Sanctions Endanger Drug Maker - WSJ
Sanctions Endanger Drug Maker
WHO-certified Pyongsu Pharma faces closure, reflecting challenges of squeezing Pyongyang without further harming the isolated country’s endangered populationNorth Korean soldiers look at items in a pharmacy in a shopping mall in a new residential housing project in Pyongyang in April. HOW HWEE YOUNG/EUROPEAN PRESSPHOTO AGENCY
By
Ian TalleyDec. 8, 2017 5:30 a.m. ET
21 COMMENTS
WASHINGTON—North Korea’s only World Health Organization-certified manufacturer of medicines faces closure within weeks if the United Nations doesn’t give the company an exemption from new sanctions, the company’s top officials said.
Pyongsu Pharma was already struggling to produce basic drugs as international sanctions escalated, but a new U.N. resolution approved in September banning foreign joint ventures with North Korea will force the company to close if it doesn’t secure a special allowance. Pyongsu officers said the company had made requests of several U.N. member states.
“At this stage, no member state has offered to do so,” Rémy Lardinois, one of the firm’s top officials, told The Wall Street Journal. The U.N. didn’t immediately respond to a request for comment.
Pyongsu’s predicament shows the challenge world leaders face in trying to squeeze North Korea’s ruling regime without further harming the isolated country’s endangered population.
North Korean leader Kim Jong Un visits the Taedonggang Syringe Factory in September 2016. PHOTO:KCNA/REUTERS
Human-rights organizations blame the country’s impoverishment on Kim Jong Un’s government, calling it one of the world’s most oppressive authoritarian regimes and criticizing it for prioritizing a nuclear-weapons program and governing elites over the care of its people.
“The state of health is terrible,” said Greg Scarlatoiu, executive director of the Committee for Human Rights in North Korea. “There have been very serious shortages for a long time, particularly antibiotics, painkillers and other basic medicines.”
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Heavy Burden
Heavy Burden
North Korea has one of the highest rates of tuberculosis.
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Without antibiotics, he said, amputations are far more common. Multidrug-resistant tuberculosis has become one of the most serious health problems in the country, human-rights groups and health experts said.
“DPRK faces a critical shortage of essential medicines,” said Matthew Cochrane, a Red Cross spokesman, using an acronym for the country’s formal name. Mr. Cochrane said supply kits the Red Cross had contracted from Pyongsu over the past decade to distribute in the country were for medicines such as aspirin, paracetamol and zinc.
Another sign of the extent of North Korea’s health woes came in November, when a North Korean soldier who was shot while defecting into South Korea was reported to have been infested with parasitic worms, including a near- footlong roundworm found in his intestines. Besides inadequate health care, Mr. Scarlatoiu said the infestation is likely the product of trying to supplement scarce military rations with foraged foods such as mice, snakes or fish.
A North Korean trading company offered a root it said would cure cancer at a sweets and alcohol exhibition in Jinan, China, in November. PHOTO: RYAN MCMORROW/AFP/GETTY IMAGES
Swiss- and Hong Kong-based Parazelsus Group, through its subsidiary, Northern Development Pharmaceutical Consortium Ltd., started Pyongsu Pharma with North Korea’s Ministry of Health more than a decade ago.
Parazelsus Chief Executive Peter Zuellig, the former head of Zuellig Group, an Asian conglomerate, said his firm decided to maintain links to its joint venture with North Korea so it could ensure the population maintained access to basic medicines.
It is unclear from the firm’s financials how much the company has made from its North Korea operations, though five-year-old presentations on the firm’s website indicate it was a tiny fraction of its total revenue across Asia. Pyongsu’s website says sales from its manufacturing and pharmacies totaled roughly $1.8 million in 2013. A 2017 presentation on the Parazelsus website said the company currently handles around $300 million in annual business.
Parazelsus, which also operates in India, Pakistan, Afghanistan and Bangladesh, maintains ties with Pyongsu through a trust it established after the U.N. started ratcheting up sanctions against North Korea over the past few years, Mr. Zuellig said.
“We cannot just walk away from responsibility,” he said in an interview. “Pyongsu has been one of the few companies that has tried to hang on and do its job,” he said. “I am personally interested in that country developing in a peaceful way.”
According to Kharon, a U.S.-based private technology firm that identifies sanctions-related risk, dozens of North Korean joint ventures established before the current U.S. and U.N. sanctions authorities may still be operating.
“Financial institutions and firms with possible exposure to these ventures may need to ensure they are in a position to identify the risk,” Kharon said.
Mr. Zuellig said the firm—which produces painkillers, cough syrups, antibiotics and other basic medicines—doesn’t export its medicines from North Korea. He said Pyongsu hasn’t been able to secure new contracts with the WHO and the International Federation of the Red Cross because it is “near impossible” to get the needed source ingredients for medicine manufactured into the country because of sanctions. Sanctions have also restricted foreign currency flows in and out of the country, he said.
Mr. Lardinois, who works for Hong Kong-based Northern Development Consortium Pharmaceutical, the international firm working with North Korea’s Ministry of Health in Pyongsu to supply the isolated country with basic medicines, said the North Korean joint venture had to turn down an offer in August to bid for another Red Cross medicine-supply contract because of the difficulties of getting resources into the country.
Asked about the sanctions exemption Pyongsu is seeking, Mr. Scarlatoiu said, in general, that his organization supports humanitarian assistance “that is adequately monitored and goes to the most vulnerable.”
Pyongsu’s website said that besides manufacturing medicines, it also offers international pharmaceutical companies distribution and warehousing opportunities and “strategic consulting for investors looking to penetrate the North Korean market.”
