Within a few days, over 10 billion yuan disappeared, and the market value of the "richest pharmaceutical company" in the storm | Hengrui Pharmaceuticals | "Pharmaceuticals"

The Shenzhen office has been swept away by a bunch of computers and files... Amidst the medical anti-corruption storm, "Yaomao" Hengrui Pharmaceutical has recently been plagued by rumors of being investigated, with its market value evaporating nearly 63 billion yuan in 10 trading days.

On the evening of August 9th, in the face of frequent inquiries from investors, Hengrui Pharmaceutical repeatedly responded and ultimately stated, "The recent rumors are not true. The company, its subsidiaries, and all dispatched agencies have not reported this situation. The company has reported the case to the public security organs and has been accepted."

Although it has been claimed to have been reported to the police, for Sun Piaoyang, the founder and actual controller of Hengrui Pharmaceuticals, who is 65 years old this year and once China's "richest man in medicine", the troubles are far from over.

The market value of "Yaomao" has evaporated by approximately 360 billion yuan

"Medicine God" - This is the title that Sun Piaoyang is honored by the industry. Starting with generic drugs, Sun Piaoyang transformed his once unknown small pharmaceutical factory into the current anti-tumor drug giant Hengrui Pharmaceutical.

The success in the pharmaceutical field has also doubled Sun Piaoyang's wealth. In the Forbes 2019 China Rich List, the Sun family ranked fourth with 182.43 billion yuan, with the top three being Jack Ma, Ma Huateng, and Xu Jiayin. In just one year, the family's wealth has increased by 110.67 billion yuan compared to when it was listed in 2018.

In 2020, Sun Piaoyang chose to retire after achieving success and stepped down as the chairman of Hengrui Pharmaceutical. However, thereafter, the market value of Hengrui plummeted from a high point of over 600 billion yuan, once falling below the 200 billion yuan mark, losing more than 400 billion yuan in market value.

After just over a year of stepping down, Sun Piaoyang once again stepped forward, focusing on innovative drug research and internationalization while optimizing personnel structure. In 2021, the sales personnel of the company were optimized from 17138 at the beginning of the year to 13208. In the first half of 2022, sales personnel decreased by more than 2300. The 2022 annual report released in April this year still shows that the company has "streamlined its low performing sales personnel and continuously increased per capita production.".

"2021 is indeed a huge test." Sun Piaoyang previously publicly stated that the slow growth of Hengrui's innovative drug business is difficult to resolve the performance pressure caused by the rapid "decline" of generic drugs. "In the past, we thought that having around 10 new drugs would support our development, but now it seems that it's not enough. We may need more products, or more 'non repetitive' products, to support our development."

According to financial reports, in 2021 and 2022, Hengrui Pharmaceutical achieved revenue of 25.91 billion yuan and 21.28 billion yuan respectively, with revenue growth rates of -6.59% and -17.87%; The net profits achieved were 4.53 billion yuan and 3.906 billion yuan respectively, with net profit growth rates of -28.41% and -13.77%.

As of the close on August 11th, the market value of Hengrui is about 250 billion yuan, which is still about 360 billion yuan lower than the highest market value.

Repeatedly questioned and debunked

Under the anti-corruption storm in the pharmaceutical industry, pharmaceutical stocks have continued to decline recently. On July 31st, Hengrui Pharmaceutical plummeted by 9.11%. Despite repeatedly refuting rumors of being investigated, the stock price and market value of Hengrui Pharmaceutical still evaporated by about 63 billion yuan within 10 trading days, which also caused Sun Piaoyang's wealth to drop by nearly 13.6 billion yuan.

On August 9th, in response to multiple inquiries from investors, Hengrui Pharmaceuticals claimed to have reported false rumors to the police. Screenshot from investor platform.

It is worth mentioning that Hengrui Pharmaceutical has been embroiled in bribery scandals multiple times.

In 2020, the judgment released by the People's Court of Liandu District, Lishui City, Zhejiang Province, showed that the pharmaceutical representative of Xinchen Pharmaceutical, a subsidiary of Hengrui, bribed Lei, the former director of the anesthesia department at Lishui Central Hospital in Zhejiang Province, for nearly 3 million yuan.

In 2021, Hengrui was named by the Ministry of Finance on suspicion of fabricating expenses. The expenses involved include non company incurred airfare, tolls, consulting fees, advertising fees, and other invoices in 2018 to support employee welfare and reward expenses, reimbursement of expert lecture fees, review fees, hosting fees, gift giving to customers, academic activity meals, and other expenses. The total amount involved is nearly 4.2 million yuan.

In Hengrui Pharmaceutical's financial report, sales expenses are also consistently high.

According to the financial report, from 2019 to 2021, Hengrui Pharmaceutical's sales expenses were 8.525 billion yuan, 9.803 billion yuan, and 9.384 billion yuan, accounting for 46.4%, 44.9%, and 43.1% of the total cost, respectively. In 2022, although Hengrui Pharmaceutical's annual sales expenses decreased by 21.7% year-on-year, this figure still reached about 7.348 billion yuan.

After a slight increase on August 9th, Hengrui fell twice again from the 10th to the 11th. Perhaps for Hengrui, how to transform in the anti-corruption storm is equally important.