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Our reporter Guo Yilin and Yu Na from Beijing reported

A sudden "detention trend" swept the medical sector, and senior executives of many medical companies were detained and taken away for investigation.

In the period from 2023 to the present alone, the actual controllers or senior executives of seven medical listed companies, including Zhou Wei, chairman of Weinan Health, Fan Zhihe, chairman of Sailun Bio, Zhao Bingxian, chairman of Wohua Pharmaceutical, Ke Jinlong, one of the actual controllers of Dasanlin, Su Qingcan, chairman of Huaxia Ophthalmology, Deng Guanhua, chairman of Yangpu Medical, and Xie Zilon, chairman of Laobaixing, have been detained, involving multiple sub-sectors such as chain pharmacies, medical devices, and medical services.

A reporter from the China Times reviewed the above-mentioned "detention" cases and found that the detention of most corporate executives was closely linked to anti-corruption actions in the medical field, and was suspected of bribery, job-related crimes, etc. Many companies where the detained executives worked issued announcements stating that the detention had nothing to do with the company, but some companies, such as Dasanlin and Weining Health, were prosecuted for corporate bribery.

In this regard, Li Cenyan, a pharmaceutical compliance lawyer at Beijing Zhijin Law Firm, said in an interview with our reporter, "Detention is usually closely linked to anti-corruption actions, which means that the persons involved need to cooperate with the investigation at a designated location, and their activities are subject to certain restrictions during the period. At this stage, the pharmaceutical anti-corruption campaign will bring compliance pressure to the industry in the short term, especially to those companies that have engaged in commercial bribery. It will also affect the sales, financing, and listing of related companies. But in the long run, it will force pharmaceutical companies to strengthen their awareness of compliance operations, thereby promoting the standardization and healthy development of the industry."

Executives of several medical companies have been detained

As a compulsory measure taken by supervisory authorities to investigate duty-related crimes, detention has gradually become a high-frequency word in the capital market.

According to incomplete statistics from Wind, in the first seven months of this year, 38 executives from 34 listed companies were detained. This number has exceeded the total for the whole of last year. In the previous three years, a total of 31 executives were detained. Among them, from 2023 to date, the actual controllers or executives of 7 listed companies in the medical sector have been detained.

In this context, the reporter wrote to the above-mentioned companies to try to learn more about the undisclosed information, but no reply was received before the time of publication. The reporter learned that detention measures refer to compulsory measures taken by the disciplinary inspection and supervision organs to restrict the personal freedom of the person under investigation when investigating suspected corruption, bribery, dereliction of duty and other serious violations of duty or duty crimes.

Xu Hao, a lawyer at Beijing Jingshi Law Firm, told the China Times reporter, "Being detained does not necessarily mean that the person under investigation has violated the law or committed a crime. Detention is only part of the investigation process, and its purpose is to ensure the smooth progress of the investigation and prevent the person under investigation from interfering with or disrupting the investigation. According to my country's Criminal Procedure Law, whether a person has violated the law or committed a crime needs to be determined by a court ruling and the final effective judgment document issued."

Regarding the reasons for the detention of the above-mentioned corporate executives, the reporter found that, except for the actual controller and chairman of Laobaixing, Xie Zilong, whose reasons are still unclear, one of the actual controllers of Dasanlin, Ke Jinlong, and the actual controller and chairman of Weining Health, Zhou Wei, are suspected of bribery; Zhao Bingxian, chairman of Wohua Pharmaceutical, and Fan Zhihe, chairman of Sailun Bio, are suspected of committing duty crimes; Deng Guanhua, chairman of Yangpu Medical, is suspected of violating laws and regulations; Su Qingcan, chairman of Huaxia Ophthalmology, denied company and business factors.

According to the announcement released by Laobaixing Pharmacy Chain Co., Ltd., the specific reasons for Xie Zilong's detention and investigation were not clearly stated in the announcement. The company stated in the announcement that the matters related to the chairman's detention had nothing to do with the company. Another announcement from Huaxia Ophthalmology stated that Su Qingcan, as the actual controller and chairman, was detained for personal reasons, not for any investigation related to the company or its business.

In addition, Zhao Bingxian, chairman of Wohua Pharmaceutical, and Fan Zhihe, chairman of Sailun Bio, both of whose companies issued announcements immediately stating that they were detained and investigated for suspected duty crimes. This detention measure has affected the performance of their duties, but the matters involved in the detention have nothing to do with the company. The company has not received any notification from the relevant authorities and has not accepted any assistance in the investigation.

