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


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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