TCM Lianhua Qingwen Under Fire in China Amid New Waves of Covid-19 Outbreaks

Garrett_Li

Garrett_...

· 4月29日

Yiling Pharmaceutical was embroiled in controversy and saw its share plunge on the stock market. On April 15, Yiling Pharmaceutical’s share dropped by 10% to 35.99 yuan per share. The company lost nearly seven billion yuan in market valuation.

Image Source: Visual China

Image Source: Visual China

Wang Sicong, son of Chinese real estate magnate Wang Jianlin, recently questioned the effectiveness of traditional Chinese medicine (TCM) Lianhua Qingwen in treating and preventing Covid-19 on his Weibo account, putting the drug’s developer Yiling Pharmaceutical under scrutiny. He called for the authorities to start an investigation into the company in a series of posts.

Yiling Pharmaceutical was embroiled in controversy and saw its share plunge on the stock market. On April 15, Yiling Pharmaceutical’s share dropped by 10% to 35.99 yuan per share. The company lost nearly seven billion yuan in market valuation.

In response to Wang’s challenge, Yiling Pharmaceutical stressed that it has evidence and report disclosure to back up its TCM products and that investors need to be careful with the information online. The company emphasized that investors should not easily buy the accusation from Wang.

The confrontation between Wang and Yiling Pharmaceutical was triggered by a new report from People.com (Shijiazhuang) that claims the World Health Organization Recognizes Lianhua Qingwen’s efficacy in treating and preventing Covid-19.

The claim that says Lianhua Qingwen can prevent Covid-19 sparked the controversy since the drug has only been advertised as an effective drug for treating Covid-19.

In the wake of the controversy, Yiling Pharmaceutical’s share fell from 34.69 yuan per share to 43.12 per share in only a few days.

How much money exactly has Lianghua Qingwen helped Yiling Pharmaceutical make in the past year?

TCM for treating Covid-19

Yiling Pharmaceutical has been gaining a lot of attention for its Lianhua Qingwen in recent years.

Lianhua Qingwen was originally developed in 2003 by Yiling Pharmaceutical as a TCM for severe acute respiratory syndrome (SARS) using a recipe of 13 herbal extracts such as apricot kernel, rhubarb, honeysuckle and forsythia powder. The formula is based on prescriptions that can date back to medical texts written during the Han dynasty. In 2004, China’s health commission listed Lianhua Qingwen as a drug for treating influenza and respiratory diseases.

In 2020, the medicine was added to China’s list of treatment options against Covid-19. Lianhua Qingwen quickly became one of the important parts of Chinese doctors’ treatment of Covid-19. The Chinese government said 91% of Covid-19 patients in mainland China had received TCM treatments including Lianhua Qingwen by May 2020. Yiling Pharmaceutical’s share rose by 300% between January and April 2020.

In March 2022, Hong Kong sent out anti-Covid packets to nearly every resident in the city, with each packet containing Lianhua Qingwen.

Yiling Pharmaceutical’s share soared again after Shanghai was hit by new waves of Covid-19 transmissions. Hong Kong’s chief executive Carrie Lam praised the pills and claimed that they “may have a better effect than western medicine.”

Actually, Lianhua Qingwen contributed most of Yiling Pharmaceutical’s revenues. The company’s 2021 H1 earnings report, which was released in August last year, shows that Yiling Pharmaceutical has 11 patented new TCM.

The company’s TCM products have leadership in the field of hypertensive heart diseases and respiratory diseases. TCM products, such as Tongxinluo, Shensong Yangxin and Lianhua Qingwen, are being used as standard treatments for relevant diseases.

In 2020, Yiling Pharmaceutical’s revenues reached 8.78 billion yuan, registering year-on-year growth of 50.76% and bringing in net income of 1.21 billion yuan. In Q1-Q3 2021, the company reaped 8.11 billion yuan in revenues, earning net profit of 1.224 billion yuan, surpassing that of the whole 2020.

Products for respiratory diseases generated 4.256 billion yuan in revenue in 2020, accounting for 48.46% of the total revenue. Revenues from products for respiratory diseases saw year-on-year growth of 149.89%. Yiling Pharmaceutical’s products for respiratory diseases include Lianghua Qingwen pills.

Revenues from products for hypertensive heart diseases grew slower when compared with that from products from respiratory products. It is worth noting that products for hypertensive heart diseases used to be Yiling Pharmaceutical’s main products.

Lianhua Qingwen is dominating the market. In 2020, Lianhua Qingwen accounted for 9.86% of the market of medicine for treating colds, which made it the No. 1 medicine brand for treating colds in retail. It is estimated that Lianhua Qingwen generated a retail volume of 3.4 billion yuan in 2020.

Statistics from the health industry information site Menet show that Lianhua Qingwen accounted for 33.5% of the TCM for the cold market. Lianhua Qingwen was also the No.1 brand in TCM for cold in terms of sales volume, according to Menet.

In retail, Lianhua Qingwen’s market share grew from 2.44% in 2017 to 9.86% in 2020, becoming the No.1 TCM brand for treating cold, ahead of top brands such as Shuanghuanglian and 999 Ganmaoling.

Despite the surge in sales performance, marketing cost has been increasing for Yiling Pharmaceutical.

