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Yunnan Baiyao (or Yunnan Paiyao; simplified Chinese: 云南白药; traditional Chinese: 雲南白藥; pinyin: Yúnnán Báiyào; literally: "Yunnan White Drug") is a hemostatic powdered medicine famous for being carried by the Vietcong to stop bleeding during the Vietnam War. The medicine, developed by Qu Huangzhang in 1902, is designated as one of two Class-1 protected traditional medicines, which gives it 20 years protection. In China, its reputation is equal to that of penicillin in the U.S. It is founded and manufactured by a state-owned enterprise, Yunnan Baiyao Group (SZSE: 000538) in Yunnan, China.
Yunnan Baiyao was developed by a Chinese man named Qu Huanzhang from Jiangchuan County in Yunnan Province. He had set out to explore the entire region and taste its hundreds of herbs. In 1902, he formulated "Qu Huanzhang Panacea" which became Yunnan Baiyao ("White medicine from Yunnan") In the massive Battle of Taierzhuang of 1938 (between Chinese and Japanese forces), Mr. Qu Huanzhang donated more than 30,000 bottles of Yunnan Baiyao to the army, thereby saving the lives of many soldiers.
As an indication of its value, it is noted that during the 1940s, army commander Wu Xuexian was seriously injured in his right leg. The French hospital in Kunming (capital of Yunnan) recommended amputation to save Wu's life. Wu turned to Qu for help, and to everyone's surprise, recovered without the need for an amputation. Yunnan Baiyao gained the reputation as a miracle remedy. After the death of Qu, his wife, Liao Lanying, donated the secret prescription to the government.
In 1935, pharmacist Qu Huanzhang registered a trademark using his own image. This was Yunnan Baiyao's earliest attempt at IP protection.Qu's wife Liao Lanying donated the drug recipe in 1956 to the government. Large-scale production of Yunnan Baiyao began. The Yunnan Baiyao Factory was established in 1971, but the company did not focus on IP protection until the late-1990s, when counterfeit products began hurting the company's business. "We found that fake Yunnan Baiyao was being sold, but we had no solution," Qi says. The company started to become aware of the importance of IP protection. It registered a series of similar trademarks, including "Yunfeng" and "Yunnan Baiyao." Last year, the brand was valued at 2.18 billion yuan (US$269 million), ranking 263rd in the World Economic Forum and the World Brand Lab's list of the top 500 Chinese brands.
Patent achievements Over the past few years, the company spent nearly 1 million yuan (US$123,300) on patent registration, industrialization of patent products and technological innovation, says Qi. The company applied for only three invention patents in 2002. The total hit 14 last year. The company has now applied for 36 invention patents and 40 design patents.
Its exact formula is a closely guarded secret. The company website mentions that the steroid progesterone is in the formula, in addition to several saponins, alkaloids and calcium phosphate. The separate herbal ingredients are reportedly made up by thirteen separate teams, none of whom have any knowledge of the ingredients the other teams are mixing. The individual mixed components are then combined by a further team, who have no knowledge of what constitutes them but knows the proportions in which they are combined.
In December 2010, purported lists of ingredients were published on the websites of Amazon.com and the Food and Drug Administration (FDA). The list supposedly containing eight active ingredients of a liquid form of the drug were found in a document published on the FDA website that contains correspondence between the FDA and a distributor of the drug. Ingredient lists were also present in the product information sections for the powdered and capsule forms of the drug on Amazon.com. The proportions and exact manufacturing processes are still unknown.
Under the Law on Guarding State Secrets, the formula as well as the making of the Yunnan Baiyao were considered "top secret" and enjoyed the longest period of secrecy protection, according to National Business Daily (NBD). There are four levels of secrecy under the Law. As a result, Yunnan Baiyao's exact ingredients are not printed on its packaging in China, and its production process was not disclosed even to workers in the factory. The workers making the medicine are reportedly divided into 13 different groups so that they have no knowledge of the rest of the production process. Some of the Yunnan Baiyao's products are sold in the US as diet supplements. According to FDA regulations, all diet supplements sold in the US market must list their ingredients on the package and report them to relevant authorities. Officials from the Yunnan Baiyao Group, the exclusive producer of Yunnan Baiyao, denied to Xinhua News Agency Thursday that there is a double standard in Yunnan Baiyao's secret-protection policy, and that ingredients are only reported to drug authorities. "Whoever disclosed the ingredients should be held legally liable," Huang Wushuang, an expert on intellectual property rights at East China University of Political Sciences, said.
From its secluded base in the eastern suburbs of Kunming, the company has embarked on a long journey of diversification by taking on some of the international giants in the fiercely competitive personal healthcare market. In 2001, the company unveiled its own adhesive band-aid product in a joint venture with German personal care products maker Beiersdorf AG, which owns the brand.
In 2003, 3M initiated contact with Yunnan Baiyao Group Co, Ltd to discuss potential cooperation opportunities in the area of transdermal pharmaceutical products.
Encouraged by its success in diversification, the Chinese company has diversified into other product lines. Instead of competing on price, Yunnan Baiyao has set its sights on the higher end market segment dominated by various foreign brands. Its toothpaste, for instance, sells for 28 yuan a tube, which is at the top end of the price chart. Following the success of its adhesive bandages, the Chinese firm added toothpaste to its product line-up. Despite its retail price of 28 yuan being higher than most of its competitors, Chinese customers accepted the Yunnan Baiyao toothpaste almost instantly, thanks to its efficiency in preventing gum bleeding. Sales revenue from the Yunnan Baiyao toothpaste topped 500 million yuan last year, making it the fifth most popular toothpaste in China in terms of sales revenue, Yin said.
That combination--the ultramodern with the extremely old-fashioned--has transformed Yunnan Baiyao Group into one of the unlikeliest rising stars of Chinese business. Over the last five years, its revenue doubled to $3.4 billion in 2016, while net profits did even better, increasing by 140% to $440 million. The market capitalization of the Shenzhen-listed company has surged as well--by two and a half times since the end of 2011 to more than $13 billion. Such vitality has landed Yunnan Baiyao on Forbes Asia's Fab 50 list of the region's best public companies for the second time; it also made the list in 2015.
starting around 2005, Yunnan Baiyao expanded even further, into products based on other forms of Chinese traditional medicine. Herbs are mixed into shampoos to soothe itchy scalps and into soaps to supposedly slow aging. Yunnan Baiyao plugs these medicinal qualities to make the case that its products are superior to their run-of-the-mill competitors. Adhesive bandages injected with the magical white powder are marketed under the motto "It heals faster with baiyao."
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