CCTV Reports Of BIDU Carrying Fake Drugs Unlikely To Have A Significant Impact

Analyst Dick Wei of JP Morgan maintains his "overweight" rating on Baidu.com

. A report on CCTV has accused “Baidu and other search engines of allowing an unlicensed drug producer to get a higher rank on its search page. The drug producer was trying to sell counterfeit drugs.” JP Morgan mentions, “Since 2009 (after CCTV highlighted unlicensed medical companies advertise on Baidu), the company requires medical/pharmaceutical customers to give proof of proper business licenses, before they can put ads on the Baidu platform. We believe management is reviewing whether there could be improvements in operating procedures. We think it would be difficult for Baidu to track all fake products.” “Unlike 4Q08, when there was no proper procedure in place, we do not expect Baidu to stop advertising from pharmaceutical customers. Medical / pharmaceutical segment accounts for around 15-20% of Baidu’s revenue,” the analyst adds.