China is to halt the implementation of a coding system to identify counterfeit drugs that is developed and operated by Alibaba Health Information Technology Ltd (阿里健康), a company controlled by billionaire Jack Ma’s (馬雲) Alibaba Group Holding Ltd (阿里巴巴).
China Food & Drug Administration (FDA) suspended the new electronic coding system as it made draft amendments to existing rules, allowing the use of other methods to build a system that tracks medicines back to their origin, the administration said in a statement published on Saturday.
The company “saw the administration’s statement, but has not yet received notice from China FDA to stop providing technical operation and maintenance services to the supervision network,” Alibaba Health spokeswoman Zhang Lei (張磊) said in a text message yesterday.
While the company, in which Alibaba Group bought a controlling stake in 2014, does not earn any revenue from the Chinese authority at present, the coding system’s earnings potential has been an influential factor for its shares listed in Hong Kong.
The stock plunged 20 percent on Jan. 28 after local media reported China’s drug regulator planned to withdraw the company’s operating rights for the coding system and rebounded 16 percent a day later after Alibaba Health said it had not received any notification from the authority to cease operations.
Alibaba Health’s unit Citic 21CN provides technical and maintenance services to the network, including the identification, authentication and tracking of drugs, it said on Feb. 5.
The company said that although the system has always been owned by the government, the services it provides help to identify counterfeits and resold drugs and deter illegal companies.
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