Chinese bear bile firm seeks expansion despite IPO pullout

 

 

File photo taken on February 22, 2012 shows journalists visiting a bear farm of 

Guizhentang Pharmaceutical Co. Ltd. in Hui’an, southeast China’s Fujian Province.    

Photo by Wei Peiquan

 

 

By Wang Ruoyao, Zhou Yan, Hu Su, Wang Xuetao and Yang Yichen

 

A Chinese bear bile firm has pledged to expand its business after withdrawing its application for an initial public offering (IPO).

Guizhentang Pharmaceutical, which extracts bile from live bears’ gallbladders to produce traditional Chinese medicine (TCM), is among 269 companies that have abandoned their IPO plans so far this year, the China Securities Regulatory Commission said on May 31.

The commission, however, did not give any reason for the pullouts.

Guizhentang terminated the plan because “the time is not ripe,” Wu Ya, the company’s board secretary, said Wednesday.

But the setback will not stall the company’s ongoing expansion projects or stunt its future development, Wu said.

The company will continue to enlarge its bear bile farm in order to triple its current stock of black bears to over 1,200, Wu said.

Construction on the first phase of the farm started in 2009 and has yet to be completed, according to the company’s website.

In addition, the company is planning to develop new drugs containing bear bile extract and will open 600 new franchise stores in the following three years, Wu said.

He said the company expects to reap 1 billion yuan (163.1 million U.S. dollars) in revenue within five years, but declined to give revenue figures for recent years.

Guizhentang may resume its IPO plan when “conditions are ripe,” Wu said, adding that the company will raise the money it needs through other channels, as well as its shareholders.

However, Guizhentang’s ambitions have been called into question by animal rights activists, who have argued that the company’s goals contradict the government’s promise to stop existing bear bile farms from growing.

At the 2012 Congress of the International Union for the Conservation of Nature and Nature Resources (IUCN) held in September, a Chinese delegation agreed on a resolution that requires measures to prevent an increase in the number of captive bears in member states where bear bile farming remains legal.

In 2011, Guizhentang made its first attempt to go public, but the plan was aborted amid protests targeting its treatment of bears. The fundraising was aimed at expanding its farm bear population and increasing its annual output.

A second try one year later was met with fierce opposition from the public, animal welfare groups and celebrities, including retired NBA star Yao Ming.

 

GROWING AWARENESS

Citizens and animal advocates have been pleased to see Guizhentang’s IPO failure and called for the elimination of bear bile farming, which was introduced to China in the early 1980s.

On popular microblogging site Sina Weibo, a post announcing the news and showing a photo of captive bears has been forwarded more than 7,700 times, with over 1,000 users leaving comments.

“This is a victory of conscience,” wrote Weibo user “Ji Dan.”

Consumers should boycott medicine containing bile extracted from live bears, said Zhang Ying, a 26-year-old translator who works at a state-owned company in Beijing.

“By doing so, we’ll make Guizhentang’s IPO impossible and eventually eliminate the whole industry,” she said.

“Only by vigorously pushing forward the development of synthetic alternatives can the government stamp out the practice of bear bile extraction,” said a former senior member of the Chinese Pharmacopoeia who requested anonymity.

Zhang Xiaohai, external affairs director of the Animals Asia Foundation, said the company’s IPO termination will help the foundation avert trouble in future efforts to end bear bile harvesting.

“If Guizhentang had succeeded, our campaign would surely face resistance from numerous shareholders,” Zhang said.

The Hong Kong-based organization has strongly campaigned against the bear bile maker’s IPO plan for the past three years.

Zhang added that the enthusiastic involvement of Chinese citizens in their campaigns signals a growing awareness of animal rights in China.

Guizhentang’s IPO pullout, however, will not end long-running debates that mainly center on whether the bears suffer when being milked for bile.

Bear bile, which has been used in TCM for 3,000 years, is believed to be an effective cure for liver and eye diseases, as well as fever.

China now has 68 legal bear bile farms that house over 10,000 black bears, according to the China Association of TCM.

Guizhentang has assured skeptics that it uses painless methods to milk the bears every day by temporarily inserting a fine catheter into their abdomens.

It promises the operation is not detrimental to the bears’ health and is much more humane than a practice used decades ago that forced the animals to wear mental pipes inserted into their abdomens day and night.

But animal rights advocates argue that the new method fails to reduce suffering, as it also results in open, non-healing wounds.

In addition, bear bile producers, TCM experts and animal rights advocates also hold divergent opinions on whether the use of natural bear bile can be fully replaced by synthetic alternatives or other drugs.

Foreign pharmaceutical firms have produced ursodeoxycholic acid, the active therapeutic substance in bear bile, for decades. The synthetic drug is extensively used to treat gallstones and liver cancer worldwide.

“Culture should never be used as an excuse for animal mistreatment and the Chinese culture is definitely not a culture of cruelty,” Zhang said.

 

SALES AFFECTED

The controversy swirling around Guizhentang seems to have cast a shadow on its sales in large cities, where citizens tend to be more concerned with animal welfare.

At a large drugstore in downtown Beijing, bottled bear bile powder sells for 220 yuan per gram.

Song Yigang, a PR manager for Beijing Golden Elephant Pharmacy, said sales of Guizhentang’s bear bile products are expected to halve this year in comparison to 2011 and 2012, partly due to public pressure.

The owners of several small pharmacies in Beijing said stopped selling bear bile remedies a long time ago. “Their purchase price is too high and we don’t want to get in trouble,” said one of the owners.

In February 2012, dozens of animal rights advocates rallied outside a Guizhentang store in Shenzhen, a large city in south China’s Guangdong Province, to protest its IPO plan.

Although she has suffered from hepatitis B for three decades, Li Xinmei said she would never buy any bear bile product.

“Bear bile is not the only remedy,” said the 56-year-old resident of north China’s Hebei Province.

Zhang said AAF is working on a proposal to gradually weed out bear bile farming in the next three to five years without cutting too many jobs.

“Relevant parties should create a plan to help those working in the industry make career changes and ensure that investors don’t lose too much,” he said.

The organization has also called for more support from the government on research and development for bear bile substitutes.

 

 

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