- Interview with TANG Xiuwen, Chairman at the Daphne Pharmaceutical Co., Ltd.Yunnan 
Staff reporter ZHANG Zhen
“Go to the world right from here”. When standing on the roof of the upcoming Wenshan World Panax pseudo-ginseng Trade Center and overlooking the vast land extending far beyond his sight, Mr. TANG Xiuwen, Chairman of the Daphne Pharmaceutical Co., Ltd.Yunnan  is so excited. The production premises of 150,000 square meters (drug and health food workshops) and storage space of 7000 square meters, covering an area of 90 mu and floor area of 370,000 square meters, are constructed to the GMP standard, forming a spotlight in the Wenshan Panax pseudo-ginseng Industrial Park. The green plants and landscapes cover the entire plant area. Entering into a workshop, you will see a bright hall with a jumbo electronic display. Behind the hall is the key place where the drugs or health foods are produced. Each system and process is like a “maze”. The entire workshop fully displays the modern production means. Mr. TANG Xiuwen says, this workshop is currently a best equipped drug and food production workshop in the Yunnan province, ensuring the product quality in the area of production hardware.
Mr. TANG’s feeling is comprehensible. 10 years ago, he started from here for “survival”. Now, he will start from here once again, but for global business expansion. Let Wenshan panax pseudo-ginseng go to the world. This is the ultimate pursuit and dream of TANG Xiuwen and his Daphne.

Jumping the Bandwagon of Wenshan Panax Pseudo-ginseng Industry
    Ask: Mr. TANG, you started your own business in 1981 as an individual carrier. May I know if you started to make money just after shifting to the drug sales and manufacturing business?
    Answer: You are partially right. At the very beginning, I joined the drug business as an agent and accumulated some capital. That vaulted me in the group of the wealthy. In 1994, I formed a small pharmaceutical factory in Wenshan. That marked my first step in the drug manufacturing business. Since then, the old panax pseudo-ginseng legend has been re-staged. “Miss Panax pseudo-ginseng” has become Daphne, Goddess of Moon, and brought us a “money maker”. Last year, this private enterprise with scarcely 100 employees, by development and production of panax pseudo-ginseng, reported annual sales of RMB 200 million yuan and profit of RMB 21 million yuan, becoming one of the 10 key pharmaceutical enterprises to be supported by the Yunnan Province. Over the past decade, we not only survived the cut-throat competition, but also showed good business outlook.
    Ask: The Wenshan Zhuang & Miao Autonomous Prefecture is the top sixth contributor to GDP of the Yunnan province, but it’s the only contributor without backing of tobacco business. Is that right?
    Answer: Yes. Tobacco is undoubtedly a key player in the economy of the Yunnan province. But you know, panax pseudo-ginseng is the most attractive and competitive plant resource in the Wenshan Prefecture. Noticing this point, the CPC Wenshan Prefectural Committee and Prefectural People’s Government lists panax pseudo-ginseng as a key industry to be fostered. This policy is in line with the Yunnan provincial government’s strategy of building a strong green economy and branding the industry of “Yunnan Medicines”. It is instrumental to the long-term economic development strategy of the Wenshan area. Daphne is just an example of enterprises taking advantage of the panax pseudo-ginseng resources and the Prefecture’s development strategy to build the industrial chain of panax pseudo-ginseng, and push rapid development and boost of the panax pseudo-ginseng industry and enterprises. As a matter of fact, Daphne’s development reflects the potential and promise of the strategy of development of the panax pseudo-ginseng industry.
    Ask: Your enterprise has grown from a small factory starting with production of headache powder and analgin and terramycin to a panax pseudo-ginseng product manfuacturer with the current production capacity. In the traditional sense, you have spanned your business from panax pseudo-ginseng planting and processing to global panax pseudo-ginseng business with modern and standardization. This process must mean much hardship and tremendous difficulty, which may be technical barriers, but more is about development of the industry in the future. How do you overcome these difficulties?
