Wednesday, October 31, 2007

False advertising in the global supply chain

This fascinating NYT story about Chinese chemical exports contains many gems, including this:

“We don’t have the resources and means to produce medicine,” said Gu Jinfeng, a salesman for Changzhou Watson Fine Chemical. “The bar for producing chemicals is pretty low.”

Even so, Watson Chemical advertises that it makes active pharmaceutical ingredients. But Mr. Gu said he would export them only to countries with lower standards than China, or if “we can earn really good profits.”

Less scary, but more to the point for this blog, was a statement by the managing director of Honor International Pharmtech, accused of various counterfeiting and customs violations:
He denied shipping counterfeit Viagra, but he acknowledged other indiscretions: making false advertising claims, using another company’s import-export license and creating a fake corporate name.

“We don’t really have a factory,” Mr. Nie said, even though he advertised that he did. Honor International is just a trading company, he said, adding, “As a trading company, saying you can manufacture attracts business. It was fake advertising.”

Claiming to be a manufacturer might seem at first to be a trivial statement, but here's an acknowledgement that it's material to key purchasers. As the Times goes on to point out, manufacturing matters especially with drugs because it goes to their provenance; obscuring origin is associated with serious safety risks.

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