Boardroom Upheaval at Troubled Pharma Firm
A seismic shift rocked *ST Sailong (002898) as nearly its entire leadership team resigned following a dramatic control change. The pharmaceutical company, already grappling with delisting warnings after consecutive annual losses, now faces complete management overhaul just three months after new shareholders seized control. This mass exodus—including Chairman Cai Nangui (蔡南桂) and President Cai Nangui—signals turbulent times for the Shenzhen-listed firm as it navigates financial rehabilitation under new ownership.
Key developments:
– Control transferred to investment firm Hainan Yayi Win-Win Technology Partnership in July 2025
– 10 executives resigned simultaneously on August 10, 2025
– Six new directors nominated including new President Chen Ke (陈科)
– Company faces delisting risk after 2024 revenue fell below critical 300M yuan threshold
The Control Change Mechanics
On May 19, 2025, *ST Sailong’s controlling shareholders Cai Nangui and Tang Lin (唐霖) agreed to transfer 24.91 million shares (14.16% stake) to newly formed investment vehicle Hainan Yayi for 199 million yuan ($27.4 million). The 8 yuan/share transaction represented a 15% premium over the previous closing price. Crucially, the founders surrendered voting rights on their remaining shares, cementing the control change.
New Ownership Structure
Established just four days before the deal announcement, Hainan Yayi operates as a special purpose acquisition vehicle with three-tiered ownership:
– Hainan Yayi Chuangke Technology (GP, 15%)
– Chen Zhansheng (LP, 25%)
– Beijing Qitong Fuyuan Enterprise Management Center (LP, 60%)
Following July’s completed share transfer, Hainan Yayi commands 24.6% effective voting power, reducing the company to a no-controller status. This control change framework—where founders retain economic interest but cede governance—represents an increasingly common rescue model for distressed Chinese listed firms.
Financial Precipice
The control change occurred against dire financial headwinds. *ST Sailong’s 2024 results revealed systemic challenges:
2024 Performance Indicators
– Revenue: 264 million yuan (-38% YoY)
– Net Loss: 33.15 million yuan
– Non-GAAP Loss: 34.2 million yuan
– Revenue after adjustments: Below 300M yuan delisting threshold
The Shenzhen Stock Exchange implemented delisting risk warning (ST designation) on April 28, 2025. Under China’s updated delisting rules, companies face compulsory removal if either:
1. Annual revenue remains below 300M yuan for two consecutive years
2. Net assets turn negative
3. Audit reports receive disclaimers or adverse opinions
With pharmaceutical R&D cycles spanning 3-5 years, this control change represents a final opportunity to avoid delisting through urgent operational turnaround.
Executive Exodus
The August 10 resignation wave impacted every senior leadership position:
Departing Executives
– Cai Nangui: Chairman & President (resigned both positions)
– Tang Lin: Director
– Liu Dawen: Director & Executive VP
– Li Jianfeng: Director & VP
– Zhang Xu: Director, VP & Board Secretary
– Deng Yongjun: Director
– Three independent directors
– VP