New Asiatic Chemical Works (新亞藥廠): Pharmaceutical Star

  1. York Lo: New Asiatic Chemical Works (新亞藥廠): Pharmaceutical Star

New Asiatic Chemical Works Image 1 York Lo Left: Trademark for New Asiatic Chemical Works Hong Kong (HK Government Report, 1939); Right: Advertisement of New Asiatic Chemical Works’ tuberculosis drug Tibilon in Hong Kong from the 1950s 

Founded in Shanghai in 1926 by K.C. Hsu and two others, New Asiatic Chemical Works was one of the largest pharmaceutical and medical companies in the Far East in the 1930s and 1940s and opened its large branch factory in Hong Kong in 1939. Under the management of K.C.’s younger brother Henry K.Y. Hsu, New Asiatic remained a leading manufacturing chemist in Hong Kong after 1949 before its eventual dissolution while the mainland operations evolved into the Shanghai New Asia Pharmaceutical division of state-owned Shanghai Pharmaceuticals Holding, a key player in the pharma business in China today. 

K.C. Hsu and the building of the New Asiatic Empire 

New Asiatic Chemical Works Image 2 York Lo  Left: New Asiatic founder K.C. Hsu; center: ad for New Asiatic’s Biozygen in Singapore in 1939 (Nanyang Siang Pao, 1939-7-31); right: list of drug trademarks registered by New Asiatic with the HK government in 1938 (HK Government Report) 

The story of New Asiatic began with Kuan-Chun Hsu (許冠群 1899-1972, hereafter refer to as “K.C. Hsu”), who also went by the name of Hsu Chao (許超). A native of Wuchin in Kiangsu province (江蘇武進), Hsu was the son of banker Hsu Kwang-cheng (許廣澄) and graduated from the College of Commerce in Shanghai. Early in his career, he worked as an accountant at the San Sing Cotton Mill (三新紗廠) and in private practice. The patriotic fervor after the 4th of May Movement in 1919 prompted him to start a mosquito incense firm in Shanghai in 1923 to compete with the “Wild Boar” brand imported from Japan but due to inferior cost structure and technology, he soon pivoted to other products such as cosmetics and anti-smoking pills which also had little success. In 1925, the May 30th incident in Shanghai ignited another wave of support for Chinese products and through his primary and secondary schoolmate H.S. Tu (屠焕生) who was studying at Fudan at the time, Hsu was introduced to Tu’s brother in law Y.T. Chao (趙汝調), a fellow Wuchin native and medical graduate of Chiba University in Japan who had the technical know-how missing in his venture. Together, the trio established New Asiatic Chemical Works to manufacture Western pharmaceuticals in 1926 with the modest sum of $1000 in capital with Hsu contributing $600 and equipment of his prior firm and the other two chipped in $200 each. The next year, the firm was incorporated and the brothers H.F. Koo(厚甫) and C.F. Koo (健甫) were brought in as shareholders. 

While Chao and Tu were responsible for production and accounting, Hsu oversaw sales and marketing. For the logo of the firm, Hsu picked a red star (the Chinese word for star, xin, rhymes with the Chinese word for new) with the Chinese character for Asia, Ya (), in the center which resembled the red cross for medicine. The firm’s first product was a tonic to treat summer illness known as “Ten Drops of Water” (十滴水). This was followed by a series of successful drugs for a wide variety of medical treatments, all with foreign sounding names with great Chinese connotations. The best example perhaps was Biozygen, a vitamin supplement for women launched in 1932, which had the Chinese name of “Precious Youth” (寳青春) In 1933, New Asiatic launched Livemin(利凡命), Placemon (胚生蒙) and Hormspermin(贺尔賜保命). Other drugs included Panadin, Magsolin, Follimon, Tancnol and Sinasbin (painkiller for headaches and toothaches). To promote his products, he launched the Journal of New Medicine for medical professionals in 1932 and the Healthy Home magazine for consumers in 1936. 

