The Shenzhen-based Joincare Pharmaceutical Group, a Shanghai Stock Exchange-listed company, suspended trading Thursday, immediately after the Shanghai Securities News's report that its subsidiary in Jiaozuo, Henan Province, was once a big client of an underground Shandong-based gutter oil network.
The Shandong network was the center of the biggest case of its kind ever in China, which resulted in some 20 suspects being put on trial on August 23 at the Ningbo Intermediate People's Court, Zhejiang Province.
But experts say that gutter oil has legitimate uses in medication, contradicting reports that stated the run-off product was being used to cut corners and could pose health risks.
The company was rebuked for poisoning the public by the Shanghai Securities News after the discovery of its purchase of gutter oil worth 145 million yuan ($22.8 million) from the Shandong-based network.
The gutter oil is used in the making of a special product called 7-ACA, a pharmaceutical intermediate needed in producing antibiotics, and products made from gutter oil have been sold to a wide range of areas, said the report.
However, experts reached by the Global Times Thursday said the likelihood of negative effects on public health is quite small.
"It is barely possible to detect any gutter oil in the final medicine, nor are people likely to get sick from it, although the process of making 7-ACA sometimes needs it," Zhou Xun, director of the safety supervision department of the Shanghai Municipal Food and Drug Administration, told the Global Times. "The process is long and many procedures are involved before the 7-ACA becomes medicine."
The Jiaozuo subsidiary was the biggest client, purchasing half of the total volume of gutter oil that Henan Huikang, a distributor of the Shandong underground oil network, sold from early 2010 to July 2011.
Suspects charged for involvement in the network, which spanned 14 provinces, are still waiting for a verdict.
Joincare said in a statement posted on its website Thursday that the company was not aware that the soybean oil purchased from Henan Huikang, one of its Jiaozuo subsidiary's suppliers, was mixed with gutter oil. The company is willing to take responsibility for any resulting flaws of its 7-ACA product.
Yang Sheng, a researcher at the Shanghai Institutes for Biological Sciences under the Chinese Academy of Sciences, said though public health would not be influenced, it was still necessary for the company to inform the public in advance.
"It's natural to have such a strong opposition against gutter oil. Some people would avoid choosing the medicine if they knew the gutter oil was used," Yang told the Global Times, adding that a wide price gap exists between medicines using standard oil and those using gutter oil, and officials should strengthen their supervision in the early production process.
Zhou said the production of 7-ACA is currently not on the radar of drug watchdogs because the intermediate is positioned at a very early stage in the whole pharmaceutical chain.
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