Drug makers stick by China

Life sciences companies establishing roots despite contamination trouble

At the same time medical imports from China are raising safety concerns worldwide, some local life sciences companies are expanding manufacturing operations there.

At least 19 people have died from allergic reactions linked to contaminated shipments of heparin, a blood thinner, imported from China, according to the Food and Drug Administration. In Panama last year, dozens of deaths were traced to Chinese-made medicine tainted with an ingredient found in antifreeze. And in China itself, hundreds of people were reportedly injured by a contaminated leukemia drug last year.

"While some Chinese [drug] companies are state-of-the art in technology and manufacturing expertise, many are at the opposite end of the spectrum," FDA deputy commissioner Murray Lumpkin told Congress last year.

The safety lapses have put the spotlight on Massachusetts' life sciences industry, which has been forging closer business relationships in China over the past few years. In December, Governor Deval Patrick led a trade mission there, which included a stop at a Shanghai drug manufacturer, WuXi PharmaTech Co. The company boasts 20 Massachusetts customers, including Vertex Pharmaceuticals Inc. of Cambridge.

Other local companies have their own Chinese plants, including Covidien Ltd. of Mansfield and Inverness Medical Innovations Inc. of Waltham, which are both expanding production in China. And Genzyme Corp., the Cambridge biotech, is considering building a small plant in Beijing.

In the United States, drug imports from China have more than quadrupled in the past five years to $401 million in 2007, according to the International Trade Administration, part of the US Department of Commerce. Roughly 3,000 Chinese companies have registered with the FDA to market medical devices in the United States.

There are plenty of reasons for US businesses to operate in China, including lower expenses and the opportunity to gain a foothold in the growing Asian market.

But there are also risks, as evidenced by the heparin incident, that could damage a company's reputation and lead to expensive litigation. Ronald V. Miller Jr., a Baltimore lawyer who is considering filing a lawsuit on behalf of patients injured by heparin, said it is easier to win damages against a company that sells defective products made in China instead of the United States.

"Reasonable people understand that there is some level of concern about Chinese manufacturing," said Miller, a partner in the law firm Miller & Zois LLC. Indeed, he said, jurors might conclude that companies make products in China to cut costs at the expense of safety.

Joseph Leghorn, a Boston lawyer who has represented biomedical companies in product liability suits, disagrees that the China connection will make a difference in court. Leghorn believes juries will hold companies responsible for defective products - no matter where they are made.

But because quality standards can be uneven in China, Leghorn said, companies should spend extra money on quality control, even if that makes operating in China less of a bargain. "You have to make sure you are meeting the same quality control standards that you would for a product made in Europe or America," said Leghorn, a partner with Nixon Peabody LLP.

Meanwhile, Dr. Sidney Wolfe, director of Public Citizen's Health Research Group, predicted there likely will be more injuries from Chinese medical imports because the FDA rarely inspects Chinese plants. More than 700 Chinese drug makers are registered with the FDA, but the cash-strapped agency conducted just 14 inspections in China last fiscal year. And the visits are seldom a surprise, because the Chinese government generally warns companies in advance. Moreover, Chinese regulators do not inspect plants that export all their products to the United States and other countries.

"It's inevitable that we will keep seeing more problems until this is taken care of," Wolfe said.

Still, many observers say the concerns about Chinese manufacturing are overblown. Vertex chief executive Joshua Boger, who accompanied Patrick to China and hands out business cards with Chinese characters on the back, said there have been many more cases of defective drugs made in other countries. Scott Wheelwright, a consultant helping a Chinese company manufacture drugs for Western firms, believes the tainted heparin was an isolated problem. Wheelwright noted that US companies are supposed to make sure their suppliers meet FDA standards. "This was just poor business practice, whatever the source was," said Wheelwright, who is based in Saratoga, Calif.

Despite the safety concerns, US firms are continuing to ramp up manufacturing in the country. Last month, Waltham's Inverness, which makes pregnancy tests and other diagnostic products, said it plans to close its plant in Bedford, England, and move most of the work to low-cost facilities in China, where it has plants in Hangzhou and Shanghai. Inverness spokesman Doug Guarino did not return calls seeking comment.

Covidien, which makes surgical instruments and respiratory equipment at its manufacturing plant in Shanghai, said last year it will triple its workforce there to 300. Covidien spokesman Eric Kraus, however, said safety should not be an issue.

"We have very stringent quality controls," Kraus said. "It's no different in China than it is anywhere in the world."

Genzyme spokesman Bo Piela said the company isn't worried about quality issues if it builds a small "cell therapy" plant in Beijing, because the plant would use a known production process run by Genzyme, rather than an outside partner.

Meanwhile, Vertex, which is developing a promising treatment for hepatitis C, tapped WuXi to manufacture chemicals used in its experimental medicine. WuXi, which said it works with many of the world's biggest drug companies, reported in a financial filing last summer that Vertex is one of its largest customers. WuXi said it is quadrupling the capacity of a plant in Shanghai to meet Vertex's needs.

Boger said Vertex makes frequent visits to the plant - including surprise inspections - to make sure chemicals it receives from WuXi meet FDA standards, just as it would with any outside supplier.

"We are legally responsible for everything, and we take that extremely seriously," Boger said. "We are constantly monitoring what is going on."

Boger said Vertex picked WuXi not to save money, but because it promised to provide high-quality materials and could ramp up production quickly to meet its anticipated demand.

"We are not working with WuXi in China because we are cutting corners," Boger said. "For what they are doing for us, they are the best in the world."

Todd Wallack can be reached at twallack@globe.com.