Chinese Pharma Firms Under Pressure After Rabies Vaccine Scandal
The Chinese pharmaceutical industry was under pressure Monday after a scandal erupted involving defective vaccine sold by Changchun Changsheng Life Sciences Ltd., China's second-largest rabies vaccine maker.
Some U.S.-listed Chinese drug makers and biotech firms, including Sinovac Biotech Ltd. (Nasdaq: SVA) and Biostar Pharmaceuticals Inc. (Nasdaq: BSPM) fell in trading Monday. In the afternoon, Sinovac's stock was trading down more than 4 percent, at $7.38 per American depositary share. The shares of Biostar dropped more than 5 percent to $2.12 apiece.
Sinovac and Biostar fell in trading Monday, 4 and 5 percent, respectively, after the rabies vaccine scandal.
(Source: Thomson Reuters Eikon)
Last week, regulators ordered Changchun Changsheng to halt production and recall a rabies vaccine, for which the company was found to fake documents.
An investigation into the drug maker also found that it has supplied an ineffective diphtheria-pertussis-tetanus (DPT) vaccine, which was given to children and infants as young as three months of age. The company has already sold more than 250,000 doses of DPT.
The announcement enraged the public, as drug safety fears intensified in a slew of Chinese pharma scams unveiled in the past decade. Over the weekend, discussions on microblogging platforms like Sina Weibo and other media ensued, little censored by the government. According to The Associated Press, the hashtag "Changchun Changsheng makes fake vaccines" on Weibo got more than 100 million views by Monday afternoon.
Beijing officials also voiced their concern. Premier Keqiang Li declared in a statement Sunday that the case "violated a moral bottom line." Li said that investigation into the incident has been launched and that offenders will be punished.
"We will resolutely crack down on illegal and criminal acts that endanger the safety of peoples' lives, resolutely punish lawbreakers according to the law, and resolutely and severely criticize dereliction of duty in supervision," he said.
Chinese President Xi Jinping, who is on a trip in Africa, also condemned the company.
The Shenzhen-listed Changchun Changsheng, a state-run company until 2003, has recently thrived on subsidies from the Chinese government and aggressive marketing, according to the South China Morning Post (SCMP). The news agency also said that in the past few years, employees of the firm have been involved in cases of bribery.
The SCMP reported that the chairwoman of the company, Junfang Gao, together with four senior executives, were taken away by police for questioning on this latest case.
Changchun Changsheng has issued an apology for the incident and said that recalling the vaccine would gravely affect its finances.
After last week the State Drug Administration unveiled the vaccine data fabrication, Changchun Changsheng faces de-listing from the Shenzhen stock exchange.
Not all U.S.-listed Chinese pharma companies, specifically, those most established, were negatively affected in New York trading by the scandal.
China Biologic Products Holdings Inc. (Nasdaq: CBPO) traded nearly level, rising 29 cents to $102.75 per share in the afternoon. At least one biopharma company, Beigene Ltd. (Nasdaq: BGNE), which is developing immuno-oncology drugs for the treatment of cancer, saw its shares rise nearly 4 percent intraday to $175.56 apiece.