China Pharma Holdings Inc. has suffered a third quarter blowout as a result of new GMP standards for quality control. The company is listed on the NYSE with a fully integrated specialty subsidiary operating in China.

Zhillin Li, Chairman and CEO of the company said, ‘Our cost expenses have experienced certain increases in this quarter due to new GMP standards for quality control improvement, which lead to an increase in our production costs and the increased sales efforts to recover our market shares’. Revenue for the quarter decreased by almost 20% year-on-year. Li said, ‘the financial performance in this quarter did not immediately reflect the improvement of our production ability’.

China Pharma Holdings develops, manufactures and markets a diversified portfolio of goods, which focus on conditions with high mortality rates in China such as cardiovascular and digestive diseases.

China is in the middle of a major health reform movement. In July of this year, the China Food and Drug Administration (CFDA) began a drug-quality crackdown leading up to onsite inspections in the early fall. Eight companies have had eleven drug applications rejected as a result of clinical-trial data deficiencies.

This year, the Chinese pharmaceuticals market is expected to make around $65 billion in sales- more than India, Russia and Brazil (the other ‘BRIC’s) combined. An ageing population with higher disposable income has begun to drive the industry. Those companies such as Sino Biopharmaceutical, 3SBio, and Shanghai Fosun stand to benefit from stricter regulations.

This year also saw a rise in on-site inspections to elucidate action behind rhetoric. A senior executive from a multinational drug maker said, ‘The CDFA seems very, very determined on this quality issue that could change the Chinese pharmaceutical industry in a big way’.

Jack Hu, Analyst at Deutche Bank said that changes shown by the CDFA represent a short-term setback for those in the industry while representing a long-term benefit to those companies with high quality standards. To be on the right side of the line in any industry, quality control supervision and inspections can mean the difference between profitability and a collapse in sustainability.

SOURCES

http://www.prnewswire.com/news-releases/china-pharma-holdings-inc-reports-third-quarter-2015-financial-results-300179845.html

http://www.biopharmadive.com/news/china-fda-cracks-down-on-pharmas-in-quality-control-effort/409164/

http://www.reuters.com/article/2015/11/12/china-pharmaceuticals-idUSL8N1373I020151112?rpc=401#suQdOt4phY2SvsyU.97

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