September 12, 2005

Chinese and US officials claim to have dismantled a multimillion-dollar fake pharmaceuticals ring, with one US citizen and 11 Chinese citizens arrested. The illegal products — manufactured in the northern city of Tianjin and the central province of Hunan — were sold over the Internet in the US, UK and Israel.

The illegal products seized included pirated versions of Lipitor, Cialis, Levitra and Viagra, some of the world's best-selling drugs. Chinese officials, meanwhile, have commented that the action marks "the beginning, not the end" of efforts to deal with China's lucrative and fast-growing fake drug problem.

This is not surprising, in view of China's attitude toward pharmaceutical patents in the recent years. In 2004, the authorities revoked the patent on Viagra, which may have been interpreted by some at the time as a green light to manufacture local copy and fake versions of the blockbuster drug. Copying was legal until 1993.

US trade association PhRMA estimates that legitimate drug firms in China lose roughly 15% of their annual income to counterfeiters. In the recent past, patent rights were left to manufacturers to enforce and standards for patented active ingredients fell under lax, non-pharmaceutical legislation. Industry sources also add that given the scale of the problem, such anti-counterfeiting successes currently amount to little more than public relations exercises.