GlaxoSmithKline Blacklisted by Chinese Authorities, Suspended from Domestic Drug Procurement

GlaxoSmithKline Blacklisted by Chinese Authorities, Suspended from Domestic Drug Procurement

Blacklisting multinational pharmaceuticals is part of China’s ‘decoupling’ strategy: expert

Multinational pharmaceutical giant GlaxoSmithKline (GSK) was recently blacklisted by Chinese authorities and will be ineligible for the country’s national drug procurement program for the next year and a half.

Through China’s drug procurement program, pharmaceutical companies participate in a centralized drug procurement program that supplies drugs in large volumes and low prices.

As first reported by state television CCTV, on October 31, China’s State Drug Administration (SDA) issued a warning stating that GSK’s Avodart (dutasteride) soft capsules exported to China did not meet China’s quality control requirements for drug manufacturing. The SDA suspended the importation, sale and use of Avodart, and the notice became effective immediately.

On the same day, China’s Joint Procurement Office (JPO) disqualified the softgels and stuck GSK on a “non-compliant list”. GSK will not be able to participate in the centralized procurement of medicines from October 31, 2022 to April 29, 2024.

GSK had not responded to The Epoch Times’ request for comment as of press time. Calls to China’s State Administration of Pharmaceutical Supervision went unanswered.

Dutasteride, a drug to treat enlarged prostate and seborrheic hair loss, is one of 61 drugs in China’s fifth round of domestic drug procurement.

GSK launched the drug under the brand name Avodart in the United States in 2002. Avodart’s patent expired in 2015 and the drug became available in generic form. In 2011, the drug was approved for the Chinese market.

According to China SDA online data and reported by Chinese state media Poper, GSK is the only importer of dutasteride capsules in China, although there are three domestic Chinese companies that manufacture the drug.

The Paper reported that with GSK suspended, Three Chinese companies may have greater opportunities in the next acquisition cycle.

GSK is not the first to be blacklisted

GSK is not the first pharmaceutical multinational to be sanctioned by the Chinese authorities.

In a November 1 report, The Paper said that on June 29 this year, China’s JPO Announced that certain batches of bicalutamide tablets produced by Sun India had been disqualified from the fifth round of domestic procurement because their dry weight loss assessment did not meet the registration standards for imported drugs.

In the end, three Chinese domestic pharmaceutical companies replaced Sun India in supplying the drug to the Chinese market.

On March 25, 2020, China also announced the cancellation of Bristol-Myers Squibb’s Abraxane (paclitaxel albumin-bound nanoparticles) in the second round of domestic purchases. Paclitaxel is used in combination with gemcitabine (Gemzar) to treat pancreatic cancer.

expert analysis

In an interview with The Epoch Times on November 5, US-based Chinese news watcher Lu Tianming said that the Chinese Communist Party’s (CCP) punishment of GSK can be viewed from three perspectives.

“First, it reflects that the CCP now has very little money, because this is not an isolated incident,” Lu said. “In the past year, the regime has excluded many imported drugs from procurement because they are more expensive, while domestic counterfeit drugs are less expensive. But even for Chinese companies, the authorities have suppressed prices through large-volume purchases.”

vintage photo
Frequent mass COVID testing and citywide lockdowns have devastated China’s economy. This photo shows empty roads during a gradual lockdown following an Omicron surge, in Shanghai, China, on April 5, 2022. (Qilai Shen/Bloomberg via Getty Images)MOREHIDE

Lower prices may not benefit consumers

Lu specifically pointed out that the reduction in acquisition prices does not benefit Chinese citizens. Bribes are an integral part of doing business in China. The cost of bribes is passed on to the consumer in the form of higher drug prices, and the government has turned a blind eye to this for many years.

“We all know that the cost of medicines in China is very high and the profit margin is also very high, because those pharmaceutical companies have to take out a large part of the money to bribe, and those costs are transferred to the price of medicines. drugs

However, the Chinese authorities have never attempted to control highly inflated drug prices,” he continued.

The CCP’s zero-COVID policies, which require mass testing and quarantine, wasted a huge amount of money and devastated China’s economy, Lu said. Lower pharmaceutical prices do not mean much lower prices for Chinese consumers. Instead, they will mean higher profits for the government as it resells the drugs to consumers, helping recoup its zero-COVID losses.

Decoupling of drug supply in China

The second reason, according to Lu, is political. A large amount of foreign capital has withdrawn from China in the past two years due to political reasons. And the CCP itself had long planned to switch its economy to an “internal circulation” model.

“Everyone has seen the results of the 20th National Congress, and many people believe that the CCP is going back to an era similar to the Cultural Revolution. The fact that Supply and Marketing Cooperatives are now springing up all over the country shows that [the CCP] it aims to achieve so-called internal circulation and self-sufficiency,” Lu said. He pointed out that the change comes as the CCP has supported Russia’s actions against Ukraine and China makes aggressive moves across the Taiwan Strait.

“The CCP believes that it needs to start making disengagement preparations now, rather than wait until international sanctions are imposed. That is why it now excludes foreign companies and gives its procurement orders to domestic companies, a sign that it is ready to start internal circulation,” Lu said.

karmic retribution

The third reason, Lu believes, boils down to karmic retribution: “what goes around comes around.” GSK did business in China for many years, while choosing to ignore the CCP’s notorious human rights record.

“In China, human rights problems have been around for a long time. The CCP’s persecution of Falun Gong for more than 20 years is the biggest human rights problem in the world. Over the years, many conscious companies have been condemning the regime and even withdrawing from the Chinese market, but there are still many foreign companies that continue to invest in China, which is equivalent to [giving a] blood transfusion to the CCP,” Lu said.

Furthermore, GSK is alleged to have been involved in various scandalssuch as bribery in the Chinese market, he added.

He said, “To put it bluntly, what they have gained through immoral means, they will eventually lose for whatever reason, and this is a kind of cycle of cause and effect.”

Lu said that the biggest risk for foreign investment in China actually comes from the uncertainty and unpredictability of the CCP’s policies, lack of compliance with rules, and lack of results. “Now that the regime is facing a crisis, it can sacrifice these foreign investments for its own interests. In such an environment, such risks are unavoidable.”

Kane Zhang contributed to this report.

Jessica Mao

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Jessica Mao is a writer for The Epoch Times specializing in China-related topics. She began writing for the Chinese edition in 2009.

olivia li

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