Shenzhen Heparin Maker Emphasizes Differences with

UNCLAS SECTION 01 OF 02 GUANGZHOU 000148 SIPDIS SENSITIVE SIPDIS STATE PASS CONSUMER PRODUCTS SAFETY COMMISSION RICH O'BRIEN/INTL PROGRAMS STATE PASS USTR CHINA OFFICE STATE PASS HOMELAND SECURITY COUNCIL STATE PASS IMPORT SAFETY WORKING GROUP HHS FOR OGHA - STEIGER, HICKEY HHS PASS TO FDA FOR LUMPKIN CDC/ATLANTA FOR OGHA BOUNT AND CCID E.O. 12958: N/A TAGS: ETRD EIND TBIO SOCI ECON PGOV PREL CH SUBJECT: Shenzhen Heparin Maker Emphasizes Differences with Changzhou SPL REF: BEIJING 762 (U) This document is sensitive but unclassified. Please protect accordingly. Not for release outside U.S. government channels. Not for internet publication. ¶1. (U) Summary: Shenzhen Hepalink Pharmaceutical Co. - recently the focus of a Wall Street Journal article - clearly takes product safety very seriously and is anxious to reassure visitors about its quality assurance and supply control procedures. The only heparin producer in China to receive U.S. Food and Drug Administration (FDA) approval, and be certified by German and EU regulators in addition to China's State Food and Drug Administration (SFDA),the company buys crude heparin only from large suppliers approved by Chinese regulators. It regularly inspects its suppliers (photographing all their processes),meticulously tracks the manufacturing process and maintains tight security at its state-of-the-art factory. If there were to be any problems with its product, managers are confident that they would be able to track exactly where mistakes had occurred. The Attitude - Taking Safety Seriously -------------- ¶2. (SBU) "We know our products have to do with life and death, and we take that responsibility very seriously," Shenzhen Hepalink Pharmaceutical Co. CEO Li Li told Congenoff during a March 7 visit to the firm's factory. Li and his colleagues went to great lengths to show that their quality control measures and product tracking procedures would prevent the types of contamination that appeared in heparin produced by Baxter International Inc. Shenzhen Hepalink, established in Chongqing in 1986 (and moved to Shenzhen in 1998),is the only heparin producer in China to gain approval from the U.S. FDA. The privately-owned company employs over 300 people at its Shenzhen headquarters. Its quality assurance workers make up 31 percent of total staff, more than any other category of employee. "If you plan to stay in business, you must be devoted to quality," Li said. ¶3. (SBU) Although Hepalink has sold to Europe since 2000, it only entered the U.S. market in the fall of 2005, after gaining FDA approval. The company ships about 2,700 kg of product to the United States each year, accounting for about 10 percent of its total annual sales. The Oversight - Standing up to Scrutiny -------------- ¶4. (SBU) In addition to U.S. FDA approval, Shenzhen Hepalink has also been certified by the German drug regulatory agency and the European Union Agency for the Evaluation of Medicinal Products. It has scores of licenses from the Chinese government, including an SFDA drug-production license, a business license, and individual certifications to manufacture each of its products. CEO Li emphasized that Chinese law makes it illegal for any company not registered and certified as a pharmaceutical company to produce or manufacture drugs. He noted that since 2005, Shenzhen Hepalink has been inspected nine times by the food and drug administrations of various countries, been audited by customers 25 times, and passed an official inspection by the US FDA. In 2007 the company passed an unannounced SFDA inspection. Every year the company is inspected no less than eight additional times, for compliance with Chinese government Good Manufacturing Practice (GMP) standards. Every one of the company's standard operating procedures (SOPs) meets U.S. FDA standards. "This is the only way to guarantee quality," Li said. ¶5. (SBU) In contrast, Li said, Baxter's supplier, Scientific Protein Laboratories (SPL),is registered in China as a chemical company, not a drug manufacturer. This allowed SPL to sidestep many Chinese government regulations, including ones prohibiting the buying of crude heparin from unregulated workshops. The Supply Chain - Choosing Carefully GUANGZHOU 00000148 002 OF 002 -------------- ¶6. (SBU) According Shenzhen Hepalink executives, the firm buys its raw materials, derived from pig intestines, only from slaughterhouses that have been approved by the Chinese SFDA. As much as 70 percent of the China's crude heparin comes from small factories, some just family-owned workshops featuring a table and cooking pots in poor villages. However, the suppliers Shenzhen Hepalink uses are larger, more established operations that employ hundreds of workers, meet all Chinese government legal regulations, and can track their goods through the entire production process. Shenzhen Hepalink audits each of the slaughterhouses that supply its raw ingredients. Its staff visits each factory periodically, photographs each step in the process, and documents sanitary and working conditions. Each slaughterhouse's licenses and government registrations are checked to make sure they're current. The Manufacturing Process - Tracking Meticulously -------------- -------------- ¶7. (SBU) Shenzhen Hepalink maintains careful tracking controls throughout the manufacturing process. The firm's managers explained to us that suppliers are required to pack their crude heparin in a sealed container with the Shenzhen Hepalink locking seal before it is flown to the factory in Shenzhen for refining. The refining process, which includes a tightly-controlled process to remove impurities, takes 30 days. Each step is recorded and traceable -- the company has some 1,600 standard operating procedures (SOPs) and nearly 3,000 record sheets for the production process. It holds an average of 50 training sessions per year for each employee on the tracking process and other quality control procedures. ¶8. (SBU) Quality Assurance Vice President Li Tan explained to us that she knows exactly who has done what to the product at any time in the manufacturing process. She signs off personally on every batch of the drug to be shipped to consumers. Even during Congenoff's visit, every time we entered a room to observe a step of the process, one of the executives had to sign off on a record sheet. The Factory - State-of-the-Art Purity and Security -------------- -------------- ¶9. (SBU) The Shenzhen Hepalink plant is a state-of-the-art facility with high-quality equipment from the United States, Europe and Japan. CEO Li said the 10,000 square meter facility was designed from the start to meet the highest regulatory standards in the world. It features laboratories that use infrared and ultraviolet light to check for impurities and solvent residue; a freezer vacuum from Japan; ultracentrifuges that remove impurities from the batches of heparin; and GPS tracking of its wastewater to make sure none enters the city water supply. The entire factory is antiseptic: visitors must cover their mouths, hands, feet, hair, and bodies to tour the grounds. The factory distills its own water and ionizes its own air, so that both of these ingredients are of the highest quality when used in the drug manufacturing process. ¶10. (SBU) Many sections -- including the crude heparin storage area, some of the labs, and the finished product storage area -- are locked and guarded by a worker who signs in all visitors to ensure that every possible input in the process is recorded. This requirement was strictly enforced during Congenoff's visit. The factory's compliance room is filled floor-to-ceiling with shelves of plastic binders full of these records, each representing a single batch of heparin manufactured here. If anything ever did go wrong with their product, company officials are confident they could go back and find exactly where in the process the mistake happened and who was responsible. GOLDBERG