Answer: It’s impossible for me or Daphne alone to overcome all these difficulties. I must thank the local CPC committee, people’s government and people of all walks for their help. As the state is ueling modernization of traditional Chinese medicines (TCM) and the Yunnan Province is vowing to brand “Yunnan Medicines”, the Wenshan Prefecture is making efforts in finding a scientific approach of development, establishing a system for protection of original Wenshan panax pseudo-ginseng products and certification of “Wenshan Panax pseudo-ginseng”, setting national standards for the panax pseudo-ginseng industry, and implementing a support system for GAP planting and GMP certification of the panax pseudo-ginseng products. These efforts have provided strong support to development of the panax pseudo-ginseng industry and the enterprises. Backed by the governments and policies, Daphne develops the products and market in accordance with the international standard and requirements and strengthens its own ability consistently to tackle the problems and push development of Daphne itself and the panax pseudo-ginseng industry.

Market-orientation from the Very Beginning
   Ask: Daphne is the first enterprise in the Yunnan province obtaining GMP certificate of the State Food & Drug Administration, and one of the first pharmaceutical enterprises in Yunnan Province and China obtaining the state GMP certificate. The 11000 mu of panax pseudo-ginseng GAP base owned by the Yunnan Daphne Panax pseudo-ginseng Industry Co., Ltd. is also known as one of the first enterprises in China and the first in the Yunnan Province obtaining GAP certificate from the state food & drug administration for production of TCM materials.
    Answer: You are right. For the Daphne Company, stressing standardization and normalization of business means important for its development in the long run. That’s why we choose to start from a high point. For many people, it’s a surprising decision when we applied for GMP and GAP certification at the very beginning. We stand firmly with what we think is right. Regardless of the difficulty and costs, we will not change our mind, because we treat it as lifeline and base for a manufacturer of food, drug and TCM materials to survive and take foothold in the market, also the key to concrete development of Wenshan panax pseudo-ginseng. Whoever goes first will grab the market.
    Ask: That’s why you are determined to obtain the GAP and GMP certificates.
    Answer: That’s right. GAP, short for Good Agriculture Practice, is basic standards and technical specifications designed to ensure quality of the TCM materials by controlling various factors that may affect quality of the medicinal materials, and normalizing each process in production of the medicinal materials, with the ultimate aim of ensuring “trueness, quality, stability and controllability” of the medicinal materials. In 1996, the US Food and Drug Administration (FDA) drafted guidelines on botanical drug products, requiring botanical drugs for clinical tests to be submitted together with information of the production base of each medicinal material. In 1998, the EUROPAM drafted the GAP standards for medicinal plants for implementation of the producers, processors and practitioners of medicinal plants. The corresponding standards have been promulgated by the Japanese, South Korean and Singaporean regulators. It is agreed among member countries of the World Health Organization (WHO) that quality control of botanical drug products shall start from germ plasm of raw medicinal materials to semi-finished product and finished product, and promotion of GAP and GMP is especially important.
    Ask: Do GAP and GMP certificates mean passport to a broader market? 
　  Answer: That’s right. But this is only start of a series of work. China is rich in the resources of TCM materials, topping the world in terms of the number of varieties and quantity. But due to some reasons, production of the TCM materials is afflicted with the problems like unclear germ plasms, normless planting and processing technology, excessive pesticide residue, high rate of failed sampling tests, and severe damage to wild resources, which are responsible for inferior quality and stability of patented TCM products. To ensure performance of the TCM materials and TCM products in the world market, we have to control the quality from the source. We need to strengthen monitoring in each step in accordance with GAP and GMP, thus to ensure the product quality radically. This means important for grabbing wider market space and more opportunities. 
    Ask: In other words, good material doesn’t necessarily mean good product. Mr. ZHANG Tianxin, Party chief of the Wenshan Prefecture, often stresses that, “Wenshan panax pseudo-ginseng, No.1 in the world”, but that only reflects its advantage in raw material. Its position in the market depends.
    Answer: Yeah. As a flagship enterprise in the Wenshan panax pseudo-ginseng industry, Daphne hopes to lead development of the panax pseudo-ginseng industry, and what’s more important, prove itself in the market. That will give Wenshan panax pseudo-ginseng a say in the national and even global market.
    Ask: Then, what do you think you can do to realize that?
Answer: Looking back at development of the panax pseudo-ginseng industry over the past years, except for the advantage in planting, our knowledge about this magic plant stays mainly in empirical and primitive worship, not to mention further deepening of its fundamental studies. Effort is even few in exploitation of the known new ingredients and functions, thus lack of technical and ideological creation. As a result, the products are in a chaotic status, and the industrial chain is loose, lagging far behind the requirement of intensive systematization necessary for a modern industry. All these things need to be upgraded through the enterprises, so that various elements for development of the panax pseudo-ginseng industry produce the effect of fusion in the industrial chain, and huge development potential of Wenshan panax pseudo-ginseng is realized.

