Leading Chinese insulin producer Gan & Lee Pharmaceuticals is brought under the limelight due to a bribery scandal.
People in the know disclosed in an interview on September 9 that it was established in Beijing in 1998 and as the sole Chinese producer of the third-generation insulin, it seized share of about eight percent in the domestic insulin market currently. It saw sales rise sharply and the shining performance in 2012 should be largely attributed to about CNY 300 million commercial bribes.
He reiterated that it witnessed increment of consumers hit about 500,000 last year and judging from return-visit cards received each month currently, it had overtaken some foreign rivals in the market. It had paid bribes of up to CNY 800 million since 2008 and high profit margin of insulin helped it conduct the activities. It planned to debut on the Shanghai stock market and in order to boost sales and product price so as to achieve the goal successfully, it paid bribes to doctors and even some governmental officials.
Information the Shanghai Stock Exchange released on June 27 this year shows that it had been initially qualified to launch an IPO on the main board of the Shanghai bourse. Tonghua Dongbao Pharmaceutical Co., Ltd. (SHSE: 600867) sold a 29.43 percent stake in it in March 2011 and the buyers included Goldman Sachs, Qiming Venture Partners, and CCB International. Obviously, it had a plan to launch an independent listing prior to that. And in 2011, it ranked No. 328 among pharmaceutical makers in the market in terms of revenue and No. 237 in terms of profit. And one year later, the ranks became No. 297 and No.131, each. And judging from the changes, its aggregate profit touched about CNY 100 million in 2012, compared to about CNY 10 million in 2009.
The insider believed that it was commercial bribes that helped it grow fast in the past three years. It developed the first Chinese recombinant human insulin namely Gansulin in November 1998, the first Chinese short-acting human insulin analog namely Prandilin in 2001 and the first Chinese long-acting insulin analog namely Basalin in 2002. The specification of Basalin was almost the same except in northeast China and the market price was about CNY 141 per unit. However, hospitals always sold the product to patients for about CNY 180 per unit. Actually, the purchasing price of provincial-level agents stood at only about CNY 70 per unit. That was to say about CNY 50 per unit was for bribes.
