It was confirmed that the complaint filed with the Korea Fair Trade Commission over Daewoong Pharmaceutical(069620)'s "hub wholesaler" policy by the Korea Pharmaceutical Distribution Association has been closed.
In the industry, the view is that the Korea Fair Trade Commission (FTC) judged it difficult to see the matter as a formal review case, and there is also an assessment that the wholesale sector's months-long offensive has effectively lost momentum. Earlier, the distribution association held rallies and press conferences in front of Daewoong Pharmaceutical's headquarters, urging the company to scrap the hub wholesaler policy.
According to the pharmaceutical industry on the 13th, the Korea Fair Trade Commission (hereinafter the Korea Fair Trade Commission (FTC)) closed on Jun. 26 the complaint related to Daewoong Pharmaceutical that the Korea Pharmaceutical Distribution Association (hereinafter the distribution association) filed in May.
The pharmaceutical industry interprets the closure of the complaint as the Korea Fair Trade Commission (FTC) judging it difficult to view the matter as a formal review case.
Under its complaint-handling rules, the Korea Fair Trade Commission (FTC) may close administrative procedures if a case does not meet case requirements, falls under grounds for not initiating a review, or if there is insufficient objective evidence to prove the allegations, making it difficult to determine whether the law was violated.
The Korea Fair Trade Commission (FTC) does not disclose the specific grounds for closing individual complaints. When asked about the grounds for closure, the distribution association said it had "no comment."
Earlier, in Mar., Daewoong Pharmaceutical divided the country by regions and introduced a "block-type hub wholesaler" model that designates wholesalers meeting certain standards as hubs. The core is to simplify the multi-tier distribution structure and use artificial intelligence (AI)-based demand forecasting and a barcode delivery tracking system (TMS) to manage the location of medicines and regional inventories in real time.
The pharmaceutical wholesale sector pushed back strongly. The distribution association filed a complaint with the Korea Fair Trade Commission (FTC), arguing that Daewoong Pharmaceutical's termination of contracts with existing direct-transaction wholesalers and adoption of a hub wholesaler system centered on certain wholesalers could constitute unjust refusal to transact and discriminatory treatment under the Fair Trade Act.
The distribution association argued that if volumes are concentrated in specific wholesalers, small and midsize wholesalers' right to survive could be threatened and distribution order could be undermined.
Daewoong Pharmaceutical, for its part, has maintained that the hub wholesaler model is a sales policy to improve distribution efficiency. The company says it is strengthening delivery efficiency, inventory management, and cold chain management, and that existing wholesalers can also receive products through hub wholesalers, so it does not restrict market competition.
With the closure of the complaint, there is an assessment that Daewoong Pharmaceutical has, to some extent, been relieved of the burden from controversies over "undermining distribution order" and "gapjil." Still, discussions over pharmaceutical companies' attempts at distribution innovation and the modernization of the drug distribution structure are expected to continue.