China Vaccine Scandal Heats Up as Police Detain Firm's Chairman

(Bloomberg) -- The Chinese biologics manufacturer at the center of a vaccine scandal said its chairman was taken away by the police, signaling the government is intensifying its crackdown on wrongdoing in the industry.

Changsheng Bio-Technology Co.’s chairman, Gao Junfang, and three other executives won’t be able to perform their duties as they were taken away by police over suspected crimes related to the vaccine case, the company said in a filing to Shenzhen’s stock exchange on Tuesday. China is investigating the nation’s vaccine industry after violations found at Changsheng heightened consumer concerns about drug safety.

The company sparked an outcry on Chinese social media after it was fined last week for having produced and sold low-quality vaccines for infants, as well as having been found to have fabricated production and inspection data for a rabies vaccine. Shares of vaccine manufacturers tumbled for a second day after President Xi Jinping described the scandal as “shocking” and called for action against those responsible for violations, Xinhua reported Monday.

China’s top anti-corruption agency also said Tuesday it will “severely punish” any local regulatory officials found guilty of dereliction of duty in supervising Changsheng. Some clues and reports of corruption related to Changsheng and its executives had already been received, the Central Commission for Discipline Inspection said in a statement.

Changsheng said its production and operations have been “severely affected,” and it has set up a team to deal with the situation. Police in Changchun city, where Changsheng is based, took action on Monday afternoon, taking away two other employees in addition to the executives, according to the company statement.

Changsheng shares dropped by the daily limit for a seventh straight session Tuesday, falling to the lowest in three years. Other vaccine makers also continued to slump, with Shenzhen Kangtai Biological Products Co. losing 10 percent, while Chongqing Zhifei Biological Products Co. slipped 4.2 percent.

To contact the reporters on this story: Jeff Sutherland in Tokyo at jsutherlan13@bloomberg.net;Stephen Tan in Hong Kong at ztan39@bloomberg.net

To contact the editors responsible for this story: K. Oanh Ha at oha3@bloomberg.net, John Liu

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