Tuesday, 27 December 2011

China's other drug trade

The profits are on a par with that for illegal drugs, and the risks of getting caught far lower: no wonder the mainland's fake-medicines industry is growing, and that legal businesses are increasingly involved

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Guanyu 道 said...

China's other drug trade

The profits are on a par with that for illegal drugs, and the risks of getting caught far lower: no wonder the mainland's fake-medicines industry is growing, and that legal businesses are increasingly involved

Alice Yan
27 December 2011

In a dark and run-down industrial zone in Shanghai's suburban Fengxian district, two security guards for a suitcase manufacturer point to a deserted section of their building and recall how it was a hive of illicit activity not too long ago.

"The pharmaceutical plant that used to be located there has been closed for months since being busted by police for producing fake drugs," one guard said.

Police detained four of the company's managers in August, and in the following days "manufacturing equipment was hauled out of there, and its 20-strong workforce was dismissed", the guard said.

Shanghai Tash Biotechnology, which had rented the now-abandoned section of the building since the start of last year, was licensed to produce compounds called raw peptide products for other drug makers.

However, police discovered that the company used only a small portion of its facilities for that purpose; the bulk of the resources was devoted to the illegal production of injectable drugs that it later sold domestically and abroad.

"They were operating around the clock," the security guard recalled. "But they never used trucks to transport their products; they hid them in their cars."

Police said Shanghai Tash had racked up more than 4 million yuan (HK$4.87 million) and US$500,000 in sales of these drugs before they were put out of operation. If that seems a lot, the company is just one of a number of manufacturers swept up in a national campaign spearheaded by the Ministry of Public Security to combat the rampant counterfeiting of medicines.

The knock-off drugs continue to proliferate as criminal operations become more sophisticated and involve many players, including hospital staff. As a result, authorities are having an increasingly difficult time trying to track and break up such operations.

Without saying when its latest crackdown began, the ministry announced last month that its stepped-up efforts had stamped out 350 syndicates either making or selling of fake drugs. In addition, more than 1,400 underground workshops had been shut down and more than 300 million pills or bottles of medication seized.

The combined street value of the products, if sold as genuine goods, was estimated at 2 billion yuan.

Ministry officials said the seizures ran the range from prescription drugs to health-enhancement products, traditional Chinese medicine and Western medicine, Southern Weekly reported.

The fake-drug makers bought packages and bottles designed for expensive drugs and filled the containers with cheap medication, salt water or expired drugs. Some forged authenticity certificates or batch numbers, and cut the drugs' ingredients with banned chemicals. Others simply contained starch and flour.

To make them appear and taste genuine, producers added talcum powder, iron or animal feed. Sometimes tranquillisers, hormones or sleeping medications were mixed in to give patients the illusion that their condition had improved in the short term, police said.

Some of the people who get into the hugely profitable underground trade are already part of the legal drug industry.

One suspect, detained by police in Suzhou , Jiangsu , for producing counterfeit liquid medicine for children, told Suzhou TV he started out as a wholesaler of drugs and had "a lot of connections with drug stores across the country" before going into counterfeiting. "It was a piece of cake to get my home-made syrups into licensed drug stores," he said.

Guanyu 道 said...

He said he bought bottles and packages that looked like the ones for a genuine medicine as well as machines to put the lids on the bottle. The liquid formula was just powdered sugar and water, which he said he mixed in an unsanitary facility in Lanzhou, Gansu.

Suzhou police officer Huang Qiang was in charge of the case. He said the syrups, which had no medicinal value, cost just a few yuan to make but were priced at 50 yuan per bottle. The operation spanned six provinces, and about 1 million yuan worth of syrup was seized.

While that operation and Tash's had their own production facilities, some fake-drug syndicates do not, the Ministry of Public Security says. Instead, they employ "professional and legal" companies to make the product, and outsource production of the packaging.

Southern Weekly quoted a man arrested in Zhejiang as saying that when he received orders, he simply searched for manufacturers online, then hired people to do the packaging.

In practice, a licensed printing factory could handle the packaging, legal chemical or drug firms could supply raw materials, and licensed drug makers could mix the ingredients to make the fake medication.

Just such a supply chain was exposed at a plant in Wuhan, Hubei, that was found pumping out counterfeit drugs to order. In another raid by Shanghai police, a licensed drug maker created a phoney formula and six chemical plants provided the resulting powder to make the imitation drugs.

In yet another variation on the theme, officers in Zhejiang raided an operation that involved hospital cleaners collecting used drug packages and bottles, and then selling them to underground manufacturers.

These types of schemes, which involve multiple entities and legal businesses, have created a grey area in terms of supervision. And the food and drug administration simply does not have the staff to keep a close eye on legal businesses. There have also been reports of industry watchdogs turning a blind eye to the illicit activity.

Meanwhile, the manufacturing of knock-off drugs is booming, and producers are employing more and more staff trained in medicine or chemistry, including some with doctoral degrees, police say.

The authorities' task is made even harder because many manufacturers do most of their business online, making it tough to pinpoint the culprits' locations.

A number of the fake drugs eventually end up in legal pharmacies. In Heilongjiang province alone, more than 2,000 pharmacies in 167 cities and counties were caught selling counterfeit medications. Provincial food and drug officials said operations caught in the Heilongjiang crackdown had raked in a combined 3.5 million yuan.

The knock-off products have also been found in hospitals across the mainland; police say the prevalence of fake medications is more serious in small private hospitals and rural clinics. Even so, such dangerous goods still pop up at top-tier hospitals.

Last year, 61 patients developed eye infections after being treated with counterfeit drugs at the Shanghai First People's Hospital, one of the city's leading health centres. The authorities discovered that the patients were being treated with fake medicine labelled as Avastin, a cancer drug made by Roche. But the pharmaceutical company said it had not supplied the drug to any mainland clinics or pharmacies.

John Clark, chief security officer and vice-president of global security for pharmaceutical firm Pfizer, told the South China Morning Post that China was one of at least 53 countries where fake Pfizer medications had breached the legitimate supply chain.

The company's signature product, Viagra, is among the most widely pirated medications in the country, with knock-offs regularly found in sleazy adult shops and small pharmacies.

Guanyu 道 said...

"In China, we have implemented an aggressive anti-counterfeiting campaign to detect and disrupt major manufacturers and distributors of counterfeit Pfizer medicines," Clark said. He said Roche had also trained enforcement authorities to raise their awareness of the problem and their ability to distinguish counterfeits from the real thing.

On the apparent rise in the distribution of fake drugs, Ge Taoran, captain of the Heilongjiang Public Security Bureau's economic crimes investigation team, told domestic media that the recent busts did not necessarily mean that more of these types of crimes were occurring now than in past years.

"The previous battles against fake drugs were not strong enough," he was quoted by Southern Weekly as saying. "Now that we have carried out the enhanced clampdown we've found how serious the situation is."

One of the reasons for the lack of past oversight is that bodies across the country supervising the drug industry have been short-handed. In Heilongjiang, for instance, there are fewer than 500 food and drug officials overseeing the drug trade, according to official figures.

Another factor driving criminals into the fake-drug trade has been the lenient punishment imposed on those who are caught. Those convicted of manufacturing or distributing fake drugs face a maximum of three years in jail - unless their products are found to have "severely jeopardised people's health", something that police have struggled to prove.

So it's little wonder the business of phoney medications has become rampant. It's an open secret that making fake medicines yields profits comparable to trafficking illegal recreational drugs such as methamphetamines - and at a fraction of the risk.

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