Traditional Chinese medicine (TCM) manufacturer Guizhentang's plan to get listed in the New Third Board has failed again, three years after it withdrew its IPO application in 2012. Both times, the company had to forego funding following a public backlash over its practice of extracting bear bile - its main product. The company has argued that the process does not cause the bears any discomfort. The wide use of bear bile in TCM has also complicated the issue, as synthetic bear bile is still being tested and isn't as effective as its natural counterpart.
Guizhentang, a manufacturer of traditional Chinese medicine (TCM), has again failed to complete plans for a public listing following an outcry from animal welfare groups over its practice of extracting bile from live bears.
In December 2015, the company published a statement saying that it planned to raise funds by getting listed on the New Third Board, China's over-the-counter board for non-publicly traded companies.
The move came three years after Guizhentang canceled its plan for an IPO in 2012 after an unanticipated public backlash.
This time, the Fujian-based TCM manufacturer was more prudent. It submitted a statement of more than 140,000 words, detailing the company's revenue and profits over the last three years, along with five certificates, including a breeding and animal epidemic prevention permit, to justify its qualifications to tap the capital market.
However, despite its efforts, the bid was aborted again in recent months, in the wake of withering public outcry to block the company from listing.
The company's main product, which is extracted from bear bile - a digestive fluid produced by liver - and used in TCM, has been the center of controversy.
A controversial business
Various animal welfare groups, including the Ta Foundation, the Animals Asia Foundation, and World Animal Protection, have publicly condemned the practice of extracting bear bile for being cruel, and called for China's securities regulator to closely scrutinize the company's business.
"The way that bile extracted will not only cause the bears excruciating pain, but also exposes bears' organs to open air and can lead to serious health risks, like illness and infection," Zhang Xiaohai, secretary-general of the Ta Foundation, told the Global Times, noting that the process is both physically and psychologically harmful to bears.
"The day [when Guizhentang halted listing] came earlier than we expected," the TA Foundation said at its microblog.
The organization also questioned whether the healthcare products sold by Guizhentang contain bear bile, which violates a Ministry of Health regulation issued in 2011, according to a statement that the Ta Foundation sent to Global Times on Tuesday.
Guizhentang refused to discuss the matter when contacted by the Global Times on Monday. Its website was down for maintenance since Monday.
According to media reports, the company emphasized that it employed a bile-harvesting method that doesn't cause any discomfort to the animal.
The company also said that the bears living under its care enjoy satisfying living conditions in environment similar to the wilderness.
The drug maker also blamed that some of animal welfare organizations spread photos taken 20 years ago of bear bile extractions in order to tar the company's reputation.
According to the data released by Guizhentang, the company's net assets tripled over the last three years, jumping from 334 million yuan ($52 million) in 2013 to 1 billion yuan in 2015. The company now rears 899 bears, up from 400 in 2013.
The company manufactures more than 30 products, of which the only two drugs made from bear bile - "bear bile powder" and "bear bile capsules" are the "top sellers," a Guizhentang employee told the Global Times on Monday.
TCM connection
Guizhentang is not the only player in the business of producing bear bile.
In China, there are currently 68 farms where bile is extracted from 20,000 bears, according to a report published on Monday by the State Council, China's cabinet.
The reason why Guizhentang and other such producers have been so successful is that bear bile is a valuable ingredient in TCM, according to Chinese medicine practitioners.
Huang Junshan, a professor at the Fujian-based Academy of Traditional Chinese Medicine, said that the use of bear bile in Chinese medicine dates back to the Tang Dynasty (618-907). The substance is used in the treatment of gallstones and fever, as well as liver and heart disease.
Bear bile powder has also been used as an agent in "Chinese patent medicine," such as PienTze Huang, a therapeutic drug for liver diseases, and the well-known traditional Chinese medicine AngongNiuhuang Bolus, which Huang said is effective for febrile diseases.
"Without bear bile, patients will not get the full effect of this medicine," he told Global Times on Tuesday.
Chen Xinling, pharmacologist and vice director of the Fujian People's Hospital, said that one of the main components of bear bile, Ursodesoxycholic acid, has already been synthesized successfully.
For example, Ursofalk, produced by a German drug maker, has been approved by the China Food and Drug Administration (CFDA). In China, billions of dollars of this type of drug have been sold in China, Guangzhou-based Southern Weekly reported on Thursday.
However, given the bear bile's complex make-up, it is difficult to find a synthetic alternative for every chemical in the substance, the report said, citing Chinese medicine pharmacologist Li Lianda.
"Bear bile is hard to replicate, and there is still a big difference in efficacy between natural and artificial versions," Southern Weekly reported, citing Wang Guoqiang, the director of the State Administration of TCM.
China's new wildlife protection law went into effect on July 2. The new regulation restricts the use of endangered species, but allows the manufacture of products made from endangered species, under which bear bile farming is still permitted.
On Monday, China's State Council proposed closing down the country's bear bile industry by 2035. It offered remedies such as artificial bear bile and government subsidies, according to a document published on its website.
Little progress has been made on the research for artificial bear bile. The experiment began in 1983 and a second round of clinical testing was completed in 1992. Yet in the 33 years since research began, the artificial substitute has not been approved for the public.
"It involves too many interests of multiple parties," the report noted, citing a professor who participated in the second round of clinical tests.