From drugs, New Asiatic expanded into other related businesses. In 1930, the New Asiatic Glass Factory (新亞玻璃廠) was formed to manufacture ampoule (small sealed vials for pharma products). In 1933, the New Asiatic Scientific Company Limited (新亞科學公司) was formed to manufacture printed packaging for the various pharma products. In 1934, the firm launched its first injection product and medical plaster. Aside from medical products, New Asiatic also manufactured a line of cosmetic products such as perfumes, toothpaste and tooth powder under the “Peacock” brand (孔雀牌).

By 1936, New Asiatic had grown from a small factory a decade ago to a large pharmaceutical manufacturer with registered capital of $500,000, annual production of over $1 million, profits of $2 million and over 400 employees and second only to Sine Pharmaceutical (to be covered) and International Dispensary(五洲藥房)among local manufacturers of Western pharma. Its products were also distributed nationwide and in Southeast Asia. 

Aside from clever marketing, another huge factor in the success of New Asiatic was its emphasis on R&D and recruitment. In 1936, New Asiatic hired Dr. K.K. Tsang, a graduate of the Tokyo Imperial University to spearhead a new chemical research lab to develop new drugs. The firm also recruited leading medical experts such as Dr. F.C. Yen (顔福慶) and Dr. Wu Lien-Teh (伍連德) to join as shareholders.  Other renowned scientists who have worked for New Asiatic include Dr. Chien Shih-liang (錢思亮, 1908-1983), later head of the Academia Sinica in Taiwan and National Taiwan University, who worked for the Shanghai factory in the 1930s and Dr. Hui Wai-haan (許慧嫻, later professor of chemistry at Hong Kong University and teacher of former HKU head Rayson Huang) who worked for the HK factory in the 1940s. As there were no schools of pharmacy in China at the time, New Asiatic also established the Kwang Cheng School of Pharmacy (廣澄高级药学职业学校, named after Hsu’s father) to train pharmacists for the firm. Hsu also built clinics, libraries and other vocational schools for his staff of over 1000. The same year, New Asiatic acquired 50 acres of land in Shanghai with plans to build a large plant. Chao to Japan to study the plants of Japanese pharma in Tokyo and Osaka and a designer was hired in June 1937 to build a plant modeled after Takeda Pharmaceuticals in Japan. The full-scale outbreak of the Sino Japanese War the next month as a result of the Marco Polo Bridge Incident put to a stop to that plan.  

War and Expansion: The Opening of the Hong Kong Plant and New Asiatic from 1937 to 1945  

New Asiatic Chemical Works Image 3 York Lo

Article about the opening ceremony of New Asiatic Chemical Works in Hong Kong in 1939. Left to right in the picture: Sir Tsun-Nin Chau, K.C. Hsu, Hsu Shi-ying (TKP, 1939-3-16) 

While the outbreak of the Sino-Japanese War in 1937 had a negative impact on most businesses, business was good for New Asiatic as the demand for medical products to treat the wounded soldiers and civilians soared because of the War and the firm embarked on a program of expansion. In 1937, he opened the New Asiatic Medical Supply Company Limited (新亞材料廠) to make surgical instruments, gauze, bandages and absorbent cotton.  In April 1938, New Asiatic Serum and Vaccine Laboratory (新亞血淸廠) was established to make vaccines for diseases such as smallpox, cholera and typhoid.  The firm also expanded into unrelated areas such as banking through the Union Industrial Bank of China (中國工業銀行, established in 1941) and trading and real estate via New Asiatic Development Syndicate Ltd (新亞建業).

