Relax, things will level out. Nobody can tell for sure how contagious the noted disease is, but the longer you keep the poor fish in the tank, chances for an outbreak increase.
Personally, my first move would not be to medicate, it would be: remove the fish, super clean the tank, then closely watch for additional infections. Chances are there wouldn't be.
The growth could be a fungus, eating the dead flesh on the mouth, possibly an injury resulting from a fight, or as CB noted, a Bacterial / Columnaris infection. One thing is sure, if the fish survives, it will be minus a mouth. The tissue damage is irreversable.