Medytox-Daewoong Botox feud flares anew with 10-fold damages claim
Medytox has raised its damages claim tenfold against Daewoong Pharmaceutical as their nine-year dispute over botulinum toxin technology continues in Korean courts.
Medytox, left, and Daewoong Pharmaceutical company logos seen on their company buildings in 2020YONHAP
The nine-year battle between Medytox and Daewoong Pharmaceutical over the origins of their botulinum toxin strains shows no sign of ending.
In fact, it may have entered a renewed state of stalemate.
While the dispute has been settled in the United States, the legal battle in Korea is growing larger. Medytox recently increased the damages it is seeking from Daewoong Pharmaceutical tenfold, from 50 billion won ($37 million) to 500 billion won, according to a regulatory filing uploaded by Daewoong Pharmaceutical on Wednesday.
Botulinum toxin reduces muscle movement and is used for cosmetic purposes, such as smoothing wrinkles, as well as for treating conditions including muscle spasms. It is commonly known as Botox, the brand name originally developed by the U.S. pharmaceutical company Allergan.
Medytox was the first Korean company to enter the domestic botulinum toxin market. It launched Meditoxin, the first domestically developed product, in 2006 and became the country's market leader in 2009. Daewoong Pharmaceutical launched Nabota in 2014.
The straining fight begins
The dispute began in October 2017, when Medytox filed a criminal complaint against Daewoong Pharmaceutical, alleging that Daewoong had misappropriated Medytox's botulinum toxin strain and manufacturing process.
A botulinum toxin strain is a particular genetic lineage of Clostridium botulinum, the bacterium that produces botulinum toxin, and serves as the biological starting material from which manufacturers produce botulinum toxin drugs.
Medytox argues that Daewoong Pharmaceutical obtained Medytox's strain and manufacturing know-how through a former Medytox employee. Medytox pointed to genetic similarities between the companies' strains as evidence supporting its claim, while Daewoong Pharmaceutical countered that it had independently isolated its strain from soil near a livestock barn in Yongin, Gyeonggi. Medytox also filed lawsuits in Korea and the United States that year.
The U.S. civil case was dismissed on jurisdictional grounds, but the dispute continued in 2019 when Medytox and Allergan, the former's U.S. partner at the time, filed a complaint with the U.S. International Trade Commission (ITC) against Daewoong and its U.S. distributor, Evolus.
The ITC recognized that Daewoong had misappropriated trade secrets related to the manufacturing process and imposed a 21-month import ban on Nabota in 2020. It did not, however, recognize the bacterial strain itself as a trade secret. Evolus avoided the sales ban the following year after agreeing to pay Medytox and Allergan $35 million as well as royalties on sales.
The legal battle in Korea is continuing. Prosecutors cleared Daewoong Pharmaceutical in 2022 of allegations that it had obtained Medytox's core technology, citing insufficient evidence, but the case is being reinvestigated following Medytox's appeal.
Medytox partially prevailed in the first trial of the civil case in 2023, when the court ordered Daewoong Pharmaceutical to pay 40 billion won in damages and hand over the disputed strain. The court ruled that Daewoong Pharmaceutical had attained Medytox's trade secrets and cut its development period by three months.
Daewoong appealed, and the case is now before an appellate court.
The key issues include the origin of the strain, whether it qualifies as a trade secret and whether Daewoong Pharmaceutical infringed on Medytox's manufacturing process. Daewoong maintains that it independently obtained both the strain and the manufacturing technology.
“There are many issues that the court needs to examine, and there are also numerous claims and pieces of evidence that both sides need to substantiate,” a pharmaceutical industry source said.
Nabota has grown substantially during the nine-year dispute, which has provided grounds for a damages suit by Medytox.
Nabota's cumulative sales surpassed 1 trillion won this year, and the product has climbed to No. 2 in the U.S. cosmetic botulinum toxin market, with a 13 percent share in the local market.
Medytox's decision to raise the claim reflected Nabota's confirmed sales volume and revenue from 2014 through July last year, as well as an extended period for calculating damages. The 500 billion won claim represents only part of the damages it could potentially seek, according to Medytox.
Based on Daewoong Pharmaceutical's regulatory filings, 500 billion won would amount to 44 percent of the company's total equity.
At the same time, Medytox has also been expanding its business in Korea and elsewhere in Asia while preparing to enter the U.S. market. Eugene Investment & Securities forecasts Medytox to generate 73.3 billion won in domestic botulinum toxin sales and 88.8 billion won in overseas sales this year.
Daewoong Pharmaceutical countered that it will "not respond to attempts to inflate the amount being claimed and appeal to public opinion outside the courtroom,” according to a company source.
Medytox, top, and Daewoong Pharmaceutical company logos seen on their buildings in 2020YONHAP
The one long battle
The problem is that prolonged litigation is weighing on both companies' valuations.
Medytox spent 45 billion won on litigation last year, including its legal battle with Daewoong, equivalent to about 18 percent of its annual revenue, according to Eugene Investment & Securities.
Lee Da-bin, an analyst at Eugene Investment & Securities, expects a ruling in the second trial of the domestic lawsuit against Daewoong Pharmaceutical to come between the end of this year and early next year.
“Once the outcome is confirmed, some of the related uncertainty could ease,” Lee said.
Mirae Asset Securities also reflected uncertainty surrounding Daewoong Pharmaceutical's litigation with Medytox when calculating its target price for Daewoong in May and applied a valuation benchmark 20 percent below the average for major Korean pharmaceutical companies.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
