Banking & Finance

Drug problem

China’s richest couple hit by American FDA announcement

Drug problem

They were China’s richest couple – for about a month, anyway. Li Li and Li Tan shot to prominence with the IPO of pharma firm, Hepalink, which in early May surged in value. Their net worth was put at $6.2 billion. Hepalink makes heparin API, an anticoagulant used in medicine – and which it derives from pig’s small intestines. Investors were particularly excited about the 180 million porcine intestines in Sichuan that Hepalink had exclusive access to, giving it a commanding position in the heparin-making sector.

But they were most excited of all by the company’s claim that it was the only Chinese firm to be certified by America’s FDA to sell heparin. That saw the company’s stock jump 35% from its issue price of Rmb148 (see Who’s Hu in WiC59).

However, the Li’s paper wealth was decimated by close to $1.5 billion when a spokesperson for the US Food and Drug Administration later told Chinese media it had not certified Hepalink after all. FDA spokeswomen Karen Riley made clear that the organisation only certified finished medicines and not raw materials such as heparin.

Official news agency Xinhua commented angrily that Hepalink had “reported false information in its previous IPO prospectus”.

On the back of that revelation, China Business News conducted an investigation of Hepalink’s 2009 financials and calculated that the company’s sales may even have been inflated by over Rmb200 million – adding to the mood of controversy surrounding the company. All this bad news caused the stock to slump well below its IPO price. “Li and his wife no longer hold their position as China’s richest,” reports the Global Times. Mind you, they are still billionaires.

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