Recently, Guangzhou Pharmaceutical Group Co., Ltd. (hereinafter referred to as Guangzhou Pharmaceutical Group) has become the focus of the industry.
Beijing Kangyeyuan Investment Consulting Co., Ltd. (hereinafter referred to as Kangyeyuan) reported on the evening of July 18 that Guangzhou Baiyunshan Pharmaceutical Group Co., Ltd. (hereinafter referred to as Baiyunshan, 600332), Chairman Li Chuyuan was suspected of disclosing false information, concealing profits and income, falsifying financial data, tax evasion and tax evasion. Subsequently, Guangzhou Pharmaceutical Group issued a statement saying that the contents of the open letter were seriously inconsistent with the facts and that the company had reported the case to the public security organs and accepted it.
Both Kangyeyuan and Baiyunshan are shareholders of Guangzhou Baiyunshan Pharmaceutical Science and Technology Development Co., Ltd. (hereinafter referred to as Baiyunshan Science and Technology). Now the partners are hard bars. The truth is complicated and confusing.
On the morning of July 23, a reporter from China Times came to the location of Kangyeyuan Company, located in Beijing Economic and Technological Development Zone, and found that the building was empty. A notice was attached to the door: Our leaders and employees were harassed and threatened by some unidentified personnel, in order to ensure the personal safety of our leaders and employees as well as the public. The normal operation of the company, is temporarily moved to the production line office area office... ___________. The reporter contacted Mr. Zhang, the companys responsible person, who said that he had not yet received the investigation notice from the relevant departments.
Is Kingos 60% profit margin true?
For Baiyunshan Science and Technology, Kangyeyuan holds 49% and 51% of Baiyunshans shares. Kangyeyuan complains in the Real Name Open Letter against Li Chuyuan of Guangzhou Pharmaceutical Group, which violates the law and discipline. Although Jinge, a product of Baiyunshan Science and Technology, has made huge profits since its listing, Kangyeyuan, as a shareholder, has not been able to obtain a complete audited financial and accounting report. And no profit was obtained.
What is Kingo mentioned in the letter? According to relevant data, Jinge is the Chinese Viagra sildenafil citrate tablet of Guangzhou Pharmaceutical Group. Since its launch in 2014, Jinge has successfully seized part of the market in a very short time. Minet data show that since 2016, Jinge has sold far more than the original research products, with the highest sales volume for three consecutive years. In 2018, the market share of sales reached 66.85%, more than twice that of the original research products, breaking the 13 consecutive years of market monopoly of foreign-funded enterprises.
Baiyunshan clearly stated in the Clarification Announcement: the sales revenue of sildenafil citrate tablets produced by Baiyunshan Pharmaceutical General Factory, a subsidiary of our company, in 2018 was 66,205.78 million yuan, accounting for 1.58% of the companys annual sales revenue; the total profit was 399.365 million yuan, accounting for the companys total profit in that year. 9.94%.
According to Baiyunshans announcement data, Kingos profit margin in 2018 would be as high as 60%. Even so, Kang Yeyuan put forward in his open letter that the output and profit of Jingo disclosed in Baiyunshan Annual Report are far lower than the actual amount, and explained: We provide the production cost of Jingo for accounting, because the first four steps of raw materials ofViagraare produced by our shareholders in Jinan Company, and there are accurate converted raw materials. The tables for the quantity of drugs are available for reference.
In addition, Kang pointed out that Baiyunshan also falsely reported the cost of Jingo medicines: according to the information obtained from raw material suppliers, the cost of medicines for main components in Jingo products was only 1800 yuan per kilogram, but the internal accounting cost of Baiyunshan was 10,000 yuan per kilogram. From April 2014 to October 2016, Baiyunshan Group made a total progress. Goods 7600 kilograms, only this company false increase cost of 62.32 million yuan, which naturally involves tax evasion and tax evasion.
If Kang Yeyuans report is true, then how high Kingos actual profits are has become a mystery.
