Wednesday, March 19, 2008

Chinese Substitutions Persist

It's official! Chinese blood thinner ingredient suppliers substituted a much cheaper chemical, over-sulfated chondroitin sulfate. Investigators say it could not have arisen from the manufacturing process and had to be added. What did this financial freewheeling do to heparin customers? A Washington Post report said:

The contaminant is believed to have caused more than 700 severe allergic reactions in U.S. patients, including a still undetermined number of deaths (19 estimated out of 40 reported).

The heparin case is reminiscent of the discovery last year that Chinese suppliers had been putting the compound melamine into gluten used by U.S. pet food manufacturers. Thousands of American pets became sick or died as a result.

As in the pet food case, the chondroitin sulfate is considerably cheaper than the heparin the Chinese manufacturer was making.

Recall that American companies substituted much cheaper Chinese labor for American by contracting out production of their goods to Chinese firms. The Communist country deals with its quality problems by executing bureaucrats (pictured above). In the case of Baxter Healthcare and Scientific Protein Labs, there is an unusual element other than their inability to monitor the quality of their products. SPL owns part of the Chinese firm that produced the tainted product. Also, SPL was brought out by an investment firm in 2006. How did their profit targets change behavior domestically and in the Chinese firm?