As the threat of bird flu grows around the world, a leading institute affiliated to the Chinese Academy of Sciences declared that it would produce Tamiflu, the only drug said to be effective against the virus.

"If the epidemic spreads, we will produce our own version of Tamiflu," Wu Jiarui, vice-president of the Shanghai Institute of Biological Sciences, said yesterday.

Swiss-based Roche Holding AG holds the sole patent for Tamiflu but under Chinese law, it could be sidestepped in case of a public health crisis.

Scientists agree it is easy to produce Tamiflu once the proper materials are available although the process is complicated. The institute has got the right materials, said Wu.

The primary goal is to try to produce a Chinese version of shikimic acid, the active ingredient in Tamiflu, which is derived from star anise a spice widely produced and used in China but Wu said the acid is also found in other plants used in traditional Chinese medicine herbs.

Meanwhile, Shanghai Pharmaceutical Group Co Ltd (SPG) expects a "very positive response" from Roche on its application to produce Tamiflu, which it submitted last week.

Huang Yanzheng, vice-president of SPG and board chairman of Shanghai Roche a joint venture between Roche and SPG said it would take about six months for SPG to mass-produce Tamiflu once Roche gives the go-ahead.

Hard hit

As public anxiety about bird flu grows in the country, all segments of the poultry industry have been hit hard.

Prices for chicks have plummeted 90 per cent in some areas, from 2 yuan (US 25 cents) to 0.2 yuan (US 2.5 cents), the Information Centre of China Feed Association said.

Supermarkets have cut down purchases of dressed chickens and ducks because of sluggish sales.

Wumart, a Beijing-based chain supermarket, said it had cut purchases by half in the past two weeks.

Shandong Liuhe Group, one of the country's leading suppliers of live fowl and poultry feed, said it suffered a loss of 4 million yuan (US$494,000) last month alone.

The group's vice-chairman, surnamed Zhang, said the company has been forced to adopt a "zero profit" strategy this month in the live-fowl business. Sales of poultry feed dropped by 10 per cent last month and may see a 20-30 per cent drop in the next few months, he added.

The price of soybeans, an ingredient in bird feed, saw a decline, too.

Soybean prices at the Dalian Commodity Exchange dropped 2 per cent yesterday, Bloomberg reported, adding that the sluggish business has exerted its influence on American market.

It said soybeans in Chicago had the biggest two-session drop in two months on speculation that demand from China, the biggest importer of the oilseed, will drop as the country culls millions of birds.

Soybeans for January delivery dropped 9 cents, or 1.5 per cent, to US$5.83 a bushel on the Chicago Board of Trade, bringing the two-session decline to 3.1 per cent, the most since August 25.

Meanwhile, the Ministry of Agriculture yesterday told farmers to buy poultry vaccines only from nine designated drug makers after a counterfeit bird flu vaccine was found in Northeast China.

The ministry revealed that a bogus bird flu vaccine produced by a biotech pharmaceutical company in North China's Inner Mongolia Autonomous Region had been sold in Liaoning Province, where the latest bird flu outbreak occurred.

"The harm (of fake vaccines) is incalculable," said Jia Youling, director of the Veterinary Bureau of the Ministry of Agriculture.

If they contain active viruses, they could spread and possibly harm both poultry and humans, he warned.