At 17 o'clock on August 30, the Guangdong Provincial Commission for Discipline Inspection and Supervision "Nanyue Qingfeng Network" released a news that Li Chuyuan, former secretary of the Party committee and chairman of Guangzhou Pharmaceutical Group Co., Ltd., is suspected of serious violations of discipline and law, and is currently undergoing disciplinary review and supervision investigation by the Guangdong Provincial Commission for Discipline Inspection and Supervision.
Li Chuyuan, former chairman of Guangzhou Pharmaceutical Group. (Image source: Information Times)
Although this news is shocking, many shareholders are already mentally prepared. Because on July 22, Guangzhou Pharmaceutical Baiyunshan, a listed company under Guangzhou Pharmaceutical Group, disclosed that Li Chuyuan resigned from the company's chairman and other positions for personal reasons, and no longer held any position in the company. At that time, some media said that Li Chuyuan resigned because he was taken away by relevant departments and was under investigation. Today, the news has been confirmed.
Despite this, as soon as the news came out, the market value of Guangzhou Pharmaceutical-related enterprises still fluctuated. On September 2, "Baiyunshan" A shares closed at 26.71 yuan per share, down 7.22%, and then ushered in three consecutive declines.
Guangzhou Pharmaceutical Group is the largest state-owned pharmaceutical enterprise in South China, with not only well-known listed companies such as Baiyunshan and Kangmei Pharmaceutical, but also time-honored Chinese brands such as Chen Liji, Jing Xiutang, Pan Gaoshou and Cai Zhilin.
Li Chuyuan, who has worked in Guangzhou Pharmaceutical for 36 years, why did he leave this state-owned pharmaceutical giant in such an undignified way?
debuted in Baiyun Mountain and eventually became the helmsman of Guangyao
In 1988, when he graduated from Sun Yat-sen University, a future "985" university, majoring in chemistry, Li Chuyuan had two paths in front of him: one was to send graduate students, and the other was to join Baiyunshan and become a technician. He chose the second article at that time, and then worked in Baiyunshan Pharmaceutical General Factory for many years, after technician, sales section chief, deputy director, assistant general manager, deputy general manager and other positions experience, ability is valued, in March 1999 officially appointed as the director of Guangzhou Baiyunshan Traditional Chinese Medicine Factory, which is a part of Guangzhou Baiyunshan Pharmaceutical Co., Ltd.
After becoming the director of Baiyunshan Traditional Chinese Medicine Factory, Li Chuyuan showed amazing work ability. In the year he took office, Li Chuyuan made the state-owned traditional Chinese medicine factory, which had a loss of more than 46 million yuan last year and was almost bankrupt, realize a profit of 16.11 million yuan, reaching four times the best level in the factory's history. Such achievements made Li Chuyuan a "star cadre" of Baiyunshan Pharmaceutical.
Around 2001, Guangzhou Pharmaceutical Group reorganized Baiyunshan Pharmaceutical, and the Baiyunshan Traditional Chinese Medicine Factory at that time was no longer what it used to be. In 2003, there was a SARS epidemic in many places in China, and Guangzhou, where Guangyao Baiyun Mountain is located, was one of the focuses of the SARS epidemic. In the "Technical Plan for the Prevention and Treatment of Traditional Chinese Medicine for Atypical Pneumonia (Trial)" formulated by experts organized by the State Administration of Traditional Chinese Medicine, "Banlangen" appears in the "prescription of traditional Chinese medicine taken by healthy people who have contact with cases of atypical pneumonia or suspected cases under the guidance of doctors", which coincides with the flagship product of Baiyun Mountain. This year, the sales of Baiyunshan Traditional Chinese Medicine Factory reached 470 million yuan, and the profit was more than 50 million yuan.
The dazzling results have ushered in a bigger stage for Li Chuyuan. In 2004, Li Chuyuan served as the deputy general manager of Guangzhou Pharmaceutical Group, assisting the general manager in marketing work. In 2010, Li Chuyuan was promoted to vice chairman and general manager of Guangzhou Pharmaceutical Group. In 2013, he became the chairman of Guangzhou Pharmaceutical Group, taking charge of this large state-owned pharmaceutical company that plays a pivotal role in the capital market.
