Core Viewpoint - The competition between two major companies in the Korean aesthetic medicine market, particularly regarding the exclusive distribution rights of the "AestheFill" product in China, has significant implications for their financial health and market positioning [1][6]. Group 1: Company Developments - Jiangsu Wuzhong's subsidiary, Datou Medical, received a termination notice from Regen, which demands the cancellation of the exclusive distribution rights for "AestheFill" in mainland China [1]. - The loss of this product, which contributed 35.55% of revenue and 45.77% of gross profit in Q1, has led to a stock price drop of over 40%, with a market value of only 768 million yuan [1]. - Aimei Ke's acquisition of Regen for 1.386 billion yuan for an 85% stake is seen as a strategic move to enhance its product offerings and market control [1][2]. Group 2: Financial Implications - The "AestheFill" product had a terminal price of 18,000 to 22,000 yuan per unit, with a gross margin exceeding 82%, making it a crucial revenue source for Jiangsu Wuzhong [2]. - In 2024, "AestheFill" generated 326 million yuan in revenue, marking the first profit for Jiangsu Wuzhong in six years [2]. - Following the loss of distribution rights, Jiangsu Wuzhong is projected to face a loss of 40 to 60 million yuan in the first half of the year, with no viable alternatives to replace the lost revenue [4]. Group 3: Legal and Regulatory Issues - Datou Medical has initiated arbitration seeking 1.6 billion yuan in compensation, citing investments in clinical registration and market development costs, as well as expected profit losses from the remaining eight years of the exclusive agency period [1][5]. - The arbitration will focus on the legality of the contract termination and whether Jiangsu Wuzhong's financial misconduct constitutes grounds for reputational damage [5]. - Legal experts suggest that if Aimei Ke is found to have acted in bad faith, the compensation could exceed the 190 million USD cost of acquiring Regen [5]. Group 4: Industry Trends - The dispute highlights the inherent weaknesses in the agency model within the aesthetic medicine industry, where control over core technology remains with the brand owner [3]. - The broader industry is experiencing anxiety among distributors regarding their future viability, especially in light of Jiangsu Wuzhong's financial misreporting and potential delisting risks [4]. - This conflict represents a shift in the industry from a "channel-driven" approach to one focused on "technological superiority," as larger players leverage capital and technology to dominate the market [6].