Mr. Lardinois said that aspect of Pyongsu’s business—helping introduce foreign investors “to the right partner in the right ministry” and helping outside firms sell their products through the company’s pharmacy chain—hasn’t grown. “Under the current climate, investors aren’t exactly queuing at the door.”
Write to Ian Talley at ian.talley@wsj.com
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There are 21 comments.
Same-ole, same-ole!
This is the same situation the world has been in for more than 50 years. It has become clear, any support given to NK will improve the lives of the favored regime supporters and any support removed will further injure the dis-favored ones. That is the Kim's method of operation and, it has worked for them.
The Kim's have proven themselves to be experts at manipulating the West. The Chinese have proven themselves expert at using NK to their own advantage. Really, the only fool here is Western Governments who repeatedly allow themselves to be manipulated in the name of "humanitarianism."
So stop threatening the USA with nukes. It's that simple. The USA has always made it policy to defend South Korea and prevent them from invading the North, so we've never been the aggressor. We've never wanted to invade NK because it would cause so many deaths in the South, and thus nukes are unnecessary. But now NK constantly threatens to hit the mainland USA with them.
Really I see no other way, unless someone can figure a way to keep the spigot on for "good things" like these drugs and off for bad things like a nuke which may someday be fired at me.
NK is under the 3rd generation of a genocidal totalitarian government.
Their dire situation is self-imposed and it is not in the best interests of the NK gulag regime to have well-fed, healthy citizens that can rise up against them.
If they need meds they can reallocate the $tens of millions they're spending on nukes and military equipment.
Mr Maczuga
It is easy for you to say that. Ordinary people have done nothing to you or any one else . Have some heart. You have to give an answer to God some day. Do not fallow a mob.
Vinay
As noted here, we could do barter, nukes and rockets for TB meds
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Fat boy said his people would eat grass, for nukes, sounds like a plan, worms also, hey protein source, export and market in US as weight control....
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The Norkia actions, are de facto, taking his own people hostage against international sanctions, just as he has taken Seoul hostage, against attacks
just as Saddam took his own people hostage, by refusing to comply w international determinations and resolutions
ended badly for Saddam
The war criminal here is rocket boy, crimes against humanity
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When the UN discontinues its anti Zionist optico-recto-cranial visual proctoscopy and remembers if is in the biz of human rights
maybe there could be some in absentia war crimes trials
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sanctions are sometimes 'second order' against those who violate sanctions, also
I am shocked Un even allows a drug company in NK! I had no idea he cared about humans.
Amazing!
Children, the elderly, those with chronic diseases, and other vulnerable members of NK society should receive assistance if possible.
This might be done by UN organizations directly distributing medicines to those in need.
Although it is important to deny NK cash for its WMD programs, optimally this would not be done by needlessly harming innocent, defenseless members of NK society.
False.
I'm an American and a key part of my American values is caring about and trying to help the less fortunate wherever they may be.
Certainly, KJU is a ruthless tyrant who is mostly responsible for the desperate plight of the less fortunate in NK society.
Nevertheless we have a moral obligation to help, if possible, the innocent defenseless members of NK society.
As noted above, this could be done with UN organizations that would distribute aid directly.
It's possible to have a pragmatic approach to NK and still try to alleviate suffering there.
To do anything less is heartless and unAmerican.
I wonder where fat boy and his army generals get their healthcare? For all the love he professes to have for his people in his propaganda, fat boy is wished nothing but endless tape worms in his intestine.
Pyongsu’s predicament shows the challenge world leaders face in trying to squeeze North Korea’s ruling regime without further harming the isolated country’s endangered population.
This is disingenuous. The only ones "harming the...endangered population" are the gang of thugs ruling over northern Korea. When they stop abusing the people and stop threatening gangland's neighbors, the population will no longer be endangered.
Eric Hines
hmmmmm....let me think....potentially millions of American lives lost in a North Korean nuclear attack or North Korea doesn't have medications....hmmmmm tough one...not.
North Korea has shortages of everything....add this to the list. The majority of N. Koreans live in abject poverty and have no access to medicinal care or pharmaceutical drugs. It's not affecting the population as a whole, only the regime and those who support it. However, global sanctions will prove futile as the communist country is funded by it's larger cousin, China. China funds N. Korea, it's nuclear program and it's pharmaceutical program and mostly everything else. Reports indicate China may account for as much as 70% of N. Korea's economy. I don't worry about N. Korea, or it's citizens.....
I worry about the children living in the Bronx without medicinal care or pharmaceutical drugs........
"Asked about the sanctions exemption Pyongsu is seeking, Mr. Scarlatoiu said, in general, that his organization supports humanitarian assistance 'that is adequately monitored and goes to the most vulnerable.'"
It may sound heartless, but by providing for the North Korean citizens the West has allowed North Korean tyrants to divert resources away from their citizens and toward nuclear/military ambitions. The unintended consequence most likely being even worse conditions for citizens.
Let the North Koreans agree to complete facilities inspections then shutdown their nuclear development operations THEN we will give them the drugs they need - NOT BEFORE!!
Tough to read that the citizens will suffer even more due to the actions of their leader, but this is the impact of sanctions.
“a new U.N. resolution approved in September banning foreign joint ventures with North Korea will force the company to close if it doesn’t secure a special allowance”
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NorKo’s predicament is entirely of its own ”dear leader’s” making. The plight of its suffering people is 100% due to KJU’s maniacle pursuit of nuclear weapons and ICBMs.
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