After many years of pulling back "Wang Laoji"
Before and after Li Chuyuan took office as the general manager of Guangzhou Pharmaceutical Group, Guangzhou Pharmaceutical Group was launching a charge against JDB on the trademark "Wang Laoji".
Guangzhou Pharmaceutical Group product - Wang Laoji.
In 1995, Hongdao Group, the actual controller of JDB, reached a cooperation with Guangzhou Pharmaceutical Group and obtained the exclusive right to use the "Wanglaoji" brand and canned beverages, and then established Dongguan JDB (later renamed Guangdong JDB) in 1998. After 2001, Hongdao Group obtained two agreements - the "Wanglaoji" Trademark License Supplementary Agreement and the "Supplementary Agreement on the "Wanglaoji" Trademark License Contract, which stipulated that the "Wanglaoji" trademark lease time limit would be extended to 2013 and 2020 respectively, and the annual trademark usage fee would only be about 5 million yuan.
Behind these two contracts, which are not commensurate with the payouts, is the bribery of Chen Hongdao of Hongdao Group to the senior management of Guangzhou Pharmaceutical Group. In December 2004, Li Yimin, the former general manager of Guangzhou Pharmaceutical Group, was arrested, which led to the hidden secret that Chen Hongdao had bribed him with 3 million yuan.
After the case of the general manager taking bribes, GPC re-sorted the content of the agreement between the two parties, believing that the agreement had an obvious tendency to protect the interests of Hongdao Group. In 2010, when Li Chuyuan became the general manager of Guangzhou Pharmaceutical Group, the first agreement signed by the two parties expired. GPH saw an opportunity to resolve this issue and filed for arbitration with the China International Economic and Trade Arbitration Commission on April 26, 2011.
On May 9, 2012, the China International Trade Arbitration Commission ruled that the two contracts for "Red Can Wanglaoji" were invalid, which means that Hongdao Group had no right to use the trademark Wanglaoji from May 2, 2010. Hongdao Group immediately filed a lawsuit, but on July 13 of that year, the Beijing No. 1 Intermediate People's Court rejected the application to revoke the arbitration result of Wanglaoji, and the 445-day battle of "Red Can Wanglaoji" ended in the victory of GPC. Subsequently, the two sides also experienced several confrontations on red can packaging, advertising slogans and economic compensation, and finally ended with JDB compensating Guangzhou Pharmaceutical Group for about 317 million yuan.
After years of pulling, Guangzhou Pharmaceutical Group and JDB have achieved success, and the most important trademark use right has become the bag of Guangzhou Pharmaceutical Group.
Dream Capital "laughs" Kangmei Pharmaceutical
After serving as the main leader of Guangzhou Pharmaceutical Group, Li Chuyuan made three efforts in the capital market, not only straightening out the capital logic of Guangzhou Pharmaceutical Corporation's listing, but also winning Kangmei Pharmaceutical, which once had a market value of hundreds of billions of yuan, at a price of 6.5 billion yuan.
Li Chuyuan's journey to pursue his dream capital has set sail during his tenure as general manager. In March 2012, Guangzhou Pharmaceutical Group issued a restructuring plan: it planned to add 446 million shares to absorb and merge "Baiyunshan A", and issue 34.84 million shares to Guangzhou Pharmaceutical Group to purchase related assets, the original Baiyunshan will cancel its legal personality, and all its assets, liabilities, equity, business and personnel will be merged into Guangzhou Pharmaceutical, and Guangzhou Pharmaceutical will also be renamed.
At this time, GPC had two listed companies in China, namely Guangzhou Pharmaceutical Co., Ltd. ("Guangzhou Pharmaceutical") and Guangzhou Baiyunshan Pharmaceutical Co., Ltd. ("Baiyunshan A"), the former was listed in Hong Kong and Shanghai in October 1997 and February 2001 respectively, and the latter was listed in Shenzhen in 1993. Therefore, this reorganization involves the three major securities markets of Shanghai, Hong Kong, and Shenzhen.
