Daewoong Pharmaceutical fined for refusing gov't probe

By Bahk Eun-ji

Daewoong Pharmaceutical was fined 5 million won ($4,084) for refusing an administrative probe by the Ministry of SMEs and Startups over allegations that the company stole botulinum toxin (BTX) strains from rival Medytox, the ministry said Monday. The two firms have been in a legal dispute since 2017.

Park Young-sun, minister of SME and Startups

Medytox has claimed Dawoong stole its BTX strain and trade secretly through former Medytox employees who joined Daewoong. Daewoong insists it discovered the strain in its lab here.

The government, which received a complaint from Medytox in March 2019, requested Daewoong's cooperation in its field investigation into the firm's research lab in Yongin, Gyeonggi Province on the grounds that the DNA sequence of registered botox strains from both companies is identical.

Daewoong Pharmaceutical CEO Jeon Seng-ho

“The purpose of the administrative investigation is to resolve an unreasonable situation whereby victims have to prove the fact that their technology was stolen. The SME ministry will continue to develop the system to help small and medium-sized enterprises who have difficulties in proving their damages by technical infringement,” Lee Dong-won, a deputy director of the ministry's technical protection division.

The SMEs ministry said Daewoong became the first company to be issued a fine for violating the SME Technology Protection Act since the act went into effect in December 2018.

Daewoong's botox formulation development period was only three years, significantly shorter than Medytox's 18 years, according to the ministry.

Medytox also filed a complaint with the U.S. International Trade Commission (ITC) in February last year, claiming a former employee stole the company's BTX strain and documents, and provided them to Daewoong.

The ITC began its official investigation in March 2019 and is scheduled to make a final decision in the second half of this year.

Daewoong has been refusing to disclose the evaluation results that include the analysis of the strain sequence while it was ordered to provide the data to the ITC.