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Advances for Purchases of Intangible Assets | 12 Months Ended
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Dec. 31, 2019
Advances for Purchases of Intangible Assets [Abstract] |
ADVANCES FOR PURCHASES OF INTANGIBLE ASSETS | NOTE 5 – ADVANCES FOR PURCHASES OF INTANGIBLE ASSETS In order to expand the number of medicines the Company manufactured and marketed, it entered into contracts with independent laboratories and others for the purchase of medical formulas. Although NMPA approval had not been obtained for these medical formulas at the dates of the respective contracts, the objective of the contracts was for the Company to purchase NMPA-approved medical formulas once the NMPA approval process is completed. The Company holds the title to one valid patent that is related to one of its medical formulas. With respect to the other patent title the Company held, the management decided not to renew the patent during 2019 as it did not have any practical value because the related advance purchase to this pipeline product was written off as of December 31, 2018. Prior to entering into contracts with the Company, laboratories are typically required to complete all research and development to determine the content of the medical formula and the method to produce the generic medicine. The application to the NMPA for production approval must be made by the production facility that will produce the related product. As a result, a contract typically provides that the Company buys the medical formula from the laboratory and the laboratory is required to assist the Company in applying for and obtaining the production approval from the NMPA. In order to promote the standard of the pharmaceutical industry in China in line with international standards, significant changes have taken place in the policies and regulations in this industry in recent years. A series of policies on consistency evaluation and drug review process have been issued, and more potential reforms and adjustments are underway. In this context, the Company believes that the uncertainties in the timetables for obtaining NMPA production approvals for products under research are increasing. Under the new regulations and policy environment, the criteria for formulations' development are more stringent. The Company must supplement and improve the corresponding processes and standards to meet the latest requirements of NMPA in accordance with the requirements of consistency evaluation. As a result, the Company anticipates an extended timeline on the approval process of its current pipeline products. Under the terms of the contracts, the laboratories are required to assist the Company in obtaining production approval for the medical formulas from the NMPA. Management monitors the status of each medical formula on a regular basis in order to assess whether the laboratories are performing adequately under the contracts. If a medical product is not approved by the NMPA, as evidenced by their issuance of a denial letter, or if the laboratory breaches the contract, the laboratory is required under the contract to provide a refund to the Company of the full amount of the payments made to the laboratory for that formula, or the Company can require the application of those payments to another medical formula with the same laboratory. As a result of the refund right, the Company is ultimately purchasing an approved medical product. Accordingly, payments made prior to the issuance of production approval by the NMPA are recorded as advances for purchases of intangible assets. To date, no formula has failed to receive NMPA production approval nor has the Company been informed or been made aware of any formula that may fail to receive such approval. However, there is no assurance that the medical products will receive production approval, and if the Company does not receive such approval, it will enforce its contractual rights to receive a refund from the laboratory or have the payments applied to another medical formula with the same laboratory. During the year ended December 31, 2019, the Company reviewed the contracts relating to advances made for purchases of intangible assets with independent laboratories and determined that the advances made by the Company for four formulas were impaired. In 2018, two formulas to two laboratories were impaired. As a result, the Company recognized an impairment loss for the advances made to these laboratories for the years ended December 31, 2019 and 2018 in the amount of $17,015,117 and $6,134,271, respectively. The management determined to impair all advances at December 31, 2019, but may resume the development of these formulas in the future if sufficient funding and other favorable conditions arise.

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