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Photo = JW Pharmaceutical |
[Alpha Biz= Paul Lee] JW Pharmaceutical has been hit with an administrative sales suspension after a court upheld its conviction over illegal rebate practices targeting medical institutions, the company said on May 6.
The company is now focused on mitigating disruptions in the healthcare field following the suspension, which took effect the same day. “We are explaining the situation to medical institutions and preparing to ensure swift product supply once the suspension ends,” a company official said.
The Daejeon Regional Food and Drug Safety Office imposed a three-month sales suspension on 31 products, including Fospenem Injection, on April 30. As a result, new shipments of the affected products will be fully halted from May 6 to August 5. These products generated KRW 53.5 billion in revenue last year, accounting for approximately 6.91% of the company’s consolidated sales.
One product, Encover Solution, was excluded from the suspension and instead subject to a fine of around KRW 300 million, considering patient convenience and medical necessity.
The administrative action follows a January court ruling related to rebate violations. The Seoul Western District Court’s appellate division sentenced CEO Shin Young-seop to 10 months in prison, suspended for two years, for violating the Pharmaceutical Affairs Act. The ruling became final after the CEO chose not to appeal further. The company was also fined KRW 30 million.
JW Pharmaceutical stated that while quarterly performance may see some impact, the effect on annual revenue is expected to be limited. “Although we cannot ship new products for three months, existing inventory in the market will continue to circulate,” the company said, adding that the overall impact will depend on second- and third-quarter results but is not expected to be significant.
Industry observers note that while the penalty is unlikely to undermine the company’s fundamentals, a short-term hit to earnings is inevitable. Given intense competition in the generic drug market, a three-month supply gap could allow rivals to capture market share.
AlphaBIZ Paul Lee(hoondork1977@alphabiz.co.kr)
