In recent days, the controlling shareholder of Shanghai Ruian Gene Technology Co., Ltd., which has seen continuous revenue declines for many years, encountered trouble. Four senior executives were taken into custody by the police on suspicion of “illegal business operations.” Some analysts believe that the top executives of Ruian Gene, with a main focus on pharmaceutical biotechnology, being taken down collectively, reflects a significant cleansing of the Shanghai turf connected to the family of former Chinese Communist Party leader Jiang Zemin.
On July 23, Ruian Gene (688217.SH, Rui Ang Gene) announced that it had received notices from the families of the actual controlling shareholder, chairman and general manager Xiong Hui, the families of the actual controlling shareholder, director and vice general manager Xiong Jun, vice general manager He Junyan’s family, and vice general manager Xue Yuwei’s family. Currently, Xiong Hui, Xiong Jun, and Xue Yuwei are under police surveillance for suspected illegal operations, while He Junyan has been criminally detained.
On July 22, Ruian Gene held a board meeting and agreed for the company’s actual controlling shareholder and director Gao Shangxian to act as the company’s legal representative, chairman, and general manager. Ruian Gene stated that the company’s daily operations are currently normal, and they will continue to monitor the progress of the above-mentioned issues and fulfill their disclosure obligations in a timely manner.
Among the four individuals subjected to mandatory measures, Xiong Hui and Xiong Jun are the actual controlling shareholders of Ruian Gene. Looking at the composition of the board of directors, Ruian Gene is a typical “family” enterprise, with the four actual controlling shareholders being Xiong Hui, Xiong Jun, Gao Shangxian, and Gao Ze – all of whom are relatives. Xiong Hui and Gao Shangxian are spouses, Xiong Hui and Xiong Jun are siblings, and Gao Shangxian and Gao Ze are father and son (though Xiong Hui is not the biological mother of Gao Ze).
Xiong Hui is the founder of Ruian Gene. According to the company’s prospectus, Xiong Hui, born in 1972, is 52 years old, holds a master’s degree in internal medicine from Shanghai Jiao Tong University, a Ph.D. in microbiology from Fudan University, and conducted postdoctoral research at the Burnham Institute for Medical Research in the United States. She was trained by renowned molecular biologist Academician Chen Zhu, prominent cell geneticist Academician Chen Saijuan, and distinguished microbiologist Academician Zhao Guoping.
From 1999 to 2002, Xiong Hui worked as an assistant researcher at the Shanghai Institute of Hematology at Ruijin Hospital, Affiliated to Shanghai Second Medical University. From 2002 to 2005, she pursued her postdoctoral studies in the United States. From 2005 to 2010, she returned to China and served as the general manager of Shanghai Shenyu Biotechnology Co., Ltd. During this time, from December 2005 to December 2011, she also served as an associate researcher at the Key Laboratory jointly built by the Ministry of Health and the Southern Research Center for Disease and Health of the National Human Genome South. Since January 2010, Xiong Hui has successively established Yuanqi Biology and Ruian Gene Limited, responsible for the overall operation of the companies.
The first-quarter report of 2024 shows that Xiong Hui holds a direct stake of 18.22%. Additionally, Xiong Hui, along with Shanghai Bosi Investment Partnership Enterprise (Limited Partnership) and Shanghai Liyang Investment Partnership Enterprise (Limited Partnership), are acting in concert. The stake of Shanghai Bosi is 8.82%, and Shanghai Liyang holds 3.58%.
Xiong Jun, the younger brother of Xiong Hui, is 48 years old and has a master’s degree. He previously worked as a designer at Shanghai Construction Decoration Engineering Co., Ltd. and Shanghai Guanghua Survey Design Institute Co., Ltd. Starting from January 2015, he served as a director and vice general manager of Ruian Gene.
The other two vice general managers who have been subject to measures are not part of Ruian Gene’s founding team. As per the financial report of 2023, Xue Yuwei previously worked at Pfizer, Abbott, and AstraZeneca before joining as a vice general manager of the company in June 2023. Meanwhile, He Junyan became a vice general manager of the company in April 2023 and had prior work experience at Lilly, Sanofi, Roche, and AbbVie among other foreign companies. He Junyan is the only executive detained in the recent announcement.
Established in 2012, Ruian Gene focuses on the tumor field and is a life science enterprise that owns self-branded testing instruments, test reagents, and third-party laboratories. It specializes in the research, production, and sale of in-vitro diagnostic products, mainly targeting leukemia, lymphoma, solid tumors, and infectious disease patients.
The company’s products include exclusive lymphoma gene rearrangement test kits in China, leukemia 15 fusion gene test kits, and WT1 determination kits. Although the company had plans to sell new coronavirus test kits, they were unsuccessful due to the failure to obtain emergency approval. In 2022, Ruian Gene participated in some COVID-19 testing businesses in Shanghai, albeit with lower gross profit margins, as the company continued to focus on the tumor field.
