nabota for the treatment of frown lines in 2016 and secured approval from the U.S. Food and Drug Administration.

Medytox has filed lawsuits in U.S. and South Korean courts, accusing Daewoong of violating trade secrets by recruiting a former Medytox employee to steal information on strains and manufacturing. In a preliminary panel, Daewoo received a 10-year ban for misappropriating trade secrets, but the final ruling reduced it to 21 months.

Daewoong said in a statement on December 17 that it would immediately apply for an injunction to suspend the execution of ITC's ban and appeal to the Court of Appeals for the Federal Circuit. "We will use all legal means to reveal the truth and win," Daewoong said, describing ITC's decision as "an obvious error."

Daewoong insisted the final ruling only partially supported Medytox's claims as its botulinum strain is not a trade secret. The ITC's decision does not reflect "the actual truth at all," the company said, adding Medytox's manufacturing process has already been published in papers, so the mere similarity of some processes is not proof of infringement.

"All claims of Medytox regarding strains were found to be false," Daewoo said, calling for a close look by the U.S. administration and the appeals court to protect U.S. public interests and the choice of consumers. Daewoong said the ban would have a small impact on corporate management because Nabota has been sold in many other countries.

Medytox suffered a setback in the domestic market in June when South Korea's public health watchdog canceled approval for three botox products produced by Medytox for fabricating test data. The company's botox product, named Meditoxin in South Korea and Neuronox abroad, has been introduced mainly for the aesthetic treatment of facial wrinkles.