VZCZCXRO4964
RR RUEHCN RUEHGH RUEHVC
DE RUEHGZ #0556/01 1350015
ZNR UUUUU ZZH
R 150015Z MAY 07
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 6049
INFO RUEHOO/CHINA POSTS COLLECTIVE
RHHMUNA/HQ USPACOM HONOLULU HI
RUEAUSA/DEPT OF HHS WASHDC
RUCPDOC/USDOC WASHDC
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC

UNCLAS SECTION 01 OF 02 GUANGZHOU 000556 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EEB/CBA AND EEB/TPP/ABT 
USDOC FOR 4420/ITA/MAC/MCQUEEN 
USPACOM FOR FPA 
 
E.O. 12958: N/A 
TAGS: TBIO ECON ETRD SOCI CH
SUBJECT: Guangdong's Pharmaceutical Professional Association Strives 
to Self-Regulate the Sector 
 
REF: A) 06 Guangzhou 15728 
 
     B) 05 Guangzhou 21224 
 
¶1. (U) SUMMARY:  The Guangdong Pharmaceutical Professional 
Association (GPPA) disclosed that in 2006 it issued  a 
self-regulatory code of standards for the local pharmaceutical 
sector in the province.  GPPA's code appears to be an attempt to 
preempt Provincial Government investigation and sanction of the 
region's pharmaceutical companies.  GPPA Vice Chairman Zhang Junxiu 
fully understands the consequences, financial and otherwise, if 
Guangdong's pharmaceutical industry fails to implement the 
appropriate safeguards.  END SUMMARY. 
 
Principles and Content of the Self-Regulatory Code 
------------------- ------------------------------ 
 
¶2. (U) GPPA established the code in order to help its members 
conform to the relevant national laws and regulations.  The 
standards require members to pledge they will not counterfeit 
brand-name products, nor apply for or accept authentication from 
unqualified suppliers.  The GPPA would recommend that the provincial 
government single out, for praise, those who abide by the standards. 
 The GPPA standards also specify penalties for companies that 
violate the code. 
 
¶3. (U) Penalties can include: 
 
-- a warning from the GPPA; 
-- a public statement of criticism; 
-- cancellation of GPPA membership; 
-- reporting the violation to the relevant government 
   administration or law enforcement agency; or 
-- a recommendation that the government revoke the 
   violator's business license. 
 
Implementation of the Standards 
------------------------------- 
 
¶4. (U) GPPA has seven sub-branches which conduct evaluations on a 
random basis of the performance of its members  The code of 
standards applies only to GPPA members.  Nevertheless, GPPA will 
look into the performance of non-member companies from the 
perspective of an ordinary consumer and report regulatory violations 
to the government as well. 
 
Obstacles to Acceptance of Traditional Medicine 
----------------------- ----------------------- 
 
¶5. (U) GPPA Vice Chairman Zhang Junxiu told Econoff that member 
companies hope to expand exports of Chinese traditional medicines. 
He lamented the failure to define Chinese traditional medicine 
treatments in terms of modern western medical science and viewed 
this as a barrier to trade, which  prevents growth in this market 
and its acceptance overseas.  Zhang also expressed strong interest 
in developing a dialogue with the U.S. Food and Drug Administration 
(FDA), PhRMA, and American experts knowledgeable in both Chinese 
traditional medical theory and western medical science. 
 
Background 
---------- 
 
¶6. (U) GPPA is a "social association" registered with the Guangdong 
Civil Administration Office and overseen by the Guangdong Economic 
and Trade Commission.  On September 10, 2006, GPPA issued a 
self-regulatory code of standards for the local pharmaceutical 
sector in Guangdong.  Guangdong's pharmaceutical sector is one of 
the most robust in mainland China.  As a result of the economic 
reform policies of the 1980's, pharmaceutical companies have 
introduced advanced production technologies from other countries. 
Guangdong is also home to several large pharmaceutical factories 
which specialize in Chinese traditional medicine production.  In 
2003, the Provincial Government decided to make the pharmaceutical 
industry one of its nine major industries. 
 
¶7. (U) As a professional association, GPPA has three main goals: to 
ensure that pharmaceutical companies abide by the law, to protect 
its members' legitimate rights and interests (especially IPR), and 
to promote growth in the sector. 
 
Comment 
------- 
 
 
GUANGZHOU 00000556  002 OF 002 
 
 
¶8. (U) GPPA's code of standards appears to be an attempt to preempt 
Provincial Government investigation and sanction of the region's 
pharmaceutical companies.  GPPA is not completely independent of 
government control, nor is it as influential as U.S. professional 
associations.  Implementation of the standards will likely be uneven 
in the short-term, but Vice Chairman Zhang fully understands the 
financial consequences of for the pharmaceutical industry for 
failure to live up to its stated goals. 
 
GOLDBERG