Affected by the imposition of mandatory measures on the four executives, Ruian Gene’s stock plummeted to a historic low, opening at CNY 14.98 (USD 2.07) per share on July 23.
Ruian Gene went public on the STAR Market of the Shanghai Stock Exchange in May 2021 at an issue price of CNY 18.42 per share. On the first trading day, the opening price was CNY 95 per share. In June 2021, Ruian Gene’s stock price reached a historical high of CNY 133.49 per share. However, regardless of the period during the pandemic or post-pandemic, Ruian Gene has seen consecutive years of declining net profits.
In 2022, Ruian Gene achieved a revenue of CNY 424.2981 million, representing a 45.83% year-on-year growth. That year, as Ruian Gene’s holding subsidiary Shanghai Sitai took on part of the virus testing in Shanghai, reaching a peak daily test volume of over 100,000 tubes and covering a daily population of 1 million, driving the self-built conventional clinical laboratory project’s revenue to CNY 220.7708 million, a significant increase of 581.10% year-on-year.
However, Ruian Gene’s attributable net profit for 2022 was only CNY 40.4736 million, a 14.49% decrease year-on-year. The company explained in its quarterly report that in the fourth quarter, with the implementation of policies such as “Category B Management” during the epidemic, there was a large-scale concentrated infection of the personnel, negatively impacting the revenue and profits of the tumor-related business of the company.
In 2022, revenue from the hematology molecular diagnostic kit product of Ruian Gene was CNY 147.1376 million, down by 15.68% year-on-year. During the same period, Ruian Gene made provisions for credit impairment losses and asset impairment losses, totaling CNY 23.9858 million.
Entering 2023, although the core and routine testing business income of Ruian Gene improved, with revenue from leukemia molecular testing kit reaching CNY 143 million, a growth of 11.88%, non-core testing business operating income dropped significantly to approximately CNY 5.67 million, a massive decline of 97.31%, leading to further deterioration of Ruian Gene’s overall performance.
In 2023, Ruian Gene recorded revenue of CNY 258.2113 million, a 39.14% decrease year-on-year, with attributable net profit plummeting to CNY 7.9307 million, an 80.41% drop.
The downturn of Ruian Gene persisted into the first quarter of this year, with a slight improvement in performance. The company achieved revenue of about CNY 64.1882 million, a 12.84% year-on-year increase, and an attributable net profit of CNY 0.5332 million, a 58.70% decrease, hovering on the brink of profit and loss.
It is noted that the four senior executives of Ruian Gene were all allegedly involved in “illegal business operations.” However, based on Ruian Gene’s announcements and responses, it is still unclear whether this “illegal business operations” matter pertains to the listed company or other behaviors of the executives.
Political commentator Li Yanming told Epoch Times that just after the recent Third Plenary Session of the Chinese Communist Party, the high-level executives of Ruian Gene were collectively taken down, indicating a continuous cleaning of the Shanghai gang belonging to Jiang Zemin’s faction.
He said, “The leading Shanghai gang headed by Jiang Zemin has long controlled the Chinese Communist Party’s Ministry of Health and the pharmaceutical system, with his eldest son, Jiang Mianheng, deeply influencing the bio-industry system. Xiong Hui’s mentors, Academician Chen Zhu, Academician Chen Saijuan, and Academician Zhao Guoping, are all prominent figures within Shanghai’s biotech circle and have strong ties to the Shanghai gang.”
Public records show that Chen Zhu was an academician at the Chinese Academy of Sciences and previously served as the director of the Systems Biomedical Research Center at Shanghai Jiaotong University, the director of the National Human Genome Southern Research Center, the president of the Chinese Red Cross Society, the vice chairman of the Standing Committee of the National People’s Congress, and a professor at the Shanghai Jiaotong University School of Medicine.
Li Yanming noted that Chen Zhu has a deep connection with the Jiang Zemin family. In 2007, Chen Zhu was appointed as the Minister of Health of the Chinese Communist Party. Being a non-Party member, Chen Zhu’s appointment was extremely rare within the CCP’s system but aligned with the political needs of the Jiang faction within the CCP.
Regarding the control of the pharmaceutical and bio-industry system by the Jiang Zemin family, Li Yanming stated that after Jiang Zemin came to power following the 1989 Tiananmen Square incident, his son Jiang Mianheng entered the Chinese Academy of Sciences system, overseeing the research and development work at the Institute of High Technology throughout the academy. Jiang Mianheng spearheaded the establishment of the Shanghai Institutes for Biological Sciences (SIBS) under the Chinese Academy of Sciences, establishing a cooperative network in the bio-industry system involving the Chinese Academy of Sciences, SIBS, Shanghai universities, hospitals, and military hospitals and research institutions. This network controlled the funding allocations for significant research projects in the biological field, creating a political-business interest group within the Shanghai gang, leading to substantial gains through discreet practices.