3 BTX makers’ stocks tumble after regulator’s discipline of indirect exports

After the Ministry of Food and Drug Safety pulled a knife again to rectify the practice of "indirect export" by botulinum toxin makers, the stock prices of the three related companies plummeted on Tuesday.

As the Korea Exchange (KRX) decided to suspend the companies' stock trading, the incident's repercussions are expected to increase.

Earlier in the day, the food and drug safety ministry said it had uncovered the violations of the state shipment approval rule by Jetema, BMI Korea Aesthetics, and BNC Korea, recalled and disposed of products, and begun procedures to revoke their product permits.

The three targets of administrative discipline are JETEMA’s Jetama The Toxin Inj. 100 IU (for export), BMI Korea’s Hitox Inj. 100 Units (for export), and BNC Korea’s Bienox Inj. (for export). The ministry said it would halt their entire production for six months as these companies had been found to have distributed their export products in the domestic market.

The disciplined companies’ share prices plummeted upon the news.

JETEMA's share prices fell to 10,000 won ($7.04), down 24.81 percent, or 3,300 won, from the previous day’s closing price of 13,300 won. BNC Korea’s stocks also fell 24.67 percent, from 5,310 won to 4,000 won. As a result, both stocks dropped to their daily meet and hit the lower limit.

To make matters worse, the KRX requested the disclosure of inquiry into the report of the commencement of administrative disposition procedures, such as suspension of business, to JETEMA and BNC Korea. The inquiry disclosure deadline is 6 p.m. Wednesday.

The exchange also announced that it would suspend the trading of the two companies’ stocks due to rumors or news reports. The time to resume the transaction is 30 minutes after the inquiry is disclosed. However, if these companies make an unconfirmed disclosure, the period of suspending stock transactions will be extended until the reasons for the rumor are resolved.

Analysts say the recent administrative disposition again pointed to indirect export practices in the botulinum toxin industry. The food and drug safety ministry believes that the "indirect export" method by which the companies supply botulinum toxin formulations to agencies not qualified to handle and sell food and medicine violates the Pharmaceutical Affairs Act.

“The latest administrative disposition seems to be the same case in the past, in which Medytox, Hugel, and Pharma Research Bio were uncovered while exporting botulinum toxin formulations through agencies, or “peddlers,” an industry executive said.

The ministry might have found it not easy to overlook these violations as there is a precedent of disciplining similar irregularities, the executive added.