China copes with drug woes amid business development

03/01/2001

Mark A. DeSorbo

SHANGHAI, CHINA—Imagine that the over-the-counter cold medicine you gave to your sick child ends up being a deadly dose of a counterfeit drug that results in their death.

What would be an extreme case scenario in the United States is a reality in China, for that is just what happened when Chi Suzhen bought what she thought was a remedy for her 12-year-old daughter.

But less than three days later, the girl died from what doctors told her was a deadly dose of counterfeit medicine. Although the family made numerous attempts to find out how the poorly manufactured drugs had made it onto the store shelves, government officials were unable to provide answers.

The Chi family, who told UPI they plan on suing the pharmacy that sold them the medicine, is not alone in their grief. According to the Shanghai Drug Administration, drug poisonings killed an estimated 200,000 Chinese and hospitalized 2.5 million in 1999.

Crackdown continues
State Drug Administration (SDA) officials, however, have stepped up efforts to crack down on substandard drugs by revising existing regulations as well as mapping out new laws to meet demands from consumers and aid the country's entry into the World Trade Organization (WTO).

In fact, the SDA is setting up a national information network, which will aid in the supervision and management of pharmaceuticals and medical devices.

In interviews with Chinese media, namely Beijing-based newspaper China Daily, SDA officials say they blame counterfeit over-the-counter and prescription drugs—many of which they say contain raw, unprocessed ingredients—for the majority of the deaths.

With increasing pressure, both at home and from abroad, to combat abuses in the country's $40-billion pharmaceutical market, China has been getting tough on the manufacturers of counterfeit medicines. Over the last year, the government has closed down at least 113 pharmaceutical factories and nearly 15,000 illegal drug distributors.

Augmenting the SDA's efforts, China's State Administration for Industry and Commerce (SAIC) launched a crackdown on false advertising that aims to eliminate misleading medical ads, some of which promise everlasting life and increased sexual potency. Advertisers who promote medicines, nutritional supplements or other health products by disguising advertising as biographies or feature stories will be severely punished, according to the SAIC.

Zheng Xiaoyu, SDA director, says other reforms currently being carried out in the health care sector would require hospitals and clinics to purchase medicine through a competitive bidding process, which is aimed at reducing kickbacks in the prescription drug industry.

Business is booming
Meanwhile, Medrad Inc., a Pennsylvania-based subsidiary of Germany's Schering AG, is partnering with Vincent Medical Manufacturing Co. (Hong Kong) to produce disposable syringes in China.

In a prepared statement, John P. Friel, president and chief executive of Medrad, said the company anticipates lower production and shipping costs for syringes supplied from the new facility. "This will give us a better opportunity to serve our customers and eliminate our shipping cost," he added.

At a recent press conference, Yu Mingde, director of the Pharmaceutical Department of the State Economic and Trade Commission (SETC), said competition will heat up after China's entry to the WTO, adding that the sector would be open to foreign companies in 2003.

China, he indicated, represents one of the fastest-growing over-the-counter (OTC) drug markets in the world, with approximately $1.4 billion in sales last year. Given a rapidly aging population, and a vast untapped rural market, he claims China's OTC market will surpass that of the U.S. market.

Yet local drug retailers in China have gotten off to a slow start, according to the Economist Intelligence Unit, a U.K.-based information provider. China has about 120,000 pharmaceutical retailers. Most are small and inefficiently run. As a sector, they suffered losses in 15 provinces in 1998. Only 200 pharmaceutical retailers have formed chains.

At the time of this report, however, the Xinhua News Agency reported that Zhongxin Pharmaceutical Group Corp. (Singapore) set up a chain subsidiary in Tianjin to become the largest pharmacy chain in China.

With 248 retail outlets in Tianjin, the new subsidiary will offer new services such as home delivery, evening delivery.