As for the suspected crime of corporate bribery, both Dasanlin and Weining Health disclosed it in the announcement. Dasanlin’s announcement stated that Ke Jinlong was criminally detained on August 24, 2023 for suspected corporate bribery, and was prosecuted in accordance with the law for suspected corporate bribery in Maoming Dasanlin Chain Drugstore Co., Ltd., a wholly-owned subsidiary of Dasanlin. This incident had a significant impact on Dasanlin, including an apology statement due to failure to disclose relevant information in a timely manner, as well as fluctuations in the company’s stock price and changes in its shareholder structure.

Weining Health said that Zhou Wei, as the actual controller and chairman of Weining Health Technology Group Co., Ltd., was investigated and detained for suspected bribery. This measure was implemented by the Maoming Municipal Supervision Committee on July 1, 2023 in accordance with the "Supervision Law". It is mainly aimed at suspects of serious duty-related crimes such as embezzlement, bribery, dereliction of duty, etc.

It is worth noting that some directors, supervisors and senior executives of listed companies have been detained by supervisory committees in different regions. For example, on April 7, Yangpu Medical announced that it had received a "Notice of Case Filing" and a "Notice of Detention" issued by the Guangdong Provincial Supervisory Committee. Chairman and General Manager Deng Guanhua was investigated and detained for suspected violations of discipline and law. On May 11, Deng Guanhua was released from detention. Less than two months later, on July 8, it received a "Notice of Case Filing" and a "Notice of Detention" issued by the Zhuhai Municipal Supervisory Committee. Deng Guanhua was again investigated and detained.

Anti-corruption in the pharmaceutical industry is always on the way

Li Cenyan emphasized: "Detention is usually closely linked to anti-corruption actions, which means that the persons involved in the case need to cooperate with the investigation at a designated location, and their activities are subject to certain restrictions during this period. Since mid-2023, the medical anti-corruption storm has swept the entire industry, which is one of the reasons for the increase in detention cases."

Reporters found that the chairmen or senior executives of listed companies such as Seron Bio, Weining Health, Huaxia Ophthalmology, and Dasanlin, which are based in Guangdong Province, have been detained. Coincidentally, three "top leaders" have been sacked in succession in the health and health system of Guangdong Province. In October 2023, Chen Yuansheng, former deputy secretary and director of the Party Leadership Group of the Guangdong Provincial Health and Family Planning Commission, was investigated for suspected serious violations of discipline and law; in November of the same year, Zhu Hong, then secretary and director of the Party Leadership Group of the Guangdong Provincial Health and Health Commission, took the initiative to surrender; on April 26, 2024, Duan Yufei, former secretary and director of the Party Leadership Group of the Guangdong Provincial Health and Health Commission, was investigated for suspected serious violations of discipline and law.

Li Cenyan believes that "in the face of the anti-corruption storm, the medical field has been particularly strong. Pricing behavior in the medical field has become the focus of rectification, and any dishonest and illegal behavior will be punished. Once a company is tarnished with a dishonest stain, it will be subject to severe restrictions in the implementation of preferential policies, bidding, market access, etc."

She analyzed the risks faced by dishonest companies and pointed out that, generally speaking, pharmaceutical companies that are slightly dishonest will receive written warnings, mainly criticism and education; pharmaceutical companies that are moderately dishonest will be substantially affected, their dishonest information will be marked on the procurement platform, medical institutions will receive risk warnings when placing orders, and companies will also be restricted when participating in procurement, bidding and online procurement and other activities. For pharmaceutical companies that are seriously dishonest, the substantive constraints they face will be more severe, and their qualifications for listing, bidding or distribution of specific products involved in the case will be suspended. As for pharmaceutical companies that are particularly dishonest, they will face the constraint measure of suspending the listing, bidding or distribution qualifications of all drugs and consumables in the province where the case occurred.

The anti-corruption storm in the medical field continues. On July 21, 2023, the National Health Commission, together with the Ministry of Education, the Ministry of Public Security, the National Audit Office, the State-owned Assets Supervision and Administration Commission of the State Council, the State Administration for Market Regulation, the National Medical Insurance Administration, the State Administration of Traditional Chinese Medicine, the National Disease Control and Prevention Administration, and the National Medical Products Administration, jointly held a video conference to deploy a one-year national concentrated rectification of corruption in the medical field. On July 28 of the same year, a video conference on the mobilization and deployment of the national concentrated rectification of corruption in the medical field by the discipline inspection and supervision organs was held in Beijing. The meeting emphasized the in-depth development of systematic governance in all fields, all chains, and all coverage of the medical industry.

Trainee Editor: Deng Zhouyu Editor-in-Chief: Chen Yanpeng