[Edaily Reporter KIM SUNG-JIN ] Medical device specialist #DongBang Medical Co., Ltd. is considering entering the botulinum toxin business. Having grown by specializing in dermal fillers, cannulas, and various traditional Korean medicine devices, DongBang Medical Co., Ltd. plans to add the toxin business to its portfolio and transform itself into a total aesthetic solutions provider.

However, as the domestic toxin market is currently characterized by intense competition, the key question is how competitive the company can be as a late entrant. Competition is also gradually intensifying in major global toxin markets, including the United States, China, and South America.

Strains of unknown origin are “poison”… Beware of litigation risks

According to industry sources on the 3rd, DongBang Medical Co., Ltd. is currently considering entering the toxin business by investing in companies that already possess bacterial strains. Since securing a strain independently, developing it, and obtaining approval requires a significant amount of time and capital, the company is reportedly aiming for rapid market entry by investing in firms with established technological capabilities.

It is reported that DongBang Medical Co., Ltd. has been seriously considering entering the toxin business since last year. In particular, during the process of selecting candidate companies, the firm is reportedly prioritizing whether the source of the bacterial strain is clear and its legality is assured. While actual investment discussions have already taken place with several companies, the firm appears to be weighing its investment decisions somewhat conservatively to ensure the reliability of the bacterial strain’s origin.

An official from DongBang Medical Co., Ltd. stated, “We are currently exploring entry into the toxin business by acquiring equity stakes in companies that own bacterial strains,” adding, “Although we have been in discussions with several companies since last year, we are proceeding cautiously due to ambiguities regarding the origin of the strains.”

Botulinum toxin is a product extracted from bacterial strains, and since the raw material itself consists of living bacteria, it is considered a substance with a very high biological risk. In particular, bacterial strains are exclusive assets, much like patents, so competitors cannot use another company’s strain indiscriminately, and it is difficult to manufacture the product without a strain of clearly identified origin. Analysts note that even if a product is manufactured, it will be difficult to demonstrate competitiveness in marketing and sales without disclosing the definitive origin of the bacterial strain.

In fact, Korea’s leading toxin manufacturers— Medy-Tox Inc.(086900)and DAEWOONGPHARMACEUTICAL(069620)—have been locked in a dispute over the origin of these toxin bacterial strains for nearly a decade. In October 2017, Medy-Tox Inc. filed a lawsuit against DAEWOONGPHARMACEUTICAL seeking an injunction against the infringement of trade secrets, alleging that the bacterial strain used in Nabota—a toxin product launched by DAEWOONGPHARMACEUTICAL in 2016—had been leaked from Medy-Tox Inc. DAEWOONGPHARMACEUTICAL countered this claim, asserting that it had secured the bacterial strain independently.

The legal dispute between the two companies is ongoing, and recently, Medy-Tox Inc.—alleging the misappropriation of the toxin bacterial strain and manufacturing technology—increased the damages it is seeking from DAEWOONGPHARMACEUTICAL tenfold, from 50 billion won to 500 billion won. In February 2023, the Seoul Central District Court ruled in the first instance that DAEWOONGPHARMACEUTICAL was partially liable, ordering it to pay 40 billion won, among other measures; both sides have since filed appeals, and the appellate proceedings are currently underway.

An industry insider stated, “If a company rushes into the toxin business and gets caught up in a legal battle after the product is launched, it could face risks that are difficult to reverse.”

Beyond Fillers to Toxins… Setting Sights on “Total Aesthetics”

The synergy with its existing aesthetic business is cited as the primary reason DongBang Medical Co., Ltd. is considering entering the toxin market. DongBang Medical Co., Ltd. currently operates a core business producing various injection needles, such as fillers and cannulas, and also manufactures and sells traditional Korean medical devices, including acupuncture needles and cupping cups. The company holds the No. 1 market share in Korea for disposable traditional Korean acupuncture needles and disposable cupping cups.

Since its establishment in 1985 as Dongbang Acupuncture Needle Manufacturing, DongBang Medical Co., Ltd. has primarily produced traditional Korean medical devices such as acupuncture needles and cupping sets; however, it made a full-scale entry into the aesthetic business in 2016 by launching its filler business. As of the first half of this year, the filler business has established itself as a core business, accounting for the largest share (28.7%) of total revenue. Given the company’s prior success in entering new markets, analysts believe it is leveraging this experience to pursue further business expansion.

For DongBang Medical Co., Ltd., one advantage is the ease of leveraging the distribution network it has established primarily for aesthetic medical devices; another is the ability to cross-sell botulinum toxin to existing customers who already use fillers. Above all, the company anticipates being able to offer bundled sales packages consisting of “fillers, cannulas, and botulinum toxin.”

An official from DongBang Medical Co., Ltd. explained, “We export a significant amount of fillers and other products overseas, and we’ve received many requests to sell botulinum toxin alongside them.”

In fact, major domestic aesthetic companies are implementing strategies to expand their business portfolios centered on their flagship products. Medy-Tox Inc., which started with toxin, currently sells products such as fillers, skin boosters, and masks, and Hugel, Inc. also sells fillers and skin boosters in addition to toxin.

The Domestic Market Is a Red Ocean… Ultimately, the Battle Will Be Fought Overseas

The toxin market is experiencing rapid growth worldwide, and steady growth is expected in the long term as well. According to Medical Insight, an aesthetic market research firm, the global toxin market is projected to grow at an average annual rate of 8.8%. As of 2023, the global toxin market was valued at approximately $5.1 billion, and it is estimated to expand to $6.7 billion this year. By region, the North American market accounts for more than half of the total market and shows the highest demand, followed by Asia and South America, which are also considered key markets.

However, with a large number of new entrants emerging around the 2020s, it remains to be seen how competitive DongBang Medical Co., Ltd.—which is entering the market relatively late—will be able to become. In South Korea alone, more than 10 companies—including first-generation firms such as Medy-Tox Inc., Hugel, Inc., and DAEWOONGPHARMACEUTICAL, as well as CHONGKUNDANG, Huons Co., Ltd., PHARMARESEARCH BIO, and JETEMA Co.,Ltd.—are competing fiercely.

In particular, the domestic market is effectively saturated, leading to suggestions that the company will ultimately have to stake its survival on expanding into overseas markets. An industry insider stated, “The domestic market is valued at approximately 200 billion won, which is limited given the number of companies,” adding, “Price competition is also gradually emerging in overseas markets.”