(Text/Wang Li Editor/Xu Zhe) Wong Lao Kat has gained popularity with its advertising slogan of "Drink Wong Lao Kat if you are afraid of getting angry", but Wang Chuyuan, the man behind it, recently announced his resignation.
On the evening of July 22, Guangzhou Baiyunshan Pharmaceutical Group Co., Ltd. (hereinafter referred to as "Baiyunshan") issued an announcement announcing that Li Chuyuan resigned as chairman of the company's ninth board of directors, executive director and strategic development and investment committee of the board of directors due to personal reasons. Director's position.
According to reports from various media including Daily Economic News, Li Chuyuan’s resignation was not simply due to personal reasons. People close to the Guangdong Provincial State-owned Assets System and core people of GPHL revealed that Li Chuyuan has been taken away by relevant departments for investigation, and his family members are also involved.
looks back at Li Chuyuan's career. He joined Baiyunshan in 1988, served the company for more than 35 years, and served as the company's chairman since 2013. Under his leadership, popular products such as Jin Ge and Wong Lo Kat were created and achieved remarkable results, and Baiyun Mountain once became the darling of the capital market.
However, during his tenure, Baiyunshan has been involved in market controversies many times due to product promotion and financial issues. In particular, Li Chuyuan's exaggerated remarks in public have caused the company to be questioned by public opinion.
What is more noteworthy is that Baiyunshan is not impeccable in anti-corruption in medicine. According to a report from the National Medical Insurance Administration, Baiyunshan’s branches and holding subsidiaries engaged in illegal activities such as purchasing raw materials at inflated prices and cashing out. Although the company has made rectifications and dealt with the relevant responsible persons, these incidents have undoubtedly caused serious damage to the company's reputation and market image.
Looking at the current situation, Li Chuyuan’s resignation will undoubtedly bring new challenges and uncertainties to Baiyun Mountain. As of the evening close of July 23, Baiyunshan's secondary market share price fell 3.2%, closing at 29.99 yuan per share.
He has been in charge of Baiyunshan for 11 years and suddenly resigned before his term expired.
html On the evening of July 22, Baiyunshan issued an announcement announcing that the company’s chairman Li Chuyuan resigned as chairman of the ninth board of directors, executive director and director of the strategic development and investment committee of the board of directors due to personal reasons. The position is effective immediately and he will no longer hold any position in the company.Something worth noting is that Li Chuyuan was re-elected as chairman of the ninth board of directors at the first meeting of the ninth board of directors of Baiyunshan on May 30, 2023, with a term of three years. In theory, his term will end in May 2026. Ends on the 29th. At that time, the sudden resignation, especially the rumor that Li Chuyuan was taken away by relevant departments for investigation, was even more rampant, causing turmoil in the secondary market.
Screenshot of Baiyunshan announcement
According to the announcement, Li Chuyuan’s resignation did not cause the number of members of the company’s board of directors to fall below the legal minimum and would not affect the normal operation of the board of directors. Baiyunshan said that Yang Jun, the company's vice chairman, will perform the duties of the company's chairman on his behalf until the board of directors elects a new chairman.
looks back at Li Chuyuan's career. Since joining Baiyunshan in 1988, he has been gradually promoted from technician to factory director, party committee secretary, and to important leadership positions in GPHL and Baiyunshan. Under his leadership, Baiyunshan has achieved a magnificent transformation from a traditional pharmaceutical company to a comprehensive pharmaceutical group. Its business scope covers pharmaceutical distribution, production of Chinese and Western medicines, production of comprehensive health products and medical and health services. During
's tenure, Li Chuyuan promoted the company's performance to achieve leapfrog growth. He successfully promoted the strategic transformation of Baiyunshan, transforming the company from a traditional pharmaceutical company into a pharmaceutical distribution company.
Li Chuyuan led the recovery and reshaping of the Wonglaoji herbal tea brand. Through a series of marketing activities, he successfully built Wonglaoji into a company. The star product has brought considerable profits to the company. In the health category, he has also successfully launched a number of star products including "Jinge".
Li Chuyuan
From 2013 to 2023, Baiyunshan’s operating income and net profit attributable to the parent company have more than tripled, reaching 75.515 billion yuan and 4.056 billion yuan respectively.
In terms of technological innovation, the "Integrated Innovation and Support System Creation and Application of Traditional Chinese Medicine Quality Inspection Technology" project led by Li Chuyuan won the second prize of the National Science and Technology Progress Award, which enhanced Baiyun Mountain's competitiveness in the field of traditional Chinese medicine.
However, Li Chuyuan’s career has not been smooth sailing. Some of his remarks in public, as well as reports from partners against Baiyunshan and its management, have had a certain negative impact on the company.
