The Co-operative Group’s joint venture, the Tianjin Tasly Sants Pharmaceutical Company

Neville Cox recently asked: “Has anyone you know given approval for a Co-op owned drug factory in China?  Is it built yet?”   A lengthy online search was needed before learning more. 

In 2007 it was widely reported that the Co-operative Group was to become the first UK business to manufacture its own prescription drugs in China as part of a joint venture with the Chinese multinational Tasly Group, one of the country’s top three drug companies. The Financial Times article can be read here and a full account can be read on the UK’s Trade and Industry website here

Sants, the medicine wholesale subsidiary of Co-operative Group, invested £20m towards the development of a manufacturing plant in Tianjin, as part of a joint venture agreement with Tasly Group, one of China’s largest herbal medicine manufacturers. Tasly owns 40% of the venture. Sants is to supply the medicines to the Co-op’s pharmacy outlets and look for opportunities to market the drugs across the EU. 

Production of well-established generic prescription drugs was planned to take place at a newly constructed factory, employing 200 people. John Nuttall, managing director of the healthcare division of the Co-op, said the new factory would make well-established generic medicines as well as newer generic versions of drugs that have recently come off-patent. These will be brought back to the UK to supply the Co-op’s 600 pharmacies. 

Serious misgivings 

At a time when dangerous manufacturing errors were being made by Chinese companies, some correspondents in the Co-operative News voiced serious misgivings about this proposal [including Ernest E. Nice, Barbara Panvel, Neville Cox].

A Guardian article reported that China had been criticised recently for the lack of safety of some of its products. The head of the country’s food and drug administration was executed after he was found guilty of accepting bribes from companies to approve their products without the necessary checks. Some of the drugs were blamed for several deaths. 

In 2008 Neville Cox wrote to the News saying that he was not aware of any input by the membership into this move, asking readers to  “imagine the results if a medicine supplied by the Co-op is not up to standard and even worse, if it causes serious ill effects . . .” 

Findings – following the extensive coverage in 2007 

In 2008, the Co-op’s chief financial officer Martyn Wates  acknowledged, in the Accountancy Age, that many members were wondering how Co-op’s strict ethical policies would be adhered to in a country noted for its relationship with sweatshop labour. He argued that engagement is better than avoidance. ‘A lot of plcs are not venturing there yet and I suppose it does raise ethical issues: why should Co-op trade with China? Because we will work with this company which already has high standards, to raise standards in that country. We are commercially focused and we can make the ethics in that deal work, having done a lot of social auditing on employee conditions and manufacturing practices over there”. 

No pictures of the factory were found, but Tasly’s website noted that on April 17th, a media group of journalists from ten countries arrived in Tianjin to see the company’s research centre and production plant.

In 2009 the Group’s Annual Financial Report said: “Our joint venture in China should be in production towards the end of the year.” 

On 30th March 2011 the Group’s Annual Financial Report announced: “In 2010, we received regulatory approval that allowed us to begin generic medicine production at our joint venture manufacturing facility in China. 

“This will increase in 2011, making further significant improvements to our margins.” 

Co-operators’ concern: members are not able to vote on the outcome of really major changes . . . except in Lincolnshire – and elsewhere?  As a member wrote to David Anderson of CFS in 2009: 

“Poor governance is the movement’s Achilles Heel – though worker co-operatives are an honourable exception. If members truly were able to vote on the outcome of really major changes which only come along every few years: like the manufacturing of pharmaceuticals in China or the almost overnight closure of the profitable Birmingham Dairy, it would gain new life and new members.”

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