Shares of traditional Chinese medicine company rise following Covid outbreak
The stake held by the founding family of one of China’s largest traditional medicine groups has soared in value to $4.5 billion after the country’s latest Covid-19 outbreaks sparked renewed interest for his coronavirus treatment.
Despite the United States explicitly warning against the company’s drugs, shares of billionaire Wu Yiling’s pharmaceutical company, Shijiazhuang Yiling Pharmaceutical, have jumped more than 60% since late December. The latest rally added to the stock’s 160% gain at the start of 2020 after Beijing endorsed its Covid treatment.
Shijiazhuang Yiling’s share price hovered around Rmb8 ($1.26) before the pandemic, but recently hit record highs after the drug was promoted in Hong Kong, closing last week at Rmb31.5. . The rally pushed the value of the owner family’s nearly 55% stake in the company, listed on the Shenzhen Stock Exchange, to around Rmb28.8 billion.
Wu is famous in China for developing a remedy from millipede, scorpion, leech and cicada to treat cardiovascular disease. His company sells a distinct herbal remedy called Lianhua Qingwen, with ingredients such as honeysuckle, licorice root, apricot seed and forsythia, as a treatment for coronavirus. Wu’s company remedy has been endorsed by both Zhong Nanshan, an expert advising the Chinese government on the coronavirus, and Hong Kong leader Carrie Lam.
Hong Kong has been reeling from its biggest Covid outbreak of the pandemic as cases also rise in China, forcing financial hub Shanghai and other cities into lockdown.
Beijing has been actively promoting traditional Chinese medicine on the world stage in recent years, and state media have trumpeted Shijiazhuang Yiling’s success in gaining regulatory approval in African and Middle Eastern countries.
But the US Food and Drug Administration, as well as authorities in Singapore and Australia, warned there was no evidence Lianhua Qingwen had any effect on the virus and cautioned against its use.
The FDA said claims that Lianhua Qingwen could prevent or treat Covid were “not supported by competent and reliable scientific evidence”, while Singapore authorities said in November that there was “no evidence scientific” to show that it can be used to prevent or treat Covid.
The dramatic rise in the company’s stock began after Lianhua Qingwen was recommended in Beijing’s official treatment protocols for the coronavirus in March 2020.
Wu holds a 31.5% stake in the company, while his son and daughter Wu Xiangjun and Wu Rui collectively own 23%, according to the company’s latest quarterly report.
From mid-2020 to late 2021, Shijiazhuang Yiling’s share price was volatile but slid lower as China and Hong Kong appeared to have successfully contained the virus.
A version of the drug that was distributed in mainland China was not initially approved in Hong Kong, and local health officials raided pharmacies selling it as recently as February.
But pro-Beijing lawmakers lobbied the Hong Kong government in March, at the height of the territory’s Omicron wave, to offer exemptions to drug batches. Mainland businesses have donated hundreds of thousands of packs to the city.
Pharmacists working in Hong Kong have said they fear the spread of counterfeit versions of the remedy.
“The question is whether there will be counterfeit versions being sold in Hong Kong and whether citizens will come to recognize them,” said pharmacist Philip Chan. “Without proper registration, drugs could become a public health problem.”