Sino Biopharm, Market Cap $3 Billion, Plunges After CCTV Bribery Report

Sino Biopharm Plunges After CCTV Bribery Report: Hong Kong Mover

Sino Biopharmaceutical Ltd. (1177) plunged the most in about 13 years before being suspended in Hong Kong trading, after a report by state-run Chinese Central Television alleged bribery at a unit of the medicine maker. Sino Biopharmaceutical fell 16 percent to HK$4.76, headed for the largest drop since October 2000, before being halted at 11:49 a.m. The stock has been suspended pending an announcement to clarify certain information in recent press reports, the drugmaker said today. Two groups of doctors attended 50-minute meetings organized by the company in China and then left on sponsored trips, according to the broadcast yesterday evening.The report is the latest claim of bribery involving physicians amid China’s crackdown on corruption in its $350 billion health-care market. The probe has extended to multiple drug companies and local hospitals after China said it was investigating GlaxoSmithKline Plc (GSK) over claims that company employees used cash and sexual favors to bribe doctors and health officials.

“Sino Biopharm is now mostly exposed to policy headwinds,” Iris Wang, a health-care analyst at Credit Suisse Group AG, wrote in a note today. “We believe this event will force Sino Biopharm to strengthen its compliance control and largely affect top-line growth.”

Wang cut her rating on the company to underperform from neutral.

The TV program referred to Jiangsu Chia Tai-Tianqing, one of 23 “principal subsidiaries” listed by Sino Biopharm in its 2012 annual report.

Sino Biopharmaceutical has sent a team to Jiangsu to investigate the allegations, Cao Xiwen, the company chairman’s secretary, said in a telephone interview. It will issue a statement after it gets more clarity on the matter, which could be as soon as today, he said.

‘Beautiful Memories’

The broadcast showed an invitation printed on Tianqing’s letterhead for a meeting on Aug. 21 at Airport Hotel Shanghai. The text said: “After the meeting, Chia Tai Tianqing’s Tiance products group has prepared an exciting and comfortable trip for you to Chiang Mai, Thailand. We believe this medical meeting will leave you with deep and beautiful memories.”

The report also said another group of doctors attended a meeting in Nanjing, eastern China, and then went to Taipei.

In July, China accused Glaxo of crimes involving 3 billion yuan ($490 million) of deceptive travel and meeting expenses as well as trade in sexual favors. Authorities detained four senior executives in China at Glaxo, the U.K.’s biggest drugmaker.

Sanofi and Eli Lilly & Co. were among drugmakers that subsequently said they had received visits from Chinese regulators. Separately, two units of Johnson & Johnson, the world’s biggest maker of health-care products, were fined by Chinese authorities for monopolistic practices.

China’s crackdown on possible misbehavior by companies has extended to industries ranging from formula milk to gold. In August, Mead Johnson Nutrition Co. (MJN) and Danone were among six dairy companies ordered to pay a combined 669 million yuan for fixing minimum resale prices of their products. Five gold retailers in Shanghai and a local trade association were fined in the same month for manipulating jewelry prices.

To contact Bloomberg News staff for this story: Natasha Khan in Hong Kong at; Daryl Loo in Beijing at

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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