Traditional Chinese medicine maker soars after top respiratory expert backs drug to potentially inhibit coronavirus

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Shares of a traditional Chinese medicine (TCM) company surged after receiving validation from the country’s top respiratory expert on the effect of its coronavirus drug, joining two other peers who have seen huge gains this year .

Guangzhou Baiyunshan Pharmaceutical Holdings climbed 13% to HK $ 21.75 in Hong Kong and 10% to 34.18 yuan in Shanghai on Friday, after Zhong Nanshan, the public face of China’s fight against the Covid pandemic -19, said one of its products could potentially inhibit the coronavirus.

Researchers led by Zhong found that Banlangen granules, an herbal medicine popular in China for treating colds and flu, were effective against the virus in a series of in vitro studies, according to a Chinese journal Nanfang Daily quoted him at a conference Tuesday in Guangzhou. The drug was also widely used in the country during the 2003 Severe Acute Respiratory Syndrome (SARS) outbreak.

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Investors clung to the hype surrounding the company even though the studies were still in their infancy and Zhong has not disclosed if or when a research paper or preclinical data would be released. The share advance in Hong Kong marked its biggest daily jump since October 2018, as revenue swelled 24 times to HK $ 240 million ($ 31 million) as of Thursday, according to data from Refinitiv.

Chinese respiratory specialist Zhong Nanshan said one of Guangzhou Baiyunshan Pharmaceutical’s products could potentially inhibit the coronavirus. Photo: Xinhua

Many have pointed to the speculative nature of Friday’s outbreak. “Data from in vitro studies are generally the weakest among preclinical data,” wrote Huang Jianping, managing director of the Shanghai Leader Capital asset management company, in an article posted to the Xueqiu online stock market forum.

Normally, pharmaceutical companies have to go through three phases of clinical trials in humans to establish the effectiveness of drugs, in addition to evidence from animal experiments, he said. “If a company listed on the Nasdaq were to claim that its drug inhibits the virus in in vitro studies, the company would be looked down upon by the market. “

China relied heavily on traditional medicine to fight the virus earlier this year. Despite government efforts to promote the use of these herbal remedies overseas, experts have warned that there is not enough evidence from clinical trials to establish their effectiveness.

Why it is so difficult for China to promote the use of traditional remedies abroad to treat Covid-19

And this isn’t the first time Zhong’s comments have contributed to a drugmaker’s fortune. Two TCM companies listed in Shenzhen, Shijiazhuang Yiling Pharmaceutical and Tianjin Chase Sun Pharmaceutical, raked in huge profits this year, after their drugs were included in the national standard treatment for Covid-19 patients and were recommended by Zhong.

Shijiazhuang Yiling shares are up 94% from a low in March, while Tianjin Chase Sun shares have climbed nearly 50% since mid-March.

Unlike the two companies, Guangzhou Baiyunshan’s products have not been officially approved, and the company reported lower profits for the first half of the year. Net profit fell 31% to 1.8 billion yuan ($ 269 million) from the same period in 2019.

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