Chinese vaccine firm hit with probes in Beijing seeks to tamp down outrage

SHANGHAI (Reuters) – Changsheng Bio-technology Co Ltd, the Chinese vaccine maker accused of falsifying data, plunged deeper into a crisis on Tuesday.

Eager to contain snowballing public outrage over the scandal and maintain confidence in China's vaccines industry. President Xi Jinping has denounced the scandal as "vile and shocking".

"Anything that touches on drug or drug use is just a huge hot button in China," said Kent Kedl, Shanghai-based senior partner at Consultancy Control Risks.

Chinese citizens are now openly asking for advice, he said, adding that the government should take a tough stance to ensure that this is not a problem.

"This is probably the highest-level of code that the government faces."

China's drug regulator has accused Changsheng of manufacturing production and inspection records related to a rabies vaccine regularly given to infants. The firm also sold 252,600 doses of ineffective DPT vaccines to inoculate children against diphtheria, whooping cough and tetanus.

While there have been no known reports of people being vaccinated, Chinese regulators have been ordered to switch their production and recall the rabies vaccine. Changsheng apologized publicly on a regulatory filing on Monday.

Changsheng's Shenzhen-listed shares plunged by their daily limit of 10 percent on Tuesday, extending $ 1.8 trillion (£ 1.3 billion) or more than half their value since mid-July.

In fresh signs that the scandal was having a wide impact, private medical clinics in Hong Kong said, mainland Chinese vaccines for their children had increased since the scandal.

The Hong Kong Department of Health told Reuters local supply of vaccines remained stable and would closely monitor the situation. Macau's health office said this was not enough.

SOCIAL MEDIA "TSUNAMI"

Chinese citizens have been quick to express their fury with a discussion hashtag on the Sina Weibo microblogging over 600 million views. Censors originally appeared to be able to block some posts about the case.

"The Changsheng vaccine case has created a tsunami on the internet," the state-run Global Times newspaper said in an editorial late on Monday, adding it was unrealistic to try and completely control it, though it could not be left unchecked .

"If nothing is done to manage public discourse, it could become a festering gateway to the country towards chaos and creating serious unpredictability."

Zeng Mei, chief physician at the Fudan University pediatric hospital, said there was there was little likelihood of harm to children from Changsheng's vaccines but noted the social media attention had magnified the impact of the scandal.

"Parents are confused and are apprehensive, of course they are," she said.

The Changsheng case, which dates back to November but first public attention on July 15, is the latest in a slew of scandals that has plagued China's pharmaceutical industry.

Etched into public memory is the 2008 scandal in which several infants died after industrial chemical melamine was added to milk powder to artificially raise protein levels. In 2016, Chinese police busted a gang for selling around $ 90 million worth of illegal vaccines on the black market.

Chinese medicine Zhejiang Huahai Pharmaceutical may have been an impurity linked to cancer since 2012.

PLENTY OF PROBES

Changsheng said on Tuesday that Chairwoman Gao Junfang, three senior executives and two mid-level employees were taken in for questioning by local police, adding they would not be in a position to carry out their duties.

Gao is also Changsheng's largest shareholder. She has been involved with the company since 2003, Chinese media reports said.

Reuters was unable to contact a lawyer for Gao.

The country's top graft watchdog, the Central Commission for Discipline Inspection (CCDI), also said that it had begun an investigation into potential corruption at the firm.

Those probes are in the process of being controlled by the drug watchdog

Changsheng is China's second largest producer of rabies and chicken pox vaccines, according to its 2017 annual report.

China has the second highest number of rabies cases in the world, according to the World Health Organization while the DPT vaccine is on the country's mandatory vaccine list.

Other Chinese vaccine makers have been hit by fears that the scandal will bring increased regulatory oversight, with Shenzhen Kangtai Biological Products also losing 10 percent while Chongqing Zhifei Biological Products fell 4 percent.