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the "second in command" of wong lao kat health was taken away, and 5 people in baiyun mountain of 46.1 billion have been investigated

2024-09-30

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baiyunshan, the "three musketeers" of traditional chinese medicine fmcg, is experiencing a "troubled autumn".

the anti-corruption storm in the pharmaceutical field continues and continues to advance in depth.

according to a report by fengli, a subsidiary of netease finance, on september 28,confirmed by multiple cross-information, zhao min, executive deputy general manager and investment chairman of wanglao kat health, was taken away by relevant government departments for investigation.

guangzhou wanglaoji health industry co., ltd. (hereinafter referred to as: wanglaoji health) is affiliated to the health segment of baiyunshan (600332.sh), a listed company of guangzhou pharmaceutical group co., ltd. (hereinafter referred to as gphl).

as anti-corruption in medicine continues to advance, five people have been investigated in baiyunshan.since july, baiyunshan’s former chairman li chuyuan and former director zhang chunbo have successively confirmed that they have been investigated.before the investigation, li chuyuan also served as the chairman of gphl, and zhang chunbo was also the deputy general manager of gphl.

in addition, according to "fengli" reports,lin yuyi, media director of wong lo kat great healthfang guanghong, chairman of guangzhou wanglaoji pharmaceutical co., ltd. (hereinafter referred to as: wanglaoji pharmaceutical), has also been taken away for investigation.wanglaoji pharmaceutical and wanglaoji health are the two main business companies in the baiyunshan health sector.

it is worth mentioning that according to the "economic observer network" report,september 18,the guangzhou municipal human resources and social security bureau released information on the appointment and dismissal of municipal government staff.lu suihua was removed from the position of dean of guangzhou health vocational and technical college.according to various sources, we have learned thatlu suihua is the wife of li chuyuan, the former chairman of gphl.

according to a report by jiemian news on july 23, li chuyuan’s nephew was also taken away.

a baiyunshan staff member told investors that he was not personally aware of zhao min’s investigation. in response to the resignation of relevant directors, the company will replace the directors in accordance with relevant legal procedures. now the company's corporate governance structure meets relevant requirements. the company is currently operating normally in terms of governance and management, and its operations are also normal.

as of the close of trading on september 27, baiyunshan's stock price was 28.38 yuan per share, an increase of 3.84%, with a total market value of 46.1 billion yuan.

great health is responsible for the profitability of baiyun mountain.

gross profit margin in 2023 is 44.41%

in july, zhao min also attended the fbif2024 food and beverage innovation forum as a guest and gave a speech.

according to the official website of fbif2024 food and beverage innovation forum, zhao min is an emba from lingnan college of sun yat-sen university and currently serves as the executive deputy general manager of wonglaoji health industry and the chairman of guangzhou wonglaoji investment co., ltd. (hereinafter referred to as: wonglaoji investment). responsible for wong lo kat’s marketing and online and offline omni-channel sales, and has nearly 20 years of practical experience in the pharmaceutical and fmcg industries.

source: fbif2024 food and beverage innovation forum official website

according to "fengli" report, previously,on september 12, lin yuyi, media director of wanglao kat health, was taken away by relevant government departments for investigation.unlike lin yuyi, zhao min, who was investigated this time, is the "real power" of wonglao kat. he is responsible for presiding over the entire wonglao kat health work and is the "second-in-command" of wonglao kat health. its superior leader is weng shaoquan, chairman and general manager of wanglaoji health.

according to tianyancha, wanglaoji health holds shares in 13 companies, of which 10 are direct holdings and 3 are indirect holdings.among the 10 directly held companies, zhao min served as the legal representative of 5 companies and the senior executives of 6 companies.

zhao min specifically serves as the legal representative, executive director and general manager in guangzhou wanglao kat litchi industry development co., ltd., wanglao kat health (maoming) lychee industry development co., ltd., and wanglao kat health industry (zhuhai hengqin) co., ltd.; in guangzhou wanglao kat litchi industry development co., ltd. he serves as the legal representative and chairman of health e-commerce co., ltd.; he serves as the legal representative, chairman and manager of wanglaoji great health industry (beijing) sales co., ltd.; he serves as the director of guangzhou wanglaoji great health enterprise development co., ltd.

source: tianyancha

in addition to the companies held by wanglaoji health,zhao min also serves as a senior executive in two companies directly and wholly owned by gphl. specifically, he invested in wanglaoji and served as legal representative, chairman and manager.served as a director of guangzhou medical haima brand integrated communication co., ltd.

it is worth mentioning that when "fengli" reported that lin yuyi was under investigation,it said that multiple insiders of gphl confirmed at that time that fang guanghong, chairman of wanglaoji pharmaceutical, had also been taken away for investigation.wanglaoji pharmaceutical and wanglaoji health are the two main business companies in the baiyunshan health sector.

