Biotechnology Stock Co., Accused of Fraud, Resumes Operations

April 5, 2010 12:16 am Last Updated: April 5, 2010 1:22 am

The operations of a leading pharmaceutical company in China have apparently resumed, although its production and sales were halted five months ago when the company was charged with producing fraudulent vaccines.

China’s State Food and Drug Administration (SFDA) found that Biotechnology Stock Co., Ltd. (Jiangsu Yanshen), had produced four batches of rabies vaccine with quality problems between July and October of 2008.

According to the SFDA notice, the company was charged with using additives in the manufacturing process to dramatically cut the cost of production in a way that would not be detected by state investigators. The actual effectiveness of the vaccine was greatly reduced, possibly affecting as many as a million people.

The SFDA suspended the company’s operations as of November 30, 2009. They discovered that Biotechnology Stock Co. had been conducting this fraud for awhile, and that half of its vaccine products were fraudulent. The adulterated vaccines had been sold out by last July through 364 Centers for Disease Control and Prevention in 27 cities.

The company became one of the six approved H1N1 vaccine providers last September and received an order for 6.3 million units of H1N1 vaccine from the Ministry of Industry and Information last November.

There have been no reports regarding the criminal investigation since Dec. 3, 2009.

According to recent reports from China Business and 21st Century Business Herald, the company is suspected of having already resumed production.

China Business asked the company whether it had indeed resumed production but did not receive a direct answer. However, when asked if they had H1N1 vaccine for sale, the answer was “Yes.”

Jianwei Xing, an assistant executive of Simcere Pharmaceutical Group (NYSE:SCR), which owns a 50.77 percent stake in Biotechnology Stock Co., was also questioned. He responded: “We’re just training the workers in order to maintain social stability. We’re still waiting for the results of the SFDA’s investigation. The company has suffered a great loss due to the suspension.”

No evidence has been found so far that would link Simcere to involvement in the fraud.

One worker at the site said they have just been running a trial production. Another worker, however, said they’ve been working three shifts around the clock. In addition, several residents in the neighborhood said they felt certain that the company has resumed operations.

Biotechnology Stock Co. has received the “Star Enterprise” award several times, and its Chairman, Gangjun Han, has also been granted the title of “Outstanding Entrepreneur” by the local government. Its sales of 20,863,000 units of rabies vaccine in 2008 were the fourth highest in the country, accounting for 11 percent of the national total.