At an event in April 2024, Li Chuyuan claimed that Baiyunshan Isatis Root, a drug owned by GPHL, has "miraculous effects" in treating the COVID-19 epidemic, and said that drinking Isatis Banlangen eliminates the need to wear a mask. This statement triggered widespread controversy and criticism, and was considered an irresponsible and unscientific statement; in 2017, Li Chuyuan said at the Fortune International Technology Brainstorming Conference that "drinking Wanglaoji can extend your life by 10%."
Screenshot from Zhejiang TV news report
Previously in 2019, Baiyunshan’s partner Beijing Kangyeyuan Investment Consulting Co., Ltd. reported that Baiyunshan and its chairman Li Chuyuan had harmed the rights and interests of shareholders, made false disclosures, concealed profits and income, and evaded taxes. . Although Baiyunshan later issued a clarification announcement denying these accusations, the incident had a certain impact on the company's reputation and investor confidence.
Regarding Li Chuyuan's resignation, Baiyunshan said that it will promptly elect directors and elect a new chairman in accordance with legal procedures to ensure the company's normal operation and sustainable development. Vice Chairman Yang Jun will perform the duties of the company's chairman until the new chairman is elected.
Hidden worries have emerged amid revenue growth: Net profit growth has slowed down for three consecutive years, which was previously reported by the National Medical Insurance Administration.
In fact, under the leadership of Li Chuyuan, Baiyun Mountain’s rapid development is not without cost.
In recent years, Baiyunshan’s OEM model has gradually exposed many problems and has become the focus of market attention. Although the OEM model can quickly expand product lines and increase market share, it also brings risks in quality control, brand reputation and other aspects.
According to public reports, many of Baiyunshan’s OEM products have frequently experienced negative incidents such as suspected pyramid schemes, false publicity, and quality issues, which have seriously affected the company’s brand image and consumer trust.
In 2022, the National Medical Security Administration issued a notice that three pharmaceutical manufacturers under Baiyunshan had committed illegal activities such as inflating the price of raw materials and inflating drug prices to obtain funds, involving huge amounts of money. The report pointed out that between 2017 and May 2021, these three companies colluded with more than 50 downstream drug agents to conduct illegal operations on 87 kinds of drugs such as ceftriamidine for injection, and part of the funds were used to bribe medical personnel or specific relationships. People conduct illegal drug promotions.
reported that the average decline of the drugs involved in the case reached more than 50%, which also showed that there is huge room for false high prices in Baiyun Mountain’s drug prices.
Screenshot from the National Medical Insurance Administration
Judging from the performance data, Baiyunshan seems to have maintained a steady growth trend. However, an in-depth analysis of its financial report data shows that its net profit growth has slowed down for three consecutive years.
In 2023, Baiyunshan's operating income will reach 75.515 billion yuan, a year-on-year increase of 6.68%, continuing the steady growth trend in recent years. However, the company achieved net profit attributable to the parent company of 4.056 billion yuan, a year-on-year growth of only 2.25%, which was far lower than the revenue growth. This slowdown in growth reflects the challenges the company faces in cost control and profitability.
What is even more striking is that Baiyunshan's net cash flow from operating activities is negative and continues to decline. At the same time, the company's accounts receivable reached 15.112 billion yuan, accounting for a high proportion of revenue. High accounts receivable not only increases the company's bad debt risk, but also affects its cash flow turnover efficiency.
In terms of research and development, Baiyunshan’s investment is obviously insufficient. Compared with peers, its R&D expenses account for a lower proportion of revenue and have been declining in recent years. R&D expenses in 2023 will be only 782 million yuan, a year-on-year decrease of 4.55%. What's worse is that the number of R&D personnel only accounts for 1.91% of the company's total number of employees, which makes people question the company's innovation ability and technological R&D strength.
In sharp contrast to R&D expenses, Baiyunshan’s sales expenses remain high. In particular, the rapid growth in advertising and publicity expenses has further compressed profits. Sales expenses in 2023 will reach 6.105 billion yuan, exceeding the industry average, of which advertising expenses account for as high as 17.73%.
Although Jinge, as Baiyunshan’s star product, occupies a pivotal position in the male medication market and shows strong profitability and market competitiveness with its gross profit margin of 91.76%, this cannot cover up the company’s other business sectors. The problem.
Although star products such as Wanglaoji herbal tea still maintain a certain market share, the continued decline in gross profit margin and cost control issues have made their profitability face challenges. In the face of fierce market competition and changes in consumer demand, how to maintain and expand market share is a serious issue that Baiyun Mountain needs to face squarely.
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