As the Japanese advanced in the mainland, New Asiatic like many other manufacturers began to explore the possibility of setting up factory in the British colony of Hong Kong in the South. In early 1938, New Asiatic Chemical Works Ltd was incorporated in Hong Kong. The directors of the HK firm at its launch included Hsu, Y.T. Chao, C.F. Koo, K.K. Tsang mentioned earlier and Li Fo-hao, Ma Yin-liang (馬蔭良, medical adviser of newspaper Shen Pao), Chen Yu-chang (陳玉璋), and banker Ke-min Koo (顧克民) from Shanghai but also included Ho Wah-sang (何華生1872-1945), the founder of Sui Cheong Medicine Co(瑞昌藥行),the leading distributor of Western drugs in HK at the time. (TKP, 1939-3-13) After over a year of planning and construction, New Asiatic’s new Hong Kong plant opened on March 15, 1939 with great fanfare with full front page ads in the local newspapers and a big opening ceremony presided by prominent politician Hsu Shi-ying (許世英) and attended by the Who’s who from Shanghai who were staying in HK at the time such as the godfather Tu Yueh-sheng (杜月笙), Wang Hsiao-lei (王曉籟) and bankers Y.M. Chien (錢永銘,Bank of Communications) and H.C. Sung (宋漢章Bank of China) and local HK community leaders such as T.N. Chau (周埈年later Sir) and Wong Ping-sun (黄屏孫,see article on Wong Wahee). In their speeches, both K.C. Hsu and Hsu Shi-ying highlighted the patriotic mission of New Asiatic in the war effort against the Japanese. The new factory occupied 53000 square feet including laboratories, offices, warehouses and stores was staffed with licensed chemists and pharmacists with the HK government. Henry K.Y. Hsu (許冠英), who had graduated from Chiao Tung University in Shanghai in 1936 and been with New Asiatic since the late 1930s after a brief stint with a steel mill. 

Aside from HK and major cities in the mainland such as Peking, Hankow, Chungking, Tientsin, Canton and Xian, branches were also opened in the late 1930s throughout Southeast Asia in Manila, Rangoon, Bangkok, Batavia, Saigon and Haiphong. In 1940, New Asiatic manufactured quinine, ointments and alcohol for medical use with materials imported from Southeast Asia. Allegedly over 100,000 first aid kits were shipped to the mainland from its Hong Kong office for the war relief effort.  By 1941, the firm had 41 points of distribution in China and 10 in Southeast Asia. The same year, the New Asiatic Bio Research Lab (新亞生物研究所) was established in Shanghai which over time developed a variety of antibiotics, penicillin and other drugs to treat diseases such as tuberculosis and typhoid fever.  

After the Japanese launched the Pearl Harbor attack and occupied the International Settlement in Shanghai and Hong Kong in 1941, K.C. and his brother Henry stayed in Shanghai and HK respectively where New Asiatic’s operations continued. K.C. Hsu had proved to be extremely adaptive in the political front throughout his career. Before 1941, he had served as a committee member of the Shanghai Municipal Council in the International Settlement and maintained close ties to different factions of the KMT. During the Japanese occupation, K.C. served as Executive Committee Member of the United Druggists’ Association of China, the Shanghai Pharmaceutical Manufacturers’ Association (founded by Hsu in 1933) and the Federation of Chinese Industries.

During the Japanese occupation, the paid-up capital of New Asiatic was increased to $120 million (puppet regime currency) and the firm was producing over 1000 varieties of medical products. From 1937 to 1945, the number of companies affiliated with New Asiatic expanded to 35. In 1942, the New Asiatic Bio-Chemical Works Ltd. (新亞酵素廠) was established to manufacture enzymes. In 1943, Hsu through New Asiatic Development Syndicate acquired the Hangchow Dyeing & Weaving Mill (杭州染織廠)from Sean You Zoo & Co (三友實業社) and renamed the factory Hangchow First Cotton Mill (杭州第一纱厂). 