On May 23, 2013, Guangzhou Pharmaceutical Co., Ltd., a subsidiary of Guangzhou Pharmaceutical Group, held a listing ceremony for new shares on the trading floor of the Shanghai Stock Exchange, which means that Guangzhou Pharmaceutical Group has become the second pharmaceutical platform to be listed as a whole after Shanghai Pharmaceutical Group through reorganization. On August 25 of the same year, the reorganized new "Guangzhou Pharmaceutical" was renamed "Guangzhou Baiyunshan Pharmaceutical Group Co., Ltd.", and the stock abbreviations of the three major exchanges in Shanghai, Shenzhen and Hong Kong were renamed "Baiyunshan".
Li Chuyuan, who tasted the sweetness in the capital market, set his sights on Kangmei Pharmaceutical, which was in trouble, a few years later.
Kangmei Pharmaceutical Co., Ltd. started with the trade of Chinese herbal medicines, and after its listing in 2001, its market value once soared, reaching a maximum of 139 billion yuan. Kangmei Pharmaceutical once held the top five Chinese herbal medicine markets in the country and was the leader of the Chinese medicine decoction piece market. However, after the problem of "financial fraud" occurred and the founder was imprisoned, Kangmei Pharmaceutical's market value plummeted and was also put on the "ST".
At this time, Guangzhou Pharmaceutical Group, as the largest pharmaceutical company in Guangdong, became the best choice to restructure Kangmei Pharmaceutical. In November 2022, Kangmei Pharmaceutical passed a restructuring plan, with Guangzhou Shennong's Traditional Chinese Medicine Development Co., Ltd., a wholly-owned subsidiary of Guangzhou Pharmaceutical Group, and Guangdong Shennong's Enterprise Management Partnership, which holds more than 46% of the shares of Guangzhou Pharmaceutical Group, together with other social capital, a total of 6.5 billion yuan and 29.9% of the shares, becoming the largest shareholder of Kangmei Pharmaceutical, of which Guangdong Shennong's invested 5.4 billion yuan to become the controlling shareholder.
The following year after the approval of the restructuring plan, Kangmei Pharmaceutical's operating income reached 4.87 billion yuan, an increase of nearly 20%, achieving a historic turnaround. On the evening of July 2, 2024, Kangmei Pharmaceutical issued a document on its official website, officially announcing that it had successfully "taken off the hat", and the company's stock abbreviation would be changed from "ST Kangmei" to "Kangmei Pharmaceutical".
After the reorganization of Kangmei Pharmaceutical, Li Chuyuan immediately launched a listing attack on the Beijing Stock Exchange. The Beijing Stock Exchange is the first company-based stock exchange in mainland China approved by the State Council, and is wholly owned by the National Equities Exchange and Quotations Co., Ltd. ("NEEQ"), and companies listed on the Beijing Stock Exchange must be innovative companies that have been listed on the NEEQ for 12 consecutive months. In order to gradually achieve the goal of listing, on December 20, 2023, the listed company "Baiyunshan" announced that it was planning to list Guangzhou Pharmaceutical on the New Third Board and choose the opportunity to apply for the Beijing Stock Exchange, and on June 18, 2024, Guangzhou Pharmaceutical officially submitted an application for listing on the "New Third Board".
However, due to the State Council's issuance of the "Several Opinions on Strengthening Supervision and Preventing Risks and Promoting the High-quality Development of the Capital Market" in April 2024, which proposed to "strictly supervise spin-off listings", a number of listed companies to be spun off have since suspended their listings. Guangzhou Pharmaceutical's journey to the Beijing Stock Exchange is also facing severe challenges. This is also one of the few operations that Li Chuyuan has not yet landed in the capital market operation.
Swallowing thousands of miles, "Jin Ge" fell off the horse?
