Questions over effectiveness of COVID remedy costs top Chinese scientist $2 billion

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Wu Yiling is one of China’s top scientists. With a fortune that neared $6 billion, he was also one of the world’s 500 richest people.

That was until last week, when the son of another Chinese billionaire sparked debate online with a post doubting the efficacy of Wu’s drug used to treat COVID-19. The herbal remedy, Lianhua Qingwen, is one of three traditional treatments the central government has recommended and was sent to households in Shanghai and Hong Kong during the latest omicron wave.

After a meteoric rise in Wu’s Shijiazhuang Yiling Pharmaceutical Co., the warning by Wang Sicong sent its shares tanking by the maximum 10% limit for two consecutive days. The slide then continued, taking the stock for its worst weekly plunge ever and down 35% from an April 11 peak. The wealth of Wu and his family has dropped $2 billion to below $4 billion, according to the Bloomberg Billionaires Index.

“Now Yiling is facing a test to restore its market recognition,” said Kenny Ng, a strategist at Everbright Securities International in Hong Kong. “In the short term, demand for Lianhua Qingwen should still be strong as the pandemic in mainland China is not yet eased, but in the long term, investors need to rethink whether its revenue can maintain decent growth as COVID subsides around the world.”

Debate over the efficacy of traditional Chinese medicine has intensified in recent weeks as the nation fights its worst outbreak since the early days of the pandemic. While the government has been promoting the remedies, they haven’t received the nod from regulators with global credibility, and the World Health Organization hasn’t approved or recommended the use of Lianhua Qingwen to treat COVID-19.

The plunge in Yiling’s shares started on April 15, after Wang, the son of property billionaire Wang Jianlin, shared a video on Weibo questioning whether the WHO had ever recommended Lianhua Qingwen as a coronavirus remedy. That came after he called on the Twitter-like platform for China’s securities watchdog to investigate Yiling.

Both posts were later deleted, and on Tuesday, Weibo banned Wang because his account “violated related laws and regulations,” according to a notice on his personal page. The following day, Yiling vowed to take legal action against defamatory statements and reiterated its Lianhua Qingwen has some “rare” adverse effects such as nausea, vomiting, abdominal pain.

A representative for Yiling declined to comment.

Wu, the son of a doctor in the northern Hebei province, became interested in medicine when he was a teenager. The 72-year-old studied the traditional Chinese practice and received his master’s degree from the Nanjing University of Chinese Medicine in 1982. He then worked as a doctor before founding Yiling in 1992. The company, which produces treatments to help with conditions including colds, cardiovascular diseases, tumors and diabetes, listed on the Shenzhen exchange in 2011.

Employees of a pharmaceutical company prepare traditional Chinese medicines for COVID-19 patients in Shanghai on April 18. | CHINA DAILY / VIA REUTERS

Lianhua Qingwen came shortly after the outbreak of SARS, and in 2003 the nation’s drug regulator approved it to fight the virus. That same year, Wu was elected as a member of the Chinese People’s Political Consultative Conference, a top national government advisory body. Then in 2009, he joined the Chinese Academy of Engineering, the highest rank a scientist can achieve in China.

While some traditional treatments have several producers, Yiling is the sole maker of Lianhua Qingwen. China has recognized the capsules — a mixture of honeysuckle, rhubarb root, sweet wormwood herb and other natural ingredients — as an effective way to reduce mild COVID-19 symptoms such as fever and sore throat. Singapore, which last year warned the remedy wasn’t approved to treat the coronavirus, is now doing a trial.

The pandemic has been a clear win for Yiling. Sales jumped 51% in 2020 and rose to 10.4 billion yuan ($1.6 billion) in the first three quarters of last year — already 32% higher than for all of 2020. That year, Lianhua Qingwen accounted for one-third of the traditional drugs used to treat flulike symptoms in China’s public hospitals, while Yiling’s respiratory remedies made up almost half of its revenue, according to the latest available annual report.

In a push to elevate Chinese innovations, President Xi Jinping’s government has been promoting traditional Chinese medicine as a COVID-19 treatment to allies worldwide. It’s sent specialists to Cambodia and supported clinical trials in Pakistan, while Russia has been selling Lianhua Qingwen since 2020. The remedy is now available in more than 20 countries.

The rise of Lianhua Qingwen has been a boon for Wu and his two children, who together own 55% of Yiling. Shares of the company, the only listed maker of traditional Chinese medicine with a treatment recommended for COVID-19, have almost tripled in the past three years, compared with losses for Chinese stock indexes.

But questions and comments are now inundating the page of Yiling’s investor-relations platform, urging the company to further clarify market concerns and provide compensation.

“We have enough of your company’s empty talks,” wrote one investor who wasn’t identified other than with the auto-generated name cninfo943685. “Please show more solid clinical-trial data and the latest sales results to restore market confidence.”

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