China's Sinovac Biotech halts hepatitis A vaccine production amid boardroom drama over company

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Beijing-based Sinovac Biotech, whose CEO is locked in a battle for control of the company, has suspended production of its hepatitis A vaccine and destroyed supplies on hand.

A yearlong internal power struggle for control of Chinese vaccine maker Sinovac Biotech has spilled from the boardroom to the production floor, forcing the company to suspend manufacturing of its hepatitis A vaccine.

The company said on Tuesday that after repeated interruptions to the power supply at its manufacturing site in Beijing, it was forced to halt production and “destroy the bulk of its hepatitis A vaccines.”

The Beijing-based company, a key supplier to China of a variety of vaccines, blamed the plant power interruptions on interference from Aihua Pan, chairman of Sinovac Beijing, and Sinobioway Biomedicine, a minority shareholder of the Sinovac Chinese controlled subsidiary. Sinobioway Biomedicine has been battling Sinovac Biotech CEO Weidong Yin, M.D., since last year for control of the vaccine maker.

It accused Pan and security guards of "physically preventing Sinovac Beijing employees from working production lines" and cutting power to the plant.

Sinovac Biotech said following the interruptions to the power supply at the Shanghai plant, Sinovac Beijing “initiated its emergency response protocol and resumed production and quality management activities step by step” but that quality assurance checks determined that the “quality and safety of the vaccines could not be sufficiently verified.” It then decided to suspend production and destroy much of the supply on hand.

The company said it will now “fumigate and sterilize the facilities, and verify whether any equipment was damaged by the power outage in April.”

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Sinovac Biotoech has accused its nemesis of using security guards to occupy buildings and trying to get hold of its legal documents. It said the occupation also forced it to scrap a Chinese FDA preinspection of a site that is to manufacture a 23-valent pneumococcal polysaccharide vaccine it is developing. It said the building has been occupied by the "unnamed individuals" since April 17, keeping Sinovac Biotech employees from doing quality checks on vaccine bacterial seeds, which then had to be destroyed.

Sinovac Biotech says it has been unable to determine the total financial impact of these steps.

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Sinovac was the only Nasdaq-listed Chinese vaccine maker when in 2016 it announced a buyout proposal by CEO Yin and investors to take it private at a price that eventually hit $7 a share. Just before the $401.8 million deal closed, Pan and Sinobioway swept in with an offer of $8 a share, but claim they have been shut out by a board playing favorites with Yin, leading to the bizarre drama.

The situation has also been complicated by allegations in court documents that Yin bribed a Chinese FDA official to get vaccines approved, leading to a number of investor class action lawsuits.