Jin Ge, which was listed in 2014, has brought profits and honors to Li Chuyuan and Baiyunshan, but also brought controversy to them.
"Jinge", whose real name is sildenafil citrate tablets, was once known as "domestic Viagra". According to Baiyunshan's financial report, in 2023, the production volume of "Jinge" will be 94.65 million tablets, the sales volume will be 101 million tablets, and the inventory will remain 16.15 million tablets.
Guangzhou Pharmaceutical Group product - Jin Ge (sildenafil citrate tablets).
Guangyao told a "Jin Ge legend" with emotion on its official website. It turned out that as early as 1998, Baiyunshan set up a research and development team to start the development and declaration of sildenafil citrate ("Jinge"). In 2003, Baiyunshan obtained the Class I New Drug Certificate from the State Food and Drug Administration.
Generally speaking, after the certificate is approved, you can apply for the registration of the production approval. However, the patent for the original drug use of "Viagra" did not expire until May 2014.
Facing a long period of 11 years, Guangyao waited hard while accumulating his strength. From 2004 to 2005, GPC obtained two invention patents for the "Jinge" synthesis process, and then invited Fred ·Murad, the "father of Viagra" and a foreign academician of the Chinese Academy of Sciences, to serve as the president of the Baiyunshan Research Institute of GPC in 2012. In 2014, when the patent for the use of the original "Viagra" drug expired, GPC had been leading the bow for many years, and after shooting the arrow of the product, it instantly broke through the "wall of sighs" that was blocked from listing.
However, the "water" behind this product seems to be deeper than what is described on the official website of Guangyao. On July 18, 2019, Beijing Kangyeyuan Investment Consulting Co., Ltd. issued an "Open Letter to the Masses", directly accusing Guangyao Baiyunshan of harming the rights and interests of small and medium-sized shareholders. Previously, Kang Yeyuan and Guangyao Baiyunshan cooperated to establish Baiyunshan Technology Co., Ltd., which was 51% owned by Guangyao Baiyunshan and 49% held by Kang Yeyuan.
Kang Yeyuan pointed out in the open letter that Guangyao Baiyunshan, under the instruction of Li Chuyuan, has never submitted financial statements to Kang Yeyuan in accordance with the articles of association of Baiyunshan Technology Company since Jinge was listed in 2014, and Jinge's production rights, management rights, and income rights have also been divested from Baiyunshan Technology Company, and Kang Yeyuan has never received any income from Jinge's production and sales. At the same time, Kang Yeyuan also pointed out that there is a problem of financial fraud in Baiyunshan. Subsequently, Kang Yeyuan posted a number of articles in succession, saying that Li Chuyuan was suspected of violating laws and disciplines, suspected of violating the letter and approval, and Baiyunshan Technology had uneven profit distribution. In October 2019, Guangzhou Pharmaceutical Baiyunshan sued Kang Yeyuan, ordering Kang Yeyuan to compensate Baiyunshan for economic losses totaling 150,000 yuan, and at the same time publicly issued an apology statement on the relevant Weibo and WeChat public accounts.
After several inquiries by "Knowledge Economy", it was found that Kang Yeyuan's WeChat public account was no longer available, and his Sina Weibo did not have any traces of the open letters questioning Guangyao Baiyunshan and Li Chuyuan, leaving only an "apology letter" dated July 12, 2021. In the apology letter, Kang Yeyuan said that the previously published article was published by the general manager and his team entrusted and authorized by Kang Yeyuan, and after the judgment, it constituted an infringement of the right to reputation, and apologized for the damage caused to Guangyao Baiyunshan and Li Chuyuan.
The open letter incident is over, and the lawsuit is still unresolved. According to the online platform, from 2022 to 2024, Kang Yeyuan and Guangyao Baiyunshan will still go to court many times due to disputes over contracts and shareholders' right to know.
Li Chuyuan's fall, I don't know if it is related to Jin Ge?
Author|Lei Kunlun
Source: Knowledge Economy