In 2020, Yiling Pharmaceutical spent 3.04 billion yuan on marketing, which accounted for 41% of the costs. In Q1-Q3 2021, Yiling Pharmaceutical invested 2.8 billion yuan in marketing, registering year-on-year growth of 36.48% and accounting for 42% of the total costs.

Xu Xiang Bit3, an influencer on Chinese social media Weibo, recently revealed that he was previously approached by Yiling Pharmaceutical for advertising.

“Lianhua Qingwen contacted me several times a few days ago for promotion service. It was the easiest promotion gig because I didn’t need to write a script. They sent me a file and I could just read it. I don’t know about medicine or science. I just feel like this is not something honest to do. So I rejected it,” he said.

In 2020, Yiling Pharmaceutical spent only 650 million yuan on research and development (R&D). R&D cost only 540 million yuan in Q1-Q3 2021.

On April 13, Wang’s call for investigations into Yiling Pharmaceutical sent the company’s share downward. The company’s share closed at 35.99 yuan per share, losing 6.7 billion yuan in market valuation within one day.

Recommended by the WHO for treating Covid-19?

Yiling Pharmaceutical’s incredible success in recent years is highly connected with the resurging Covid-19 pandemic.

Since the initial Covid-19 outbreak in 2020, Lianhua Qingwen has been included in the standard treatment for the virus. It was added to the 4th-9th edition of treatments for Covid-19. Lianhua Qingwen is recommended to treat patients in observation and patients with mild and common symptoms.

The controversy involving Wang was about the claim that Lianhua Qingwen was recommended by the WHO.

On April 6, the media reported an assessment report on TCM for fighting Covid-19 published by the WHO.

The report mentioned that Chinese experts presented clinical statistics on 284 patients who received Lianhua Qingwen as treatment in 23 hospitals across 9 provinces in China, which show patients who received Lianhua Qingwen as treatment recover faster than those who did not have TCM.

The WHO Expert Meeting on Evaluation of Traditional Chinese Medicine in the Treatment of Covid-19 Report confirms that it is safe and effective to use TCM in treating Covid-19 and encourages WHO member states to adopt treatments that combine western medicine and TCM for treating Covid-19.

It appears that the claim that “Lianhua Qingwen is recommended by the WHO” is a result of misinterpretations of the report. But as a publicly listed company, Yiling Pharmaceutical has never disclosed clinical data on Lianhua Qingwen.

Can Lianhua Qingwen prevent Covid-19?

Lianhua Qingwen once again became a hot topic in China after Shanghai was locked down after a new wave of Covid-19 outbreaks. On April 3, eight million packs of Lianhua Qingwen were shipped to Shanghai to help combat the virus. On the same day, Yiling Pharmaceutical donated 50-million-yuan worth of Lianhua Qingwen to Shanghai.

Lianhua Qingwen pills were delivered to many residents in Shanghai who later posted pictures of their Lianhua Qingwen on social media.

At a press conference of Shanghai’s pandemic control and prevention task force held on March 30, Wu Yingen, a tenured professor at the LongHua Hospital Shanghai University of Traditional Chinese Medicine, said that Lianhua Qingwen could be used for treating Covid-19 patients with mild or no symptoms.

But is Lianhua Qingwen effective in preventing Covid-19?

Chinese health information platform Dingxiang Yisheng interviewed Wang Xiaoyan, a physician at the Respiratory and Critical Care Medicine Department of the Beijing Jishuitan Hospital on the matter. Considering the information on Lianhua Qingwen’s own medicine description and the drug’s working mechanism, Lianhua Qingwen cannot prevent Covid-19, said Wang Xiaoyan.

In addition, Lianhua Qingwen is also an oral drug, which means it can lose effect due to the human body’s metabolism.

“Pharmacological study is required before recommending drugs for preventing Covid-19. Controlled randomized studies should be conducted,” Wang Suna, a physician at the Department of Infectious Diseases of Xijing Hospital said. “Recommendations cannot be made before we can validate the effects.”

It appears that Yiling Pharmaceutical has not yet conducted controlled randomized studies on Lianhua Qingwen’s effect in preventing Covid-19, Wang Suna said. There is no clear evidence that can prove Lianhua Qingwen is effective in preventing Covid-19 infection, Wang Suna concluded.

Shanghai’s local newspaper Jiefang Daily had also reported that Lianhua Qingwen cannot prevent Covid-19 and that medicine use is not advised if there is no symptom.

While it is unclear whether Lianhua Qingwen could prevent Covid-19, a study has found that Lianhua Qingwen has a variety of side effects.

A study published on Frontiers in Pharmacology shows that Lianhua Qingwen has at least 61 chemical compounds and can cause side effects such as nausea, vomiting, stomachache, diarrhea, rash, dry mouth and itching.

Yiling Pharmaceutical also noted on Lianhua Qingwen’s medicine use instruction that patients with high blood pressure or heart diseases should be cautious about using Lianhua Qingwen. Patients with liver problems, diabetics or kidney issues, or children, pregnant women and the elderly should use the medicine under the guidance of a doctor, according to Lianhua Qingwen’s instruction manual.

The controversy has made it evident that Yiling Pharmaceutical might need to disclose more clinical data on Lianhua Qingwen.

(The article is translated and edited with authorization from the author @奇偶派, please note source and hyperlink when reproduce. The original article can be found here.)

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