However, regarding Kang Yeyuans statement, Baiyunshan said that after verification, Baiyunshan Pharmaceutical General Factory, Baiyunshan Chemical Pharmaceutical Factory and Baiyunshan Pharmaceutical Science and Technology Company have been operating in accordance with the law and regulations. There are no cases of false increase in costs, tax evasion, tax evasion, revenue concealment, false disclosure of information and infringement of shareholdersinterests.
Shareholders Rights and Gingers Right of Speech
Regarding the origin of the cooperation between the two sides, Kang Yeyuans relevant personages described to the reporter of the China Times: In early 1997, our scientific researchers carried out systematic research and development of the pre-clinical study of sildenafil citrate (Jingo) according to the requirements of a new class of drugs in the country. In December 1998, all pre-clinical medical experiments were completed and Harbin was used. Sanlian Pharmaceutical Co., Ltd. declared clinical practice in name, and was notified of sufficient supplementary clinical research reports in September 1999. In October 1999, Baiyunshan took the initiative to discuss cooperation with us, and jointly established Baiyunshan Science and Technology with Baiyunshan in the fourth quarter of 1999.
It is understood that at that time, Kangyeyuan used the national first-class new drug sildenafil citrate tablets (Jinge) clinical approval and the national fourth-class new drug Azithromycin powder injection certificate as the price to invest in Baiyunshan Science and Technology and 49% of the shares, while Guangzhou Pharmaceutical Group took 51% of the shares in Baiyunshan Trademark Use Rights and other assets.
According to Kangyeyuan, in recent years, as a shareholder, Kangyeyuans decision-making power and profit distribution power for Jinge and other businesses have been almost overridden. Since the Golden Gold products were listed in October 2014, their property rights, management rights and earnings rights have been stripped from the technology companies, and shareholdersrights and interests have not been allocated according to the company law.
However, Guangzhou Pharmaceutical Group in the Strict Statement said that Baiyunshan Science and Technology held a board of directors and shareholders meeting in accordance with the companys charter, but Kang Yeyuan failed to perform the duties of directors and shareholders for many times. Kang Yeyuan responded that Baiyunshan Science and Technology did not hold shareholder meetings and board meetings on time in the past five years. The Kingo Resolution Bill put forward by us has never been included in the formal issue, but only recorded in the minutes.
The reporter consulted the information and found that Baiyunshan participated in the further research and development of the drug from the establishment of the joint venture company to the final listing of Jinge. According to relevant media reports, Baiyunshan set up a research and development team in 1998 to start the research and declaration of sildenafil citrate. Guangzhou Pharmaceutical Group also appointed Nobel Prize in 2012. Dr. Murad, the winner of the Physiological Medicine Award and Father of Viagra, directed the research and development of Ginger.
So, is Baiyunshans right to speak about Jinges business related to this? Kang Yeyuan explained to the reporter of the China Times: Our company is a legal shareholder of Baiyunshan Science and Technology. When Baiyunshan Science and Technology was founded, the income of Jinge property right was clearly agreed upon. Especially in December 2001, Guangzhou Baiyunshan Pharmaceutical Factory, Harbin Sanlian Pharmaceutical Industry Co., Ltd., Guangzhou Baiyunshan Pharmaceutical Science and Technology Development Limited signed a tripartite agreement clearly agreed that the property rights of Jinge shall be owned by Baiyunshan Science and Technology, and no regrets shall be allowed.
In the Yanzheng Statement, Guangzhou Pharmaceutical Group said that Baiyunshan Science and Technology and related parties have been actively engaged in communication and consultation with Kangyeyuan Investment, but no agreement has been reached.
