Medytox’s performance in the fourth quarter will rely on the Chinese government’s regulations on “daigong” -- merchants who purchase tax-free goods in Korea and sell them in China – industry sources say.

Korean companies have yet to begin the official export of their botulinum toxin products, and these peddlers might have carried most of the made-in-Korea Botox goods traded in China, the sources said Monday.

According to data at Korea Customs Service, the export amount to China of what industry officials presume to be botulinum toxin (HS Code: 3002903090) totaled $56.18 million last year. An additional $45.38 million worth of the same items were also exported to China in the first eight months of this year.

Some analyzed the July-August shipments this year fell short of expectations, remaining at only $6.12 million. “Medytox’s sales in the third quarter are expected to total 50.2 billion won ($44.4 million), up 24 percent from a year ago but down from the second quarter,” said Seo Min-jeong, an analyst at Hana Finance and Investment in a report.

The sluggish export data in the July-August period was due in part to the seasonal factors but seems to have resulted from a stricter crackdown on daigong by the Chinese authorities in the wake of controversy over bogus vaccine products in the world’s second-largest economy, she said.

Seo expected the Beijing government would likely give official permission to the export of botulinum products next year. Medytox submitted its application for permitting the export of its Botox product with the brand name of Neronox to the Chinese Food and Drug Administration in this past February.

“As Beijing is likely to give the final permits for the Chinese sales of Neronox in May or July next year, Medytox is likely to make an official advance to the Chinese market in the latter half of 2019,” Seo said.

Medytox’s sales in China will be made through Medybloom China, a joint venture with a local filler maker with the Korean company shipping out finished products to its Chinese partner, she noted.

“As Medybloom China is perceived as Medytox’s subsidiary by the equity method, the Korean company’s actual value profit will likely sharply increase next year, as its subsidiary’s net profit will be reflected on the parent company’s balance sheets according to its equity holdings,” Seo added.