Korean pharmaceutical corporations are waging an all-out war against overseas counterfeits. As K-beauty gains popularity abroad, so-called copycat products are flooding the market. The range is wide, from aesthetic medical devices to hypodermic needles, Botox (botulinum toxin), and fillers.
The rise of counterfeits overseas means the stature of domestic brands has grown. But if patients use products with unclear manufacturing routes, side effects may occur, leaving corporations on edge. Some are taking legal action to protect brand image.
◇ Injunction lawsuits over trademark infringement in China
Huons Group affiliate Huons Meditech is struggling with counterfeits of its "multi-needle" (sterile injection needle). It is a product that delivers drugs evenly with multiple needles. The company detected that Chinese corporations including Company A were producing products that cleverly copied its sterile injection needles and filed a lawsuit in a Chinese court early this year to ban patent infringement. The first trial is underway. A Huons Group official said, "Unverified products can cause side effects."
Huons Meditech also saw counterfeits of its medical device "Dermashine" distributed in China. It is a medical device that effectively delivers drugs into the skin during aesthetic injections. The company learned that Chinese Company B had imitated it and was distributing it under the name Dermashine Max. Dermashine is a product released up to the third generation, but they reportedly marketed it as if a fourth-generation new product had come out. Huons Meditech filed a lawsuit in July last year with a Chinese court to block trademark infringement against Company B and won at the first trial in June this year. As a result, it was able to discard the counterfeit medical devices and packaging boxes distributed in China.
Medytox(086900) had a similar experience in Thailand. Medytox filed lawsuits to stop trademark infringement after counterfeits of the Botox "Meditoxin" and the filler "Neuramis" were distributed. In Nov. last year, Thailand's Supreme Court sentenced three brokers who distributed counterfeits to prison terms and fined the illegal distributors. Medytox entered Thailand in the mid-2010s. As its market share rose, counterfeits appeared locally, and the situation escalated to the point where the Department of Special Investigation (DSI) stepped in. Medytox reportedly filed the lawsuits to protect its brand image in the local market. A Medytox official said, "This incident exploited our brand recognition," adding, "Only genuine products are distributed domestically."
◇ Sensitive to temperature… unauthorized export of Botox to the U.S.
Illegal distribution is also a serious problem. Daewoong Pharmaceutical(069620) recently confirmed that two vials of the Botox "Nabota" were exported to the United States without authorization. Launched in 2014, Nabota recorded cumulative sales of 1 trillion won through June this year and is a flagship product. Daewoong Pharmaceutical separates domestic and overseas distribution. However, it learned from a local partner that Nabota supplied to domestic medical institutions had been exported to the United States through an unrelated third party. A Daewoong Pharmaceutical official said, "We traced the lot number, identified the medical institution involved in the illegal distribution, and halted the transaction."
Botox is a toxic protein extracted from Clostridium botulinum. When injected into the skin, it paralyzes muscles and temporarily smooths fine wrinkles. Because Botox is sensitive to temperature, it must be stored between 2 and 8 degrees Celsius under World Health Organization (WHO) standards. Outside that range, its protein structure can change, reducing the effect or triggering inflammatory reactions. Daewoong Pharmaceutical says it controls the process from production to patient administration with in-house cooling systems and containers that maintain temperature for up to 168 hours.
PharmaResearch(214450) is also monitoring domestic and overseas distribution of the aesthetic injection "Rejuran." Rejuran is an injection into the dermis of a biocompatible substance extracted from salmon DNA. The company said it works with specialized firms to monitor distribution and, if issues arise, sends warning letters or enables overseas authorities to conduct crackdowns. A PharmaResearch official said, "When the source of a product is unclear, its raw materials and manufacturing process cannot be verified, making it difficult to guarantee quality and safety."
◇ Concern that copycat products will hurt the image of Korean corporations
In the pharmaceutical industry, the view is that as K-beauty gains attention overseas, corporations are moving to defend their markets. Riding the wave of Korean culture and the Netflix animation K-Pop Demon Hunters, domestic corporations are drawing attention abroad. In this situation, they say they will not allow counterfeits to erode market share and muddy the waters of the industry.
There is also concern that overseas counterfeits could tarnish domestic brands' images. For drugs and medical devices, patient safety is paramount. But counterfeits have unclear ingredients and manufacturing processes, increasing the risk of side effects and making post-event tracing difficult. A pharmaceutical industry official said, "If counterfeits are mistaken for genuine products and a quality issue arises, it can affect trust in corporations," adding, "We are enabling medical institutions to verify authenticity with hologram stickers and other methods."