Source: Bureau of Health and Literacy

On April 30, Haizheng Pharmaceutical issued a number of announcements in which it was mentioned that the former director and president of the company had been investigated by the relevant departments. The notice said: recently, according to a letter from the State-owned assets Supervision and Administration Office of the people's Government of Jiaojiang District, Taizhou City, Li Gong, a former director and former president, is under investigation by relevant departments on suspicion of embezzlement, embezzlement, bribery and non-state staff bribery.

The announcement shows that Li Gou's investigation is related to alleged embezzlement, bribery and job embezzlement in the company's agency business between 2019 and 2022.

The Health and Information Bureau learned from authoritative channels that Li Gou's "agency business" suspected of embezzlement and bribery in the announcement was related to the company's sales of some varieties as a CSO agent for pharmaceutical companies.

During Li Gong's tenure, the main agency business of Haizheng Pharmaceutical Co., Ltd. took place in Hanhui Pharmaceutical, a subsidiary. The subsidiary was formerly known as Haizheng Pfizer, a joint venture between Haizheng and Ruihui in 2012. Pfizer withdrew in 2017 and its stake was taken over by Hillhouse Capital, which changed its name.

The "agency business" involved by Li Gou is the business direction that Hanhui started after the participation of Hillhouse Capital. Such a major problem has arisen in just a few years, and Haizheng may have more secrets.

Agent varieties flow to third parties

Haizheng Pharmaceutical Co., Ltd. is a veteran state-owned enterprise in Taizhou, Zhejiang Province, which was once as famous as Heng Rui. its antineoplastic drugs, anti-parasitic drugs and cardiovascular system drugs once ranked first in domestic enterprises.


In 2012, Pfizer and Haizheng formed a joint venture subsidiary, Haizheng Pfizer, hoping to hand over generic drugs to the joint venture company, which is one of the first joint venture projects between domestic multinational pharmaceutical companies and local pharmaceutical companies. In 2017, Pfizer withdrew for strategic reasons, and Hillhouse Capital invested 1.9 billion yuan to transfer its 49 per cent stake to achieve partial control of Haizheng Pharmaceutical.

It was at this time that Li Gou joined Haizheng Pharmaceutical Industry. Li Gou, who first worked in the pharmaceutical industry and then invested, has no direct contact with Haizheng on his resume. After Hillhouse bought a stake in Hanhui Pharmaceutical in March 2017, Li Jie became general manager and further became president of Haizheng Pharmaceutical in January 2019. Li Gou has always been thought to be closely related to Hillhouse.

At a news conference in 2018, Li Gou unveiled the renamed Hanhui Pharmaceutical as CEO. When he was in office, he said bravely that it would take five years for Haizheng to return to the ranks of first-tier pharmaceutical companies.

Haizheng Pharmaceutical Co., Ltd. spans the pharmaceutical industry, commerce and other sectors, among which Hanhui Pharmaceutical has the strongest profitability and has a significant impact on the company's performance. But after Pfizer withdrew, Hanhui faced the problem of readjusting its strategic direction.

Li Gou's play at that time was to strengthen the company's CSO attribute and introduce more third-party varieties in addition to the original varieties of Pfizer and Haizheng, which brought a lot of vitality to Hanhui Pharmaceutical in a short period of time.

There are rumors in the industry that Li Gou frequently appeared in all kinds of commercial activities in those two years and was very active in the pharmaceutical circle.

As a result, Hanhui Pharmaceutical, as a CSO company, saw its first edge at that time. From 2018 to 2019, Hanhui Pharmaceuticals successively introduced three respiratory drugs of Novartis Pharmaceuticals, and reached strategic promotion cooperation with Shanghai Anbisheng, Fudan Zhangjiang and other enterprises on two characteristic generic drugs. In 2020, the company reached cooperation with Zaiding Pharmaceutical and Microcore Biology to win the promotion rights and interests of Zaiding's Niuzele and Microcore Shuangluoping products.

According to the financial report of Haizheng Pharmaceutical Co., Ltd., Hanhui Pharmaceutical's promotion service income comes from self-promotion and agent promotion, the latter being carried out by third-party promotion service providers commissioned by the company, including Fudan Zhangjiang, Novartis, Zaiding Pharmaceutical, etc.

Li Gou's accident is precisely because of the "agency business", then the direction of the variety involved is very clear.

Return to healthy profit model

Even if Mr Li did not line his own pockets in the agency business, Hanhui Pharmaceuticals, in which he traded, had attracted the attention of the exchange because of a series of equity changes.

Li Gou promoted Hanhui Pharmaceutical to a higher level in a short period of time by opening up CSO business. In 2020, Haizheng Pharmaceutical made an unexpected decision to reclaim a 49 per cent stake in Hanhui Pharmaceutical from Hillhouse with a value of 4.4 billion yuan.

Haizheng is Hanhui's joint venture party, which could have taken over 1.9 billion yuan when Pfizer quit, but had to spend 4.4 billion yuan to recover it two years later, which aroused the vigilance of the Shanghai Stock Exchange and sent out a letter of inquiry. Haizheng explained that he had no money before, but now Hanhui's business is doing well and a new profit growth point has been formed by promoting the business, so it is worth the price.

This is true. According to the company's financial report, the company's "externally introduced product income" soared to 3% in 2019, up from 67.65 million yuan in 2018.Crashbandicootplaystation1.30 million yuan. However, by 2020, this income will plummet back to 70 million yuan.

The investment of 1.9 billion yuan from Hillhouse Capital has increased to 4.4 billion yuan in less than three years, and Li Jie is responsible for it all. Li Gou is currently being investigated for suspected crimes in related business, and the performance myth he created is also a flash in the pan.

On April 30th, Haizheng Pharmaceutical released its annual report that the company's revenue in 2023 was 10.3 billion yuan, a decrease of about 14% compared with the same period last year. At the same time, the auditor has reservations about the annual report.

Li Gou announced his resignation in early 2023, and since then, a number of senior executives, including the chairman and vice chairman of Haizheng Pharmaceutical Co., have left. It wasn't until last October, when Xiao Weihong, the former chief executive of Haizheng Pfizer, returned to Haizheng that the company's management initially stabilized.

After Xiao Weihong took office, she made a drastic reform of the company's management, with the focus on the adjustment of the sales structure and the improvement of the compliance system. According to the annual report, the adjustment of the company's sales structure has been completed, such as sorting out the previous domestic agent varieties, taking back all the self-owned varieties with high profits, and so on.Crashbandicootplaystation1In terms of agent management, the company has implemented more stringent measures to ensure partner compliance and business efficiency, and to improve the openness, transparency and professionalism of selecting agents.

    Powered by Z-BlogPHP &