* China watchdog flags inspections of vaccine sector
* Changsheng drops 5 pct, new daily limit
* Firm hit with bourse warning, marks step towards delisting
* Regulator at Changsheng facility on Thursday (Recasts, adds details from CFDA inspections, changes dateline)
By Philip Wen and Adam Jourdan
CHANGCHUN, China/SHANGHAI July 26 (Reuters) - China has launched sweeping spot checks at vaccine makers around the country in a bid to rein in outrage after Changsheng Bio-technology Co Ltd was found to have falsified data and sold ineffective vaccines for children.
A government inspection group was at Changsheng’s main factory in the northeastern city of Changchun on Thursday, police outside the site said. A Reuters reporter saw vehicles from the China Food and Drug Administration enter the site.
The running checks on production lines of all vaccine makers come as authorities seek to restore confidence in the sector and allay fears that the scandal could threaten ambitions for Chinese-made vaccines to be exported overseas.
“We can rest assured that there will now be more unannounced inspections,” Gauden Galea, China representative for the World Health Organization (WHO), told Reuters, adding that Chinese manufacturers would be put to the test.
“The data, the dossiers are going to be looked at clearly, the clinical trials are going to be looked at, assessments of safety, purity, efficacy are going to be done in more numbers.”
Changsheng’s Shenzhen-listed shares were battered again on Thursday, falling 5 percent - the maximum allowed after the bourse slapped the company with a “special treatment” risk alert that restricts share price movement and is a step towards a firm being delisted.
The stock, which had been suspended from trade on Wednesday, has lost more than $1.9 billion or more than half its market value, since the scandal erupted in mid-July.
Changsheng, whose chairwoman is among 15 people detained by police over the scandal, earlier this week publicly apologised and flagged that it could face a delisting. It is also the subject of a corruption probe by China’s top graft watchdog.
In addition to the running checks, China’s food and drug regulator also said the country would punish individuals and companies involved in the scandal and investigate public officials linked to the case.
Other Chinese vaccine makers, hit by the fallout from the scandal, extended declines on Thursday. Shenzhen Kangtai Biological Products has now lost some 37 percent while Chongqing Zhifei Biological Products has tumbled 20 percent since their shares began to slide last week.
Galea told Reuters that the WHO would watch closely to see if the case spilled over to other domestic vaccine makers, but that China’s response so-far had been “effective”.
“We will look at that investigation carefully, we will also look at results for what they imply for other companies,” he said, adding the case did not mean that Chinese vaccines would not be used overseas.
“One cannot just eliminate a whole country because of one outlier.”
Highlighting the high-profile nature of the scandal, a group of around 40 petitioners were also gathered outside Changsheng’s factory gates despite driving rain. The people wanted to air grievances unrelated to the vaccine maker, but said they hoped to use the case to get heard by leaders in Beijing. ($1 = 6.7708 Chinese yuan) (Reporting by Adam Jourdan in Shanghai, Philip Wen in Changchun and Samantha Vadas in Beijing; Editing by Edwina Gibbs)