baiyunshan, together with yunnan baiyao and pien tze huang, are also known as the "three musketeers" in the field of domestic chinese medicine fmcg. baiyunshan's business mainly includes four major sectors: great southern medicine, great health, great commerce and others. although big commerce is the main source of baiyunshan's revenue, its profits come more from the big southern medicine and big health sectors.

according to the financial report, in 2023, the main revenue of baiyunshan health will increase by 6.15% year-on-year to 11.117 billion yuan, accounting for 14.77% of the revenue. andthe gross profit margin of this segment's business increased by 0.89 percentage points year-on-year to 44.41%, second only to da nan yao's 48.74% among the four major business segments.the gross profit margins of the other two major business segments - large commercial and others were 6.99% and 14.79% respectively.

the core product of the comprehensive health segment is wanglaoji herbal tea. however, in recent years, as a century-old brand in baiyun mountain, wanglaoji has repeatedly suffered a decline in reputation in the market.

source: can gallery

according to "daily economic news",since 2021, a large number of agents claiming to be products related to the wong lao kat brand have claimed that many "investment companies" use the names of "gpharma group healthy beverage national operation center", "gpharma healthy wonglaoji new product operations headquarters", and "wonglaoji headquarters" under the guise of celebrity endorsements, high rebates, and the promise of a professional operation team to help distribute goods for free, they lured thousands of people into signing agency contracts, with amounts ranging from more than 100,000 yuan to millions of yuan.

in this regard, gphl said that after investigation, it was found that since 2021, many companies have appeared in the market in the name of "wang lao kat operation center" to mislead merchants into thinking that such companies are companies related to gphl. this type of company has no affiliation with gphl. it has reported the case to law enforcement authorities and established a special anti-counterfeiting working group to cooperate with relevant departments in investigating and punishing.

"gpharma should not be aware of these (fraudulent) behaviors. this is harmful to gphl's corporate image. if you knew someone was doing these things in your name, would you ignore it?" said an industry insider familiar with gphl. sources told the "daily economic news", "gpharma group wants to expand the 'wanglaoji' brand to major health industry clusters such as medicated wine, cosmeceuticals, health products, food, and sports equipment through independent operations, brand licensing, and brand leasing. expanding the field to maximize the value of the 'wang lao ji' brand, but the current incident shows that there are oversights in brand licensing management."

xiao zhuqing, a chinese consumer goods marketing expert, said that wonglaoji has carried out external brand licensing in recent years, making wonglaoji beer and some wonglaoji healthy drinks. but,such developers may have unclear responsibilities in terms of quality control, integrity management, and sales services, etc., so this also brings challenges to wong lo kat's brand reputation.

however, xiao zhuqing also said that wanglaoji is a traditional chinese time-honored brand and the pioneer of the herbal tea category in the chinese beverage industry.at present, this golden signboard is still the core value advantage of wanglaoji.

li chuyuanhe has been in charge of baiyun mountain for 11 years

was involved in the "jin ge report letter" incident

on july 13, li chuyuan also delivered a speech at the opening ceremony of the event as the chairman of gphl. a week later, news of his resignation came.

on the evening of july 22, baiyunshan announced that the company’s board of directors received a written resignation report from chairman li chuyuan on july 22. li chuyuan resigned from his position as chairman, executive director and director of the strategic development and investment committee of the board of directors of baiyunshan due to personal reasons. after his resignation, li chuyuan no longer holds any position in the company.

li chuyuan, born in 1965, is 59 years old and has worked for gphl for 36 years. baiyunshan stated in the announcement that li chuyuan confirmed that he had no differences of opinion with the company's board of directors, and there were no other matters that needed to be brought to the attention of the company's shareholders. previously, li chuyuan was the chairman of two companies, gphl and baiyunshan.

on august 30, according to the official public account of the guangdong provincial commission for discipline inspection and supervision, li chuyuan, the former party secretary and chairman of guangzhou pharmaceutical group co., ltd., was suspected of serious violations of discipline and law and was undergoing disciplinary review and supervisory investigation by the guangdong provincial commission for discipline inspection and supervision.li chuyuan does not hold shares in baiyunshan. after his resignation, vice chairman yang jun will perform the duties of chairman on his behalf until a new chairman is elected.

source: can gallery

it is worth noting thatfive years ago, baiyunshan under the leadership of li chuyuan was involved in the jin ge "report letter" incident.