Sharing of interests leads to disputes
Kang Yeyuan, the relevant person in charge, said: From 2014 to 2017, our company, on behalf of more than 20 times, went south to Guangzhou to request Guangzhou Pharmaceutical Group to provide financial statements and dividends of Jinges operating conditions. Chairman Li Chuyuan, for various reasons, let other managers of the companycopewith our proposal. Reasons and demands are ignored. In the meantime, the other party put forward a proposal based on sales, and we firmly oppose the distribution plan. According to Kang Yeyuan, Li Chuyuan refused to pay dividends on this basis.
It can be seen that Kang Yeyuan pointed the spearhead of the report at Li Chuyuan. The above-mentioned Kangyeyuan official stressed to the reporter of China Times: Our company will not take the initiative to sue Guangzhou Pharmaceutical Group, our main purpose is to sue the chairman of Li Chuyuan, who manages the enterprise. We still hope to cooperate with state-owned enterprises for a long time.
Our company will publish evidence one after another, including actively cooperating with the investigation of relevant functional departments such as the Securities and Exchange Commission, discipline inspection and supervision department, taxation and so on, and announcing the facts and developments to the media. For this public report, the above-mentioned person in charge said, The ideal result is to restore the truth to the society, safeguard our legitimate rights and interests, in accordance with the original contract, regularly submit to our company the financial report and dividend after audit.
Regarding the reported incident, the responsible person of Guangzhou Pharmaceutical Groups Public Relations Department told the reporter of China Times that regarding this matter, please take the announcement issued by Baiyunshan, a listed company, and the solemn statement issued by Guangzhou Pharmaceutical Group as the criteria.
Although Kang Yeyuans report was superficially directed against Li Chuyuan, it was tantamount to sending a letter of invitation to the whole Guangzhou Pharmaceutical Group. Baiyunshan A and H shares fell 3.54% and 6.26% respectively from the opening of July 19 to the closing of July 23.
It is worth mentioning that there have been more than 20 lawsuits between Guangzhou Pharmaceutical Group and another partner Gardobo, involving a sum of 5 billion yuan. In the face of Kangyeyuan, it is clear that Kangyeyuan has the ability to fight a protracted war. Whether Kangyeyuan can finally achieve the ideal result is still unknown.
In fact, since Kangyeyuan was founded in 2009, it was impossible for Kangyeyuan to participate in the formation of Baiyunshan Science and Technology Company. Reporters also found that Kang Yeyuan recently announced the establishment of Baiyunshan Science and Technology contract only gives part of the content, in addition to a Kang Yeyuan official seal, there is no other words related to Kang Yeyuan. Is the awkward partnership related to this? Regarding the reporters question, on July 24, the person in charge of Kang Yeyuan said, Its not convenient to disclose specific matters now. But at the same time, he said, We are the legal shareholders of the technology company, and the property right and income right of Jinge are confirmed by three agreements. This is an indisputable fact. Guangzhou Pharmaceutical Group has forced to replace the original equity allocation scheme with the sales commission scheme. We strongly oppose it until then. At present, there is no reasonable and legal dividend. The truth may be more complex than the current clues? Journalists from the Cathay Times will continue to pay attention. Source: Responsible Editor of China Times: Wang Xiaowu_NF
In fact, since Kangyeyuan was founded in 2009, it was impossible for Kangyeyuan to participate in the formation of Baiyunshan Science and Technology Company. Reporters also found that Kang Yeyuan recently announced the establishment of Baiyunshan Science and Technology contract only gives part of the content, in addition to a Kang Yeyuan official seal, there is no other words related to Kang Yeyuan. Is the awkward partnership related to this? On the question of journalists,
On July 24, the official in charge of Kangyeyuan said, It is not convenient to disclose specific matters now. But at the same time, he said, We are the legal shareholders of the technology company, and the property right and income right of Jinge are confirmed by three agreements. This is an indisputable fact. Guangzhou Pharmaceutical Group has forced to replace the original equity allocation scheme with the sales commission scheme. We strongly oppose it until then. At present, there is no reasonable and legal dividend.
The truth may be more complex than the current clues? Journalists from the Cathay Times will continue to pay attention.