Survival Depends on the Product
    Ask: Why do Daphne products have so big share in the panax pseudo-ginseng market?
    Answer: Our unique drug products Qishengli and Qishengjing and panax pseudo-ginseng health food products Likang Tablets and Tangzhikang Capsules lead the panax pseudo-ginseng industry in China. The famous Menstruation Regulating Capsules, refined using the modern technology and according to folk prescription among the Yi people, are especially designed for women. These products have formed a name product group of Daphne. In the panax pseudo-ginseng industry, Daphne has established a perfect sales system comprising 29 sales outlets. Currently, the Daphne series drugs and health food have heated up the TCM market in Shanghai. The products are also sold in the Japanese, Singaporean, South Korean, Thai, Malaysian, Australian, European and American markets. On the basis of triumph in sales, Daphne has mounted its effort in developing new products and expanding the market, having gained advantage in scale.
    Ask: Can we say successful development of the name product group has made great contribution to success of Daphne in the market?
    Answer: In the Wenshan Prefecture, the number of panax pseudo-ginseng processing enterprises has grown to 26. Daphne, as a breakout star, is now a prefectural leader in development of panax pseudo-ginseng. With introduction of high technology, we separated Rg1 and Rb1 from panax pseudo-ginseng total glycoside, thus giving birth to two high-end panax pseudo-ginseng drug products - Qishengli and Qishengjing. These two new products are beneficial to immunity and regulation of the nervous system. In 2003, Qishengli reported sales of RMB 11.76 mil yuan. Clinical tests in a hospital in Shanghai have shown that it has similar effect with a best drug for Hepatitis B in the world. All these have fully displayed Daphne’s advantage, and fueled market expansion of the Daphne product.
     Ask: Daphne made its name in Shanghai during the epidemic period of “SARS”. Do you think it’s because of the unprecedentedly strong sense of health?
     Answer: Our Likang Tablets, as “the angel of health” from the home of panax pseudo-ginseng arrived at Shanghai in the epidemic period of “SARS”, and made a hit. But we don’t want to rest in these honors. Since entrance into the Shanghai market, “Daphne” has mounted effort in promoting the TCM pharmacological knowledge of panax pseudo-ginseng. This is another major factor contributing to hot sales of our products. In the aspect of pharmacological effect, Daphne has shown the known effect of panax pseudo-ginseng in quickening blood flow, removing stasis, swelling & pains, nourishing the body, and treating injury. In addition, many new effects have been tapped, further boosting the technical level and competitiveness of the TCM products, driving up the need of TCM materials, and regaining consumer’s confidence in TCM products like panax pseudo-ginseng. The Tangzhikang Capsules, for example, are known as the first functional health food product of panax pseudo-ginseng directed at diabetes. Their sales are expanding quickly.   
     Ask: Is R&D an important part in Daphne’s industrial chain?
     Answer: The competitiveness of a product depends largely on the effort in R&D. Daphne has recognized the benefit of R&D. The Company is the first enterprise succeeding in separating Rg1 and Rb1 from panax pseudo-ginseng. Through scientific preparation, we have brought out new type of TCM drugs with the advantage of small dosage, high quality, strong performance and good effect. What’s notable, the products Qishengli, Qishengjing, Likang Tablets and Tangzhikang Capsules are leading the industry in terms of development of panax pseudo-ginseng products. Undoubtedly, development of these new products reflects the technical strength of the enterprise, and makes a great contribution to expansion of the market. 
Currently, Daphne’s panax pseudo-ginseng R&D center joins hands with researchers, home and foreign, to jointly develop the panax pseudo-ginseng product. By introducing new technology and absorbing talents, we strengthen our technical support. We believe Daphne will bring more and better products to boost our competitiveness.

Grabbing the Opportunity to Become an Industrial Leader
 Ask: According to your experience by now, what you think Daphne’s turning point should be?