"jinge", a male drug mainly used to treat erectile dysfunction, was regarded as baiyun mountain's "cash cow" because its gross profit margin was once as high as 91.76%.

but on july 18, 2019,beijing kangyeyuan investment consulting co., ltd. published an open letter titled "a real-name open letter against li chuyuan, chairman of gphl, for violating laws and disciplines", pointing out that one item of jinge's raw material procurement is 1,800 yuan per kilogram, and when it arrives at the main factory, it becomes one. therefore, gphl was accused of inflating costs, concealing profits, and suspected of tax evasion.it also accused bai yunshan and its chairman li chuyuan of violating the securities law, the company law and other relevant regulations and infringing on the rights and interests of partners.

however, baiyunshan had previously responded, stating that the content of the report letter was seriously inconsistent with the facts and that it would resort to law. in the end, the first instance judged that kang yeyuan apologized and compensated baiyun mountain for economic losses totaling 150,000 yuan. the second instance upheld the first instance judgment.

in august 2022, three companies including tianxin pharmaceutical factory, a subsidiary of baiyunshan, were exposed by the national medical insurance administration for inflating the prices of raw materials and raising drug prices to obtain funds. later, baiyunshan tianxin pharmaceutical factory and others issued an apology statement.

on the evening of august 30, when li chuyuan was officially announced to be under investigation by the guangdong provincial commission for discipline inspection, baiyunshan issued an announcement on the resolution of the 14th meeting of the 9th board of directors, which showed that 10 directors should be present at the meeting held that morning, but the directors actually present 9 people. executive director zhang chunbo was absent from the meeting due to personal reasons.

on the evening of september 1, baiyunshan announced the news of zhang chunbo’s resignation and stated that zhang chunbo’s resignation did not cause the number of members of the company’s board of directors to fall below the legal minimum number and would not affect the normal operation of the board of directors. his resignation report was delivered to the company’s board of directors from the date of delivery effective from now on. as of the disclosure date, zhang chunbo did not directly or indirectly hold shares in the company. baiyunshan will by-elect directors in a timely manner in accordance with legal procedures.

according to reports from many media including china business news, zhang chunbo has also been taken away by relevant departments for investigation.

since july 2023, 10 ministries and commissions including the national health commission have launched a nationwide centralized rectification of corruption issues in the pharmaceutical field.according to incomplete statistics from yema finance, more than 30 pharmaceutical company executives have been investigated in the past year.

among them, well-known domestic pharmaceutical companies such as gphl, pien tze huang, shanghai pharmaceuticals, china national biotec, and hisun pharmaceuticals have relevant executives involved in corruption cases in the pharmaceutical field, and the actual controllers or former executives of many listed companies have been detained. according to officially disclosed information, bribery and other disciplinary and illegal activities are the main reasons why the above-mentioned corporate executives are investigated.

picturein may, a scandal broke out at yunnan baiyao (000538.sz). five senior executives, including former chairman wang minghui and former chief operating officer and senior vice president yin pinyao, were taken away for investigation by the commission for discipline inspection and supervision because they were involved in the same matter.in 2023, six senior executives of shanghai pharmaceuticals (601607.sh) were investigated successively within 3 months.

baiyunshan’s revenue in the first half of the year was 41 billion.

net profit decreased by 9.31%

baiyun mountain was founded in 1987. the main business involves chinese patent medicines, western medicines, medical devices, etc. it was listed on the h-share market in 1997 and on the a-share market in 2001.

baiyun mountainin terms of chinese patent medicine, he is the master of southern traditional chinese medicine.it owns 12 century-old enterprises, including chenliji pharmaceutical factory, zhongyi pharmaceutical, pan gaoshou pharmaceutical, jingxiutang pharmaceutical, caizhilin pharmaceutical, and wanglaoji pharmaceutical, all of which have obtained chinese time-honored brand certification.

baiyunshan divides its business into great southern medicine, great health, great commerce and others. each of the four sectors has its own strengths and weaknesses. large commerce is the first source of revenue. it mainly operates pharmaceutical circulation business, including pharmaceutical distribution and retail models. its main profits come from the price difference between the purchase and sale of drugs, medical equipment, etc. and distribution fees.

source: can gallery

in 2023, baiyunshan achieved operating income of 75.515 billion yuan, a year-on-year increase of 6.68%; net profit attributable to the parent company was 4.056 billion yuan, a year-on-year increase of 2.25%. it is worth noting thatthe growth rate of baiyunshan's net profit continues to slow down, reaching 27.6% and 6.63% in 2021 and 2022 respectively.

on the evening of august 30, baiyunshan announced its semi-annual results. in the first half of 2024, operating income was 41.043 billion yuan, a year-on-year increase of 2.68%; net profit attributable to shareholders of listed companies was 2.55 billion yuan, a year-on-year decrease of 9.31%.the last time baiyunshan's semi-annual report performance declined was in the 2020 semi-annual report, when net profit fell by 30.75%.

