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On July 23, Japan's Kobayashi Pharmaceutical held an interim board meeting. Affected by the incident of Kobayashi Pharmaceutical's health products containing red yeast rice, the company's chairman Kazumasa Kobayashi and president Akihiro Kobayashi resigned. Kazumasa Kobayashi and Akihiro Kobayashi are the fourth and fifth generation leaders of Kobayashi Pharmaceutical, respectively. After leaving office as chairman, Kazumasa Kobayashi will become a special advisor to the company. After resigning, Akihiro Kobayashi will lose his legal person status, but he will continue to stay on the board of directors to deal with a series of problems caused by the company's "red rice mold" supplements and set up compensation for victims.

The controversy caused by Kobayashi Pharmaceutical can be traced back to late March. In recent months, many people in Japan have been hospitalized or even died due to kidney disease after taking health products containing red yeast rice produced by Kobayashi Pharmaceutical. As of the 10th of this month, the number of people suspected of dying from taking health products containing red yeast rice produced by Kobayashi Pharmaceutical and whose specific causes of death are under investigation has increased to 100.

According to reports, a report provided by an external lawyer showed that in early November 2022, the Osaka plant of Kobayashi Pharmaceutical Co., Ltd. in Japan confirmed that Penicillium was attached to the inside of the lid of the red yeast rice culture tank, but the quality management personnel believed that "Penicillium would be mixed in to a certain extent" and therefore did not pay attention to it. In addition, Kobayashi Pharmaceutical Co., Ltd. did not understand the problems in the production process from the person in charge of the manufacturing link before first disclosing the damage to consumers' health in March this year.

According to reports from multiple Japanese media, Kobayashi Pharmaceutical received reports of health products containing red yeast rice causing damage to consumers' health as early as January this year, but it was not until more than two months later that it informed external directors and announced the recall of related products. Kobayashi Pharmaceutical has announced the recall of all three health products containing red yeast rice (red yeast rice cholesterol granules, nattokinase granules, and cholesterol-lowering health auxiliary granules). After analyzing the relevant health products and the red yeast rice raw materials used, Kobayashi Pharmaceutical found that its self-produced red yeast rice raw materials contained mold ingredients. The Ministry of Health, Labor and Welfare of Japan previously stated that penicillic acid and some other "unexpected substances" were found in the problematic red yeast rice raw materials produced by Kobayashi Pharmaceutical.

Red yeast rice is also called red yeast rice, red yeast red, red yeast koji, and red yeast rice. It is made of rice and soybean as the main raw materials to make liquid culture medium, which is fermented and cultured by red yeast koji, and then extracted, concentrated, and refined. It can also be obtained by extracting, concentrating, and refining red yeast rice as the raw material. Red yeast rice can give food a ruddy and bright color, and has good stability. It is naturally produced during the fermentation process and has long been used as a natural pigment. However, trace amounts of toxic substances may be produced during the fermentation process of red yeast koji, such as citrinin, which has kidney toxicity, carcinogenicity, and teratogenicity to a certain extent.

In Japan, Kobayashi Pharmaceutical is known as the "National Pharmaceutical Company". The company was first founded by Kobayashi Chubei in Osaka in 1886 as a pharmacy, which lasted for 70 years. It was not until the 1960s that Kobayashi Kazumasa took over the family business and became the fourth-generation president of Kobayashi Pharmaceutical. Although the leadership of Kobayashi Pharmaceutical resigned due to the "Red Yeast Rice Controversy", the incident itself has not come to an end.

According to Yicai Global, the Ministry of Health, Labor and Welfare also found in its previous investigation that in addition to penicillic acid, experts also detected two "other" substances that may indicate the mixing of penicillium in a batch of raw materials produced from June to August last year. At that time, experts involved in the investigation believed that this might be due to the interaction between Monascus and Penicillium during the cultivation process. The discovery of new substances has undoubtedly added new complexity to Kobayashi Pharmaceutical's "Monascus storm." As of press time, the Ministry of Health, Labor and Welfare of Japan has not yet announced the situation of the two "other" substances.

In addition, Kobayashi Pharmaceutical has not yet disclosed relevant information regarding compensation for consumers whose health has been damaged. It only compensates consumers who purchased the relevant problematic products in the form of vouchers.

Kobayashi Pharmaceutical's website shows that the company has a history of more than 130 years and is a product development company that is mainly engaged in the research, development, production and sales of medicines, medical devices, daily necessities, food, etc. Its products are not only sold in Japan, but also sold to the United States, the United Kingdom, Southeast Asia and other parts of the world.

According to data released by the company, a total of 18.5 tons of red yeast rice raw materials were produced in 2023, of which about 16 tons were sold to other companies for use in brewing and food manufacturing. A previous investigation by Japan's Imperial Database Company showed that the problematic red yeast rice raw materials produced by Kobayashi Pharmaceutical may affect up to 33,000 companies in Japan, including more than 5,000 food and beverage retailers.

Some Chinese people in Japan said through social media that all Kobayashi Pharmaceutical and red yeast rice related products have been removed from the shelves in Japanese drugstores. At the same time, it can also be seen that in drugstores, people consult with the store pharmacists more carefully when purchasing products.

According to preliminary estimates by a Japanese think tank, Kobayashi Pharmaceutical may need to pay up to 1.8 billion yen in compensation to manufacturers that purchased red yeast rice from the company. This amount of compensation may have a serious impact on the company's financial situation, and may lead to a drop in its stock price and a reduction in its market value.

According to Kobayashi Pharmaceutical's financial report data, in fiscal year 2023, Kobayashi Pharmaceutical's operating income was 173.5 billion yen, a year-on-year increase of 4.3%; operating profit was 25.78 billion yen, a year-on-year decrease of 3.3%. Prior to this, Kobayashi Pharmaceutical had maintained profit growth for 25 consecutive fiscal years.

In order to prevent such incidents from happening again, Japanese Prime Minister Fumio Kishida has said that the Japanese government will explore countermeasures. The Japanese Consumer Affairs Agency has begun emergency inspections of more than 6,000 registered functional health products.

Beijing Business Daily Comprehensive Report