So-Young Removes Banned Drugs, Fake Reviews From Platform; Stock Plunges 9%
Chinese plastic surgery promoter So-Young International Inc. (Nasdaq: SY) said it has unlisted banned drugs and deleted related fake reviews from its platform following the scandal that sent its stock to plummet on Monday.
The Beijing-based company announced today that it has formed an internal investigation team in response to the allegations from the Beijing News that the platform promoted unlicensed neurotoxic protein and published fake promotional reviews.
The medium reported on Monday that wrinkle-reducing products in So-Young's brand list contain five unlicensed brands from South Korea apart from two only authorized products, Hengli and Botox.
The news sent the stock in So-Young more than 9 percent lower Monday, to $15.25 per American depositary share.
In response, So-Young said in an official statement that the reported illegal drugs sold on the new platform came from Korean medical and aesthetic institutions.
"Although these drugs have not obtained the certification from China Food and Drug Administration, they are legal in Korea and So-Young informed customers of the drug compliance status," the company stated.
China's regulators have never approved the production of human embryonic and cosmetic drugs such as human placenta, nor have they approved the importation of placental products, according to Chinese regulation.
"These products are now off the shelves," So-Young said in the statement.
So-Young was also reported to fail to detect fraudulent reviews. The company said it has deleted more than 710,000 suspicious accounts, 150,000 posts and 2.3 million comments over the past year. Looking ahead, the company said it will launch a face recognition system to improve its accountability.
The Chinese promoter of medical aesthetic services and products was welcomed by Wall Street on May 2, raising $179.4 million in its IPO. As of December of last year, So-Young listed products from approximately 4,000 medical aesthetic service providers, according to its prospectus.
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