 Answer: Industry used to be regarded as a term about industrial production. As the modern economic organization is being intensified, now industry is not only about industrial production. It comprises resources, research, product processing and sales. But, what’s signficant, the ultimate goal of industry development is to turn resources into product, so that their feeling of value is realized in the form of product. Therefore, for the panax pseudo-ginseng industry, processing of product is key to success of development of the whole panax pseudo-ginseng industry. It will also be turning point for Daphne. In June 2000, the provincial government approved the proposal of construction of the Panax pseudo-ginseng Industrial Park in Wenshan Prefecture. The target is to build the park into a modern TCM industrial park integrating infrastructure, processing, trading, research, ecology, culture and service. Daphne is the first enterprise moving into the park. The Company invested RMB 250 million yuan to construct drug and health food production premises, with annual production capacity of up to RMB 4 billion yuan. It provides guarantee for our attempt of market expansion. 
Ask: Why does Daphne take the lead to move into the park and construct the production premises?
Answer: Limited by some special conditions such as geographical location, transportation and drug production, wooing enterprises to move into the park may not be an easy thing. As a major panax pseudo-ginseng processing enterprise in the Wenshan Prefecture and a major investor in the park, we take the lead to make demonstration to other enterprises, so that more enterprises move to the park and form a strong panax pseudo-ginseng product processing group, which will mean important to growth of the panax pseudo-ginseng industry.
Ask: The drug managing system is under broad reform in China now. The category of health drugs has been canceled. Spending in health is now a trendy thing. Does it mean new opportunity for Daphne?
 Answer: I have proposed a two-track approach for development in the future. Specifically, the enterprise should seek business growth by “steadily developing the medicinal business and making more effort in developing health food”. That’s why we have spent RMB 5 million yuan in promoting the idea of “ginseng in north China, panax pseudo-ginseng in Wenshan”. There is still large appreciation space of panax pseudo-ginseng. Look at the Korean and American ginseng. Their huge consumption market is driven by diversified business of drugs, health food and health food. South Korea reports annual output value of USD 40 million, while the US reports annual output value of USD 20 billion. In China, ginseng reports output value of RMB 10 million yuan. Seeing this, we want to grab the opportunity brought by system reform and market to extend R&D of panax pseudo-ginseng products to health food and common food. Panax pseudo-ginseng health food is shifting from the idea of snacks to green food and health food.
    Ask: This idea has been advertised for two years. It is benefit to the whole panax pseudo-ginseng industry.
    Answer: The benefit may not be significant for us now. But as our weight is increasing in the whole industry, the market share will show our benefit someday. I think, we must take a market share of no less than 30%, or else it will mean failure for the huge investment.
    Ask: Panax pseudo-ginseng makes sense not only for the Wenshan Prefecture, but also for the whole Yunnan Province and even the whole country. It is expected to be one of the most promising TCM materials in the global market. Now, popularity of panax pseudo-ginseng is increasing. So are its production and selling prices.
    Answer: The purchasing price of raw panax pseudo-ginseng is increasing sharply. Last year, the price more than doubled compared to the previous year. In the second half of last year, the comprehensive price of panax pseudo-ginseng further advanced by more than 30%. The quality & image of the raw material and product of Wenshan panax pseudo-ginseng arguably are important factors directly linked to prices of panax pseudo-ginseng. In other words, through construction of the panax pseudo-ginseng industry over the years, panax pseudo-ginseng is showing brighter market prospect. During the harvesting seasons of this year and last year, the Wenshan Prefecture has seen rarely hot panax pseudo-ginseng transactions in the produces market and growing areas. Over 10,000 persons visited this area for talk of purchase. In the past, when the annual production of panax pseudo-ginseng reached about 1.2 million kg, the critical point of market capacity would be hit, in which case the panax pseudo-ginseng prices would tumble. But in 2004, things were different. The production reached 4.5 million kg, but the price still kept escalating. There are signs showing Wenshan panax pseudo-ginseng industry is facing a new market opportunity.
    Ask: Last year, the Japanese Snawa Co., Ltd. signed a contract with the Daphne Co. on joint development and sales of panax pseudo-ginseng products and establishment of the Japanese Daphne Co., Ltd.. What’s the significance of this cooperation?
Answer: Through this cooperation, we are expected to boost feeling of value of panax pseudo-ginseng, make way for panax pseudo-ginseng to access to the international market. We want to work harder to brand Chinese panax pseudo-ginseng in the world, and make it a new driver for Chinese economy.