New Asiatic After the War 

New Asiatic Chemical Works Image 4 York Lo

Article about Henry K.Y. Hsu in 1954 with his picture and some of New Asiatic’s products (TKP, 1954-12-24)

Shortly after the Japanese surrendered in August 1945, K.C. Hsu left Shanghai for Hong Kong to escape from charges of wartime collaboration (K.Y. Shang of China Can made a similar move, see article) and Y.T. Chao succeeded him as head of the firm in Shanghai. The post-War period was difficult for New Asiatic in the mainland with strong competition from imports, distribution challenges due to road infrastructure devastated by the War and high debt load totaling over $2.6 billion (inflated currency at the time) in addition to the management departure mentioned above. By early 1947, New Asiatic in Shanghai was on the brink of bankruptcy with the jobs of its 200 staff and 330 workers on the line. Y.T. Chao had stepped down as managing director and was succeeded by K.M. Koo. Koo managed to secure a $1 billion bridge loan from the Bank of China, the Bank of Communications and the Bank of Agriculture and negotiated with the other creditors to keep the firm afloat.  (TKP, 1947-1-9, 1947-4-3) 

After the Communists took over in the mainland in 1949, the new regime through the lawyer Chang Shih-chao (章士釗1881-1973) persuaded K.C. Hsu to return to Shanghai to help with industrial development in the newly established People’s Republic. In September 1950, K.C. Hsu left HK for Shanghai and left the HK operations to his younger brother Henry. He resumed his position as chairman of New Asiatic in Shanghai and managing director of the First Cotton Mill in Hangzhou where he also developed a hotel for overseas Chinese. In 1954, New Asiatic in Shanghai became a public private enterprise. 

In the 1950s and 1960s, New Asiatic in Hong Kong maintained its offices at 16 Queen’s Road Central and had its factory located at Hing Yip Street in Kwun Tong. In its advertisements, it billed itself as the “the most famous and biggest manufacturing chemists in Hong Kong”, producing “injections, tablets, tinctures, ointments, suspensions, emulsions etc.”. (Owen’s Commerce Register, 1961) The firm was the only manufacturer in Hong Kong of injection medicine at one point and in addition to the many Western medicine, it also produced drugs using Chinese ingredients such as dong quai (“female ginseng”), papaya and others. Its products were used in many hospitals, clinics and homes in Hong Kong as it was 50% cheaper than imported ones and the firm had significant business exporting to various countries in Southeast Asia, Pakistan and Africa.   

Outside of business, Henry Hsu was active in community affairs in Hong Kong, having served as director of the Tung Wah Group of Hospitals for 2 years in addition to serving on the board of the Chinese Manufacturers Association (he was head of promotions for the HK Products Expo), Kiangsu-Chekiang Residents Association and its school and the Shau Kei Wan Fishermen’s Children School.   

In 1962, the trading firms of Loxley and Gilman sued New Asiatic over a variety of medicinal products found in its Kwun Tong factory which infringed on the trademarks of British drugs that the firms represented. New Asiatic was found guilty of and fined a total of HK$12500. (KSDN, 1962-4-7) 

As a firm, New Asiatic Chemical Works in Hong Kong was dissolved 1992. 

In the mainland, the firm’s operations became Shanghai New Asia Pharmaceutical (上海新亚药), a subsidiary of the Shanghai Pharma Holding (SPH) and remains a major player in the pharma business. 

The Hsu family’s pharmaceutical legacy continues with the family of K.C. and Henry Hsu’s younger sister Hsu Hwa (許華). A graduate of l’Université Franco-Chinoise in Peking, she married John H.H. Chao (趙墀熊, 1914-1999), a graduate of Tokyo Imperial University who joined New Asiatic and was deputy manager of the Shanghai factory before starting his own pharmaceutical business in Taiwan. Their son Dr. Allen Chao (趙宇天, 1944-) started Watson Pharmaceuticals in 1983 with his brother in law Dr. David Hsia (husband of Allen’s sister Phylis 趙宇婷), which became one of the largest generic drug manufacturers in the US.  

Sources: 

http://blog.sina.com.cn/s/blog_c1751c8e0102wj1v.html

http://61.129.65.112/dfz_web/DFZ/Info?idnode=66571&tableName=userobject1a&id=62656

http://mhdb.mh.sinica.edu.tw/mhpeople/bookimage.php?book=56&page=84

http://www.renwencz.com/a/lcmr/mrms/2015/0325/7901.html

Chinese Medicine Men: Consumer Culture in China and Southeast Asia By Sherman Cochran

This article was first posted on 9th December 2019.

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