(Yicai Global) Aug. 31 -- A unit of Shanghai Fosun Pharmaceutical Group that makes generic drugs has been charged with raw materials fraud and other irregularities. Fosun Pharma is conscious of the seriousness of the report and is conducting strict on-site investigations to verify the situation, according to its chairman.

If the probe uncovers irregularities, they will be rigorously followed up on and the subsidiary severely sanctioned, Shanghai Securities News reported Chen Qiyu as saying today.

An employee of the unit, Chongqing Pharmaceutical Research Institute, reported that it violated national regulations on drug production and management, revealing that almost none of the company's drugs meet production standards, including an antipsychotic drug called aripiprazole, shows information posted on the website of the local Food and Drug Administration branch in the southwestern Chinese city of Chongqing.

The affiliate cheated to obtain a good manufacturing practices certificate for drugs by fabricating production and inspection records and also paid bribes to FDA oversight personnel, the staffer also alleged.

In-depth investigation is underway into the matters claimed in the report, but illegalities and disciplinary violations such as bribes accepted by FDA inspectors have as yet not been substantiated, the Chongqing FDA said in its investigation progress report today.

The personal details the employee left are not genuine, so it is unable to contact the whistleblower, the agency added.

A wholly owned subsidiary of Fosun is the controlling shareholder of Chongqing Pharmaceutical Research Institute, holding almost 57 percent of its shares. The other investor is Chongqing Medicines Group, according to data from Suzhou Berta Data Technology's Qixinbao company information check app.

Chongqing Chemical & Pharmaceutical Holdings Group holds 75 percent of Chongqing Medicines' shares.

"The company has been informed of the relevant information, but the allegations in the report are false," a staffer told local news outlet National Business Daily, which yesterday contacted Chongqing Pharmaceutical Industry Research Institute. "The municipal FDA is currently investigating, and we will publicly explain only after their results are forthcoming."

Shanghai-based Fosun Pharma's stock [SHA:600196] has fluctuated since the news broke, but ended almost 7 percent lower today at CNY29.20 (USD4.27), down from a closing price of CNY30.57 on the day of the leak.

Editor: Ben Armour