China’s Potential HIV Contamination Revives Drug Safety Fears
China’s Potential HIV Contamination Revives Drug Safety Fears
(Bloomberg) -- Concerns about potentially HIV-tainted blood products produced by a state-backed company, followed by conflicting information from regulators, is undermining confidence in China’s drug industry as it seeks to join the global biotech race.
Over Chinese New Year, the National Medical Products Administration said a batch of intravenous human immunoglobulin in blood plasma by Shanghai Xinxing Medicine Co. tested positive for HIV antibodies in the eastern province of Jiangxi. Shanghai regulators conducted their own tests, which came back negative for the virus, and ordered a production halt and recall. Xinxing is investigating as well, according to China Meheco Co., which owns 51 percent of the blood producer and is controlled by a state firm.
The incident, which sparked social media outcry in the country, follows protests and President Xi Jinping’s reprimand of the drug industry after children in Jiangsu province received ineffective vaccines last summer. Xi’s government has been ramping up spending on the nation’s health sector and overhauling its drug approval process in a bid to spur medical innovation.
Drug Scares
“It’s another scandal that will hit market confidence in China’s healthcare sector,” said Linus Yip, chief strategist with First Shanghai Securities in Hong Kong. “Looking forward, investors will continue to prefer market leaders with better reputations, as the confidence in the overall drug market isn’t ready to recover yet.”
Previous drug scares have caused shares declines for the entire sector -- the CSI 300 index of health-care shares has fallen 31 percent since July when the vaccine scandal broke. For now, investors have factored in the risks of potential quality and safety issues in the current valuations of most companies in the healthcare sector, he said.
Yip said that may explain why Meheco’s shares fell as much as 5 percent when markets opened on Monday, before recovering to gain 0.8 percent in Shanghai.
Meheco said the probe of Xinxing’s products will have little impact on its financials, because the latter’s business scale and profit comprise a small share. Meheco said it ordered Xinxing to halt all operations and close quality-control loopholes, according to statement. Shanghai Xinxing makes and distributes blood products often used to treat immune deficiencies and disorders.
Shanghai Xinxing and the National Medical Products Administration did not respond to requests for comment.
Alarms over unsafe drugs occasionally flare up and can stoke government worries about social unrest. China has grappled with HIV contamination before. In 2005, leaders struggled to manage a tainted blood supply damaged by illegal blood buying stations in the northern province of Henan.
In July after manufacturer Changsheng Bio-Technology Co. revealed it had faked data and sold substandard vaccines used for infants, the government warned it would delist shares of companies found to have severely violated public health. The Shenzhen Stock Exchange notified Changsheng Bio-Technology of the initiation of delisting proceedings, the company said last month.
--With assistance from Claire Che.
To contact the reporters on this story: Daniela Wei in Hong Kong at jwei74@bloomberg.net;Bruce Einhorn in Hong Kong at beinhorn1@bloomberg.net
To contact the editors responsible for this story: K. Oanh Ha at oha3@bloomberg.net, Sharon Chen
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