[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 such as the U.S., 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 the product, and obtaining approval requires significant time and funding, the company is believed to be 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 origin 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 at DongBang Medical Co., Ltd. stated, “We are currently exploring entry into the toxin business by acquiring equity stakes in companies that possess bacterial strains,” adding, “We have been approaching several companies cautiously since last year.”

Botulinum toxin is a product extracted from bacterial strains; since the raw material itself consists of live 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 freely use each other’s strains; moreover, it is difficult to manufacture the product without a strain of clearly verified 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 source 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 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 obtained the bacterial strain independently.

The legal dispute between the two companies is ongoing, and recently, Medy-Tox Inc.—alleging the misappropriation of the botulinum toxin strain and manufacturing technology—increased its claim for damages against DAEWOONGPHARMACEUTICAL tenfold, from 50 billion won to 500 billion won. In February 2023, the Seoul Central District Court issued a first-instance ruling partially against DAEWOONGPHARMACEUTICAL, 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 main reason DongBang Medical Co., Ltd. is considering entering the toxin market. DongBang Medical Co., Ltd. currently operates a core business manufacturing 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 top market share in Korea for disposable Korean medicine acupuncture needles and disposable cupping cups.

Since its establishment in 1985 as Dongbang Acupuncture Needle Manufacturing, DongBang Medical Co., Ltd. has primarily manufactured traditional Korean medical devices such as acupuncture needles and cupping sets, but in 2016, it began its filler business and made a full-scale entry into the beauty industry. 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., it is an advantage that it can easily leverage the distribution network it has established primarily for aesthetic medical devices, and that it can cross-sell toxin to existing clients who already use fillers. Above all, the company anticipates being able to offer package sales of “fillers, cannulas, and 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 botulinum toxin, currently sells products such as fillers, skin boosters, and masks, and Hugel, Inc. also sells not only botulinum toxin but also fillers and skin boosters.

The Domestic Market Is a Red Ocean… Success Ultimately Lies 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, competition is fierce among well over 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.

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