After the chairman and general manager were successively detained by relevant authorities, Li Zhong, deputy general manager of Tiansheng Pharmaceutical, was criminally detained by public security organs on May 10 for suspected crimes. This came less than 47 days after the chairman was detained.

On the evening of May 14, Tiansheng Pharmaceutical issued an announcement stating that Li Zhong, deputy general manager, was criminally detained by public security organs on May 10 for suspected crimes and was unable to perform his duties as deputy general manager. The company has received Li Zhong's written resignation report. Previous announcements showed that the company's chairman Liu Qun and general manager Li Hong had been detained by relevant authorities and were temporarily unable to perform their relevant duties.

A staff member surnamed Li told AI Finance and Economics, "Regarding Mr. Liu's (Liu Qun) matter, we have issued an announcement. You can pay attention to our announcements; any news will be announced."

The announcement stated that as of May 14, Tiansheng Pharmaceutical's daily operations and major matters are handled by acting chairman Liu Wei, until the chairman resumes his duties or the company elects a new chairman. As of the time of writing, Tiansheng Pharmaceutical has not issued any announcement related to Liu Qun, meaning Liu Qun has not yet resumed his duties.

Starting from April 3, Tiansheng Pharmaceutical suspended trading due to planning a major asset restructuring, with the suspension period not to exceed June 1, 2018 in principle. As of the last trading day before the suspension, the company, which listed on the Shenzhen Stock Exchange on May 19, 2017, had a total market value of 6.583 billion yuan. According to the company's 2018 first-quarter report, Liu Qun, holding 32.38% of the shares, had an estimated net worth of 2.131 billion yuan.

On the 2017 Hurun Rich List, Liu Qun ranked 1681st with a net worth of 2.5 billion yuan.

Counterfeit JDB Taken to Court

As a billionaire, Liu Qun also had some interest in herbal tea.

In August 2013, according to a report by Chongqing Morning Post, a red-canned herbal tea produced by a company named Chongqing JDB Beverage Co., Ltd. was launched. However, this red-canned herbal tea was not called JDB but Jianduobang Xia Sang Ju Herbal Tea. The tea was somewhat similar to JDB and Wanglaoji on the market at the time. For example, they all used red cans, yellow fonts, vertical fonts, and 310ml packaging. The top of the can also had the words "Classic Chinese Formula, Century-Old Authentic Herbal Tea."

According to the Chongqing Morning Post reporter at the time, the person in charge of Chongqing JDB Beverage Co., Ltd., surnamed Liu, was also the head of a well-known pharmaceutical company in Chongqing. Regarding the production of herbal tea, Mr. Liu said it was "just a sideline for the company." He also stated that this JDB had no relationship with Guangzhou Wanglaoji or JDB China Beverage Co., Ltd., and that the herbal tea was the company's own product. Since it had just been launched, sales were not yet significant.

On December 23, 2016, a civil judgment regarding the imitation dispute between JDB (China) Beverage Co., Ltd. and Chongqing JDB Beverage Co., Ltd. showed that the defendant, Chongqing JDB Beverage Co., Ltd., was ordered to immediately cease unfair competition practices, namely to stop using "JDB" as the company name.

Tianyancha shows that Chongqing JDB Beverage Co., Ltd. changed its name to Chongqing Ningningqi Beverage Co., Ltd. on August 24, 2017, with the shareholder being Chongqing Miaoke Food Co., Ltd. In this company, Liu Qun holds 31% of the shares; another shareholder is He Yan, who serves as a supervisor in Chongqing Wugu E-commerce Co., Ltd., where Liu Qun is the legal representative.

On April 23, Tiansheng Pharmaceutical's 2017 annual report showed that the company had related-party transactions with Chongqing Ningningqi Beverage Co., Ltd., specifically the sale of goods.

It is worth mentioning that Liu Qun also holds 100% equity in Hubei JDB Beverage Co., Ltd., which was registered on May 3, 2012, with a business scope including: pre-packaged food, bulk food, dairy products (including infant formula), beverage wholesale and retail, etc.

On May 15, AI Finance and Economics searched multiple mainstream online shopping platforms and found no products related to "Jianduobang Xia Sang Ju Herbal Tea."

Suspected Involvement in Drug Procurement Corruption

Since being detained on March 24, Liu Qun has not performed his duties as chairman for more than 51 days.

Currently, it is unclear why Liu Qun was detained. Some media reports suggest that Liu Qun may be related to corruption in drug procurement. The aforementioned staff member told AI Finance and Economics, "We have not received any information. You can check the announcements; we have announced everything we know."

On April 27, Tiansheng Pharmaceutical stated in an announcement regarding the chairman's matter that the company was orally informed by relevant institutions that the chairman was detained by relevant authorities on March 24.

In March 2017, Tiansheng Pharmaceutical's prospectus disclosed that the company's main customers for pharmaceutical distribution business were hospitals at all levels in Chongqing and surrounding areas. During the reporting period (2014-2016), sales revenue to terminal customers such as hospitals accounted for 96.28%, 95.24%, and 96.00% of the total annual pharmaceutical distribution sales, respectively. Chongqing Fuling Central Hospital and Chongqing Nanchuan District People's Hospital were the third and fourth largest sales customers of Tiansheng Pharmaceutical's pharmaceutical distribution segment. In 2016, the company's sales to these two hospitals both exceeded 100 million yuan.

Two notices published on the Chongqing Discipline Inspection Commission website in August 2017 were exactly related to these two hospitals. The notices stated that Li Jianping, former president of Nanchuan District People's Hospital, colluded with pharmaceutical company bosses to abuse power for personal gain and amass wealth; Wang Xiaobo, former deputy secretary of the Party Committee and president of Fuling District Central Hospital, used his position to seek benefits for others and accepted property, suspected of bribery. Both were ultimately expelled from the Party and public office, and their suspected criminal issues and clues were handled by judicial authorities according to law.

According to information, Tiansheng Pharmaceutical is mainly engaged in pharmaceutical manufacturing and distribution, with business scope covering pharmaceutical manufacturing, pharmaceutical distribution, cultivation and processing of Chinese herbal medicines, drug research and development, and other fields, with a complete industrial chain.

Source: AI Finance and Economics -END-