What are the warnings for medical professionals about the decline in red, yellow and blue shares and the loss of $300 million in

Red, yellow, blue, although industry domain, but under the crisis of the market, has enough to make all pharmaceutical enterprise of warning: if the illegal cost low status is still not enough to make the medicine compliance management consciousness raising, but because of the crisis on market performance and the influence of corporate reputation is a fatal thing!

After the case of child abuse in ctrip parent-child park attracted intense public attention, "China's first independent pre-school education brand", red, yellow and blue, has been exposed again. Such bad behaviour as needles, pills, nude stands and child molestation has created a stir in public opinion.

This is not the first time something like this has happened. From nearly 100 cases of child abuse by preschool teachers in wenling, zhejiang province, to more than 70 cases of child abuse in a kindergarten classroom in Shanxi Province, to the corporal punishment of a 3-year-old and a half boy in a kindergarten in hebei province, to the recent ctrip, red, yellow and blue incidents, child abuse has never seemed to disappear from the spotlight.

The key question is, why does child abuse happen again and again in kindergartens? Throw out the mental state and moral quality of the people involved. What is the basis for them to dare to carry out this illegal act?

The answer is pretty clear: the cost of breaking the law is low. Related abuse cases from previous reports, the end result, br preschool teacher apologize to children and family, or give some compensation, serious, troupe involved teachers fired, or brief controlled by the public security organ, and really be in criminal punishment, few and far between, the involved institutions of punishment, is also rare.

But what are the authorities afraid of? It's also clear: market performance. As a us-listed company, the capital markets reacted quickly to the outbreak of child abuse at the red, yellow and blue kindergarten: shares fell more than 40 per cent, falling below their offering price and wiping out $300m in market value. Red, yellow and blue also had to spend $50 million to buy back shares in the first place, with little effect.

On the face of it, what does the field of early childhood education, where red, yellow and blue lie, have to do with the field of medicine? But in fact, although the industry domain, but the market performance of red yellow blue under the crisis, was enough for all the pharmaceutical enterprises of warning: if the illegal cost low status is still not enough to make the medicine compliance management consciousness raising, but because of the crisis on market performance and the influence of corporate reputation is a fatal thing!

1

Cases are frequent and the illegal cost is low

It is a clear fact that, similar to other industries, the low cost of illegal activities in the pharmaceutical industry has become an important factor in the continuous illegal and illegal behaviors of pharmaceutical enterprises.

Taking the environmental protection issue that has attracted increasing attention in recent years as an example, relevant data show that as a major producer of chemical API, China's production capacity in this field, especially fermentative pharmaceutical products, ranks first in the world, accounting for about 70% of global production. However, the "three wastes" produced in the production of API have always been paid attention by regulators due to its complex composition and serious pollution hazards. Since 2017, environmental protection authorities have also stepped up inspections, especially in the provinces of shandong and hebei, where the bulk drugs are produced.

However, it is not uncommon for drug companies to be punished for environmental problems, but the severity of the punishment is far from strict. In September 2017, six pharmaceutical companies in yinchuan city were fined 2.2 million yuan according to the air pollution prevention and control law, with an average family of less than 400,000 yuan. In March 2017, shandong keyuan pharmaceutical co., LTD., a neeq listed company affiliated to linuo group, exceeded the standard and discharged air pollutants, with a fine of only 200,000 yuan. In 2015, shandong rukang pharmaceutical co., LTD., which had a record of environmental violations, was again fined 50,000 yuan for environmental problems. Compared with pharmaceutical companies' annual profits of tens of millions of dollars, the deterrent effect of fines is clear.

For another example, over a long period of time, drug companies have been violating GSP more and more frequently. There are some behaviors that affect the quality of medicines, such as insufficient cold chain quality management, false temperature and humidity, inadequate warehouse management and so on. The regulatory authorities have also begun to respond quickly. According to incomplete statistics, in 2016, the GSP certificates of 739 pharmaceutical enterprises were revoked across the country, including 168 provincial bureaus and 571 municipal bureaus. It is worth noting that this is already the most severe punishment for such violations, but in spite of this, the relevant enterprises can still apply for the certificate after six months 'suspension of operation.

However, in the promotion of products by pharmaceutical companies, illegal advertisements are used to exaggerate the scope of adaptation of products and conduct false publicity. Currently, the punishment for pharmaceutical companies is even more trivial. But the cost of such violations is much higher abroad. Astrazeneca was fined $355 million more than a decade ago for inducing doctors to use drugs, and in 2009 Pfizer, the world's biggest drugmaker, agreed to pay about $2.3 billion for mismarketing 13 drugs.

Similar "sky-high compensation" from pharmaceutical companies is not an isolated case in the United States, especially when it comes to lawsuits over quality issues. Johnson &johnson has received more than 4,800 lawsuits in the United States over a potential cancer risk from a talcum powder hygiene product, with the highest award of $417 million.

In fact, the low cost of breaking the law has existed for many years, and its impact has been recognized gradually, and a series of new measures have been introduced. Still on environmental problems, for example, claims to be history's most severe new "environmental law" the regulation of enterprises and institutions, and other illegal discharge of pollutants, the production operators are fine, was ordered to make corrections, and refused to correct, the administrative organ in accordance with the law as the penalty decision may be from shall be ordered to correct the date of the next day, according to the original penalty amount on a daily basis for punishment. This is thought to be a huge increase in the cost of breaking the law, but how effective it is in practice, in the case of the past year, the punishment has indeed increased compared with the previous punishment, but it still seems to be a drop in the bucket for enterprises.

2

Be alert to emergencies that trigger crises

It is precisely because of the low cost of violation of laws and even the high cost of compliance. Neither pharmaceutical companies nor other types of enterprises are able to form the motivation of compliance operation under the shock and awe of regulations. However, what pharmaceutical companies must be alert to is something similar to the emergency that caused the stock price of red, yellow and blue to plummet this time. As it turns out, the good stories told in the capital markets, which had previously spent a lot of resources, are likely to be destroyed by an emergency.

This is not without precedent. Shares in Ariad, the us pharmaceuticals company, plunged almost 15 per cent to $387m after it quadrupled the wholesale price of its leukaemia drug Iclusig to $199,000 a year, after senator BernieSanders, a non-partisan independent, launched an attack on its official Twitter account.

Similarly, the world-famous Israeli pharmaceutical company teva has been accused by the us foreign corrupt practices act after it was revealed that its subsidiaries paid bribes to win business in Ukraine, Mexico and Russia. As a result, Teva ended up paying a $519 million fine.

Besides affecting market value and market performance, the impact on corporate reputation is also significant. Take the "poison capsules" incident that shocked the whole country a few years ago. On April 15, 2012, the weekly quality report of CCTV revealed that some enterprises in hebei province used quicklime to bleach and clean leather waste, then boiled it into industrial gelatin, sold it to the pharmaceutical capsule manufacturer in xinchang county, zhejiang province, and eventually to the pharmaceutical enterprise. According to the investigation, the content of heavy metal chromium in capsules used in 13 batches of medicines in nine pharmaceutical companies, including some of the star pharmaceutical companies at the time, exceeded the limit, with the maximum exceeding 90 times. The incident has led directly to today's resentment of the "poison capsule" company, whose image is hard to recover.

In a word, the compliance management of enterprises should not be a thing forced to complete under strict laws. When the non-compliance happens, there are always some potential dangers surging in the dark stream, like the powder that has ignited fuse, which may explode at any time. On the one hand, with the gradual improvement of national and industrial laws and regulations, the increase of illegal costs is inevitable. On the other hand, the market will always respond most directly. To avoid similar crises, compliance management has become a necessity.