Large customers, especially new large customers, have always been one of the key points of scrutiny for companies planning to go public. Jiangxi Shimei Pharmaceutical Co., Ltd. (hereinafter referred to as "Shimei Pharmaceutical"), which is seeking to be listed on the Growth Enterprise Market (GEM), is mainly engaged in CRO and CDMO of generic drugs, improved innovative drugs and innovative drugs.
The reporter of the Spiegel Financial Studio of the "Public Securities Journal" noticed that among the new major customers of Shimei Pharmaceutical during the reporting period, a company that just became the company's largest customer in the first half of 2023 took the company to court at the end of that year, on the grounds that Shimei Pharmaceutical and its wholly-owned subsidiaries constituted a fundamental breach of contract. There is also a major customer of the company's entrusted R&D services for many years and the fourth largest customer in 2021, the person who registered as the legal representative, director and general manager after January 2023, has the same name and surname as the former executive of Shimei Pharmaceutical - this "mysterious" person became a director and senior executive of the company in December 2021, and resigned "suddenly" less than a year later, and his annual salary is the highest among the company's directors, supervisors and senior executives, and the company has not disclosed whether the person was an employee of the company before.
In the first half of the year, it became the largest customer
At the end of the year, the company was sued for breach of contract
During the reporting period, Shimei Pharmaceutical added a lot of large customers. From 2020 to the first half of 2023, 15 companies appeared in the company's top five customer list, of which 9 were new large customers.
The company explained in the prospectus the reason for the large number of new large customers: "The top five customers of traditional Chinese medicine research and development and customized production business customers have certain changes, the main reason is that compared with the sales of standard products of enterprises, the company provides pharmaceutical research and development and customized production business with the characteristics of customization and project system, the company and each customer transaction volume changes and the customer's research and development needs, the number of cooperation projects, project scale and research and development progress is closely related, the number of projects, The difference in scale and R&D progress will lead to large changes in the transaction volume between the company and the customer, which in turn will lead to certain changes in the company's top five customers. ”
The company's latest new major customer, Tongji Pharmaceutical, the largest customer with a sales amount of 33 million yuan in the first half of 2023, is the company's pharmaceutical R&D and customized production business customer. According to the prospectus, the company cooperated with Tongji Pharmaceutical for the first time in March 2023, obtained the customer's market development and customer R&D project needs, and signed a contract with it for the transformation of the R&D achievements of sildenafil citrate oral disintegration tablets with an amount of 33 million yuan.
The above-mentioned approval document for sildenafil citrate oral disintegration tablets was issued on June 27, 2023, and the results have been transformed, and the drug is produced by the company.
However, as of the end of the first half of 2023, the company still has accounts receivable of 9.9 million yuan from Tongji Pharmaceutical. According to the company, the main sildenafil citrate oral disintegration tablet project was approved by the State Drug Administration on June 27, 2023 and the drug registration certificate was issued, and the accounts receivable were formed according to the contract, and the payment was received in July 2023.
However, Tongji Pharmaceutical sued the company in December 2023.
Shimei Pharmaceutical said in the prospectus that on December 18, 2023, it received the court's "Notice of Response" and other documents, and the case of Tongji Pharmaceutical and Shandong Innovation (a wholly-owned subsidiary of the company) and the company's technology transfer contract dispute has been accepted. "The plaintiff, Tongji Pharmaceutical, believes that Shandong Innovation and the issuer have failed to cooperate with the rights and interests of sildenafil oral disintegration tablets (Guoyao Zhun Zi H20233803) MAH (i.e., drug marketing authorization holder) and the change of production site, etc., and have failed to perform their contractual obligations, which constitutes a breach of contract, and claims to terminate the "Technology Transfer Contract" signed by the parties on March 9, 2023 regarding sildenafil citrate oral disintegration tablets (specification: 50mg), return the technology contract transfer money of 29.7 million yuan paid by the plaintiff, and return the plaintiff's production mold procurement. The total advance payment for material procurement and entrusted processing was 1.4713 million yuan, and the plaintiff was paid 9.9 million yuan in liquidated damages for the contract, and the litigation costs such as litigation fees and preservation fees were borne by the plaintiff. As of the signing date of the prospectus, the case has not yet been tried in court, but the Wuhan Intermediate People's Court has ruled to freeze a total of 41.01 million yuan in the bank accounts of Shandong Innovation and the company.
According to the company, in response to the above-mentioned technology transfer contract disputes, Shandong Innovation and the company will actively respond to the lawsuit and file a counterclaim, assert its legitimate rights and interests in accordance with the law, and effectively safeguard the interests of the company and shareholders. In view of the fact that the case has not yet been heard, the impact of the relevant case on the issuer's profit is uncertain, and the actual impact is subject to the final judgment of the court.
Judging from the announcement of major lawsuits issued by Tongji Pharmaceutical, which is listed on the New Third Board, on March 14, 2024, Shimei Pharmaceutical sued Tongji Pharmaceutical again.
Tongji Pharmaceutical's litigation claims are consistent with the disclosure in the prospectus of Shimei Pharmaceutical, and the Company's counterclaim against Tongji Pharmaceutical is as follows: 1. Order the counterclaim defendant to pay the counterclaim plaintiff RMB 4,271,600 related to the change of the rights and interests of the drug marketing authorization holder; 2. Order the counterclaim defendant to pay the counterclaim plaintiff RMB 28,498,800 for the loss of sales profits; 3. Order the counterclaim defendant to pay the counterclaim plaintiff RMB 657,200 for material procurement and RMB 3.96 million for the difference in orders; 4. Order the counterclaim defendant to compensate the counterclaim plaintiff for the loss of RMB 498,200 caused by not participating in the ninth batch of national centralized procurement; 5. Order the counterclaim defendant to pay liquidated damages of RMB 9.9 million to the counterclaim plaintiff; 6. It is ordered that the plaintiff of the counterclaim shall bear the expenses incurred by the plaintiff in the counterclaim, such as litigation fees, preservation fees, and property preservation insurance premiums.
The company's reason is that there is no breach of contract by itself, and Tongji Pharma unilaterally requests to terminate the contract and should compensate for the corresponding losses.
At the same time, Tongji Pharmaceutical's announcement shows the reason for its lawsuit against Shimei Pharmaceutical, which believes that Shimei Pharmaceutical "failed to cooperate with the change of the rights and interests of sildenafil citrate oral disintegration tablets and the change of production site, and required Tongji Pharmaceutical to pay an additional 5 million yuan for the change of MAH, which was subjectively malicious and constituted a fundamental breach of contract." ”
Looking through the announcement of the purchase of assets disclosed by Tongji Pharmaceutical on April 4, 2023, it can be seen that it intends to purchase the registration approval document and production technology of the drug listing holder of "Sildenafil Citrate Oral Disintegration Tablets (50mg)" independently developed by Shandong Innovation, a subsidiary of Shimei Pharmaceutical, for 33 million yuan.
In terms of the transfer consideration and payment method of the above-mentioned transaction, the transfer price of 33 million yuan is paid in five installments (Shimei Pharmaceutical is Party B): 1. The first phase of the transfer price is 9.9 million yuan, which shall be paid by Party A within 5 working days after the contract takes effect; 2. The second phase of the transfer price is 9.9 million yuan, which shall be paid by Party A within 5 working days after the payment of the first phase of the transfer money, and within 5 working days after Party B hands over the electronic version of all the registration materials of the contract products to Party A; 3. The third phase of the transfer price is 9.9 million yuan, which shall be paid by Party A to Party B within 10 working days after the contract product obtains the production registration approval; 4. The fourth phase of the transfer price is 1.65 million yuan, which shall be paid by Party A to Party B within 10 working days after the change of the marketing authorization holder of the contract product to Party A's approval; 5. The fifth phase of the transfer price is 1.65 million yuan, which shall be paid by Party A to Party B within 10 working days after the change or increase of the drug production site of the contract product to the production site of Party A is approved.
Shimei Pharmaceutical claims that it has not breached any contract, and why Tongji Pharma believes that the company "did not cooperate with the change of the rights and interests of sildenafil citrate oral disintegration tablets MAH and the production site, and required Tongji Pharma to pay an additional 5 million yuan for the MAH change fee", as well as whether the situation alleged by Tongji Pharma really exists, and whether the situation is a breach of contract or beyond the contract between the two parties, these are all worth paying attention to.
After all, the amount of litigation is more than 40 million yuan, which is not a small amount for both parties.
Former executives are not only famous as executives of large accounts
During the reporting period, Huanghai Pharmaceutical, a new major customer of Shimei Pharmaceutical, only appeared once in the list of the top five customers, and was the fourth largest customer in 2021, with a sales amount of 6.7122 million yuan, and it is also a customer of the company's pharmaceutical R&D and customized production business.
However, Huanghai Pharmaceutical has been a major customer of the company's entrusted R&D services for many years. The company's response to the inquiry letter shows that from 2021 to the first half of 2023, Huanghai Pharmaceutical has been among the top five customers of entrusted R&D services. Looking through the prospectus, it can be seen that the company signed a contract with Huanghai Pharmaceutical in September 2019 for the entrusted research and development of febuxostat tablets with an amount of 11.3 million yuan.
According to the industrial and commercial information queried through the national enterprise credit information publicity system and enterprise checks, Huanghai Pharmaceutical, which is also located in Shandong Province as Shandong Innovation, a wholly-owned subsidiary of Shimei Pharmaceutical, is currently the legal representative, director and general manager of Liu Yajuan; The change registration information also shows that Liu Yajuan became a director in January 2023 and became the legal representative and general manager in May 2023 (see Figure 1).
Figure 1: Screenshot of the change registration of Huanghai Pharmaceutical on the national enterprise credit platform
It is worth mentioning that Liu Yajuan of Huanghai Pharmaceutical has the same name and surname as a "mysterious" former director and vice president of Shimei Pharmaceutical.
According to the prospectus, Liu Yajuan of Shimei Pharmaceutical seems to have come quietly and left in a hurry - from the end of December 2021 to around November 2022, he served as a director (non-independent director, until November 22) and deputy general manager (until October 28).
From the perspective of combing, at the company's fourth extraordinary general meeting of shareholders in 2021, Zhao Ping (assistant to the general manager and marketing manager of Guangzhou Shimei, a wholly-owned subsidiary of the company) resigned as a director for personal reasons, and the company by-elected Liu Yajuan. Subsequently, at the fourth meeting of the third board of directors of the company, Jiang Xiangqi (the company's actual controller, Jiang Hong brothers, shareholders and directors who indirectly hold more than 5% of the shares) resigned as deputy general manager for personal reasons, and the company hired Liu Yajuan to replace him as deputy general manager.
Liu Yajuan has been in office for less than a year, and at the second extraordinary general meeting of shareholders in 2022, she resigned as a director for personal reasons, and the company by-elected Zhao Lijun (executive deputy general manager of the company and its wholly-owned subsidiary Shandong Innovation), at which time Liu Yajuan has resigned as deputy general manager for personal reasons.
Moreover, the company gave Liu Yajuan, the former director and deputy general manager, the highest annual remuneration among directors, supervisors and senior executives - her annual salary in 2022 is 713,400 yuan, which is tens of thousands of yuan more than the 650,000 yuan annual salary of Jiang Hong, the actual controller, chairman and general manager.
In the prospectus of Shimei Pharmaceutical, there is no mention of whether Liu Yajuan was an employee of the company before she became a director and deputy general manager.
It should also be noted that Liu Yajuan, the current helmsman of Huanghai Pharmaceutical, also bumped into a former director and deputy general manager of the A-share company Guanhao Biotechnology (300238).
According to the announcement on the completion of the re-election of directors and supervisors and the appointment of senior executives issued by Guanhao Biotech on March 13, 2020, the resume of Liu Yajuan, the new non-independent director and deputy general manager, is: "Vice Chairman of the Policy and Regulation Professional Committee of China Chemical Pharmaceutical Industry Association; Member of the Academic Group of Drug Clinical Trials of China Association for the Promotion of Pharmaceutical Innovation; He is a member of the CMAC Committee of Chinese Medical Affairs. From 1990 to 1996, he served as a pharmaceutical management engineer in the First Pharmaceutical Factory of Anyang City, Henan Province; From 1997 to 2012, he successively served as sales manager, senior manager of market development, manager of marketing department and deputy director of marketing department in Xi'an Janssen Pharmaceutical Co., Ltd.; From 2012 to 2020, he served as Deputy General Manager, Vice President/General Manager of Academic Center of Qingdao Huanghai Pharmaceutical Co., Ltd.; From 2018 to January 2020, he served as chairman and general manager of Qingdao Huanghai Pharmaceutical Management Co., Ltd.; From 2019 to January 2020, he served as a director and deputy general manager of Qingdao Haiji Biopharmaceutical Co., Ltd. (see Figure 2). ”
Figure 2: Screenshot of the resume of Liu Yajuan, vice president of the director of Guanhao Biology, in the announcement
In the 2022 annual report of Guanhao Biotech, it was disclosed that its senior executive Liu Yajuan served from March 13, 2020 to January 14, 2022.
The change registration information through the national enterprise credit information publicity system and the enterprise check and inquiry all show that Qingdao Huanghai Pharmaceutical Management Co., Ltd. (Huanghai Pharmaceutical holds 100% of the shares) has undergone a change of key personnel on March 4, 2020, and Liu Yajuan no longer serves as the chairman and general manager (see Figure 3), and the date of her registration as chairman and general manager is July 3, 2019, and the current legal representative and chairman is Liu Yajuan. Qingdao Haiji Biopharmaceutical Co., Ltd. (Huanghai Pharmaceutical holds 20% of the shares), which was established in July 2019, also changed the registration of Liu Yajuan's resignation as a director on October 16, 2020 (see Figure 4).
Figure 3: Screenshot of the change of registration of Qingdao Huanghai Pharmaceutical Management Co., Ltd., a national enterprise credit platform
Figure 4: Screenshot of the change of registration of Qingdao Haiji Biopharmaceutical Co., Ltd., a national enterprise credit platform
So, whether Liu Yajuan, the former director and deputy general manager of Shimei Pharmaceutical, and Liu Yajuan, the current legal representative, chairman and general manager of Huanghai Pharmaceutical, the company's major customer, are the same person?
There are also questions surrounding Liu Yajuan, a former executive of the company: Was Liu Yajuan an employee of the company before she became a director and deputy general manager? If not, what was the reason for the company to appoint her as the company's director and deputy general manager? Is there any special circumstance behind the company's sudden appointment of Liu Yajuan as the company's director and deputy general manager, and Liu Yajuan's sudden resignation for personal reasons less than a year later? According to the company's disclosure, during Liu Yajuan's tenure in the company, she was the director, supervisor and senior officer with the highest annual salary in 2022, what is the reason why the company pays her such a high salary?
Previously, around Liu Yajuan, the former director and deputy general manager, and Tongji Pharmaceutical, which had just become the largest customer, sued the company at the end of that year and other related questions, the reporter of the Spiegel Finance Studio of the "Public Securities Journal" sent an interview letter to Shimei Pharmaceutical by email, and called the public phone number disclosed in the company's prospectus many times, but could not be connected, and did not receive a reply from the company as of press time. This newspaper will continue to pay attention to other noteworthy situations of Shimei Pharmaceutical. Reporter Erdong