in the first half of 2024, among the four main businesses of baiyunshan, the large commercial sector with pharmaceutical distribution as its main business drove the overall performance increase, achieving revenue of 27.819 billion yuan, a year-on-year increase of 6.12%, accounting for nearly 70% of the total revenue . however, the great southern medicine segment achieved revenue of 6.183 billion yuan, a year-on-year decrease of 2.04%. the comprehensive health segment achieved revenue of 6.538 billion yuan, a year-on-year decrease of 7.24%.the gross profit margins of the above three major sectors all fell within 2 percentage points.

baiyunshan mentioned in the financial report that in 2023, facing the still complex external environment and being affected by industry policies and other factors, the pharmaceutical industry is in an important window period for transformation and upgrading. in,the pharmaceutical industry faces challenges such as consistency evaluation, centralized bulk procurement of drugs, rising raw material prices, and medical insurance payment.

in addition, baiyunshan's sales expenses in 2023 have reached 6.1 billion yuan, while from 2021 to 2023, the company's research and development expenses are only 875 million yuan, 819 million yuan, and 782 million yuan respectively.

in the first half of the year, baiyunshan's total operating expenses were 38.076 billion yuan, a year-on-year increase of 3.91%, of which operating expenses were 33.244 billion yuan, sales expenses were 3.119 billion yuan, and administrative expenses were 1.213 billion yuan.

at the same time,baiyunshan's liabilities have increased, from 34.791 billion yuan in 2021 to 41.909 billion yuan in 2023. 2024in the first half of the year, the company's asset-liability ratio was 51.12%, a year-on-year decrease of 1.59%; the current ratio was 1.52, and the quick ratio was 1.2; total debt was 16.683 billion yuan, of which short-term debt was 13.428 billion yuan, and short-term debt accounted for 80.49% of the total debt. %.

source: can gallery

from january to june 2024, the company's net cash flow was -5.352 billion yuan, a year-on-year decrease of 426.19%, of which operating cash flow was -2.037 billion yuan, investment cash flow was -3.915 billion yuan, and financing cash flow was 595 million yuan.

under this development trend, baiyunshan's revenue (2023 revenue of 75.515 billion yuan) is much higher than yunnan baiyao (000538.sz) (2023 revenue of 39.111 billion yuan) and pien tze huang (600436.sh) (2023 revenue revenue is 10.035 billion yuan), but there is a certain gap between the total market value and the latter two.

as of the close of trading on september 27, baiyunshan's total market value was 37.6 billion yuan, yunnan baiyao's total market value was 100.8 billion yuan, and pien tze huang's total market value was 141.8 billion yuan.

when the semi-annual report was released on august 30, baiyunshan also announced that it planned to distribute a cash dividend of 4 yuan (tax included) to all shareholders for every 10 shares. since its listing in february 2001, baiyunshan has distributed cash dividends 24 times, with a cumulative cash dividend of 8.955 billion yuan.

in recent years, the country has paid more and more attention to the status of the traditional chinese medicine industry.from 2022 to now, the "14th five-year plan for the development of traditional chinese medicine", the "implementation plan for major projects for the revitalization and development of traditional chinese medicine", and the "national procurement alliance of chinese proprietary medicines centralized procurement documents (draft for comments)" have been released, and the traditional chinese medicine industry is continuously facing challenges. the policy is favorable.

"the chinese patent medicine industry has always had problems such as inflated prices and hype of medicinal materials. in the long run, the normalization of centralized procurement of chinese patent medicines and market reshuffling are inevitable trends. national unified centralized procurement has accelerated the process of reshuffling the chinese patent medicine market. under the trend of normalized centralized procurement of patent medicines, significant price reductions, and market reshuffle,chinese patent medicine companies must increase investment in scientific and technological research and development, strengthen intellectual property protection, strive to improve the company's scientific and technological innovation capabilities, combine "inheritance" and "innovation", strengthen "century-old" brand building, strengthen corporate management, and adopt professional operations and the path to sustainable development."deng zhidong, hainan boao medical technology co., ltd. said.

for thousands of years, traditional chinese medicine has been continuously promoted, and more and more traditional chinese medicine companies have emerged. as a long-established pharmaceutical company, baiyunshan has 12 chinese time-honored pharmaceuticals, including zhongyi pharmaceutical, chenliji pharmaceutical, qixing pharmaceutical, jingxiutang pharmaceutical, and pan gaoshou pharmaceutical. if it wants to make good use of its "secret weapon" , you must do a good job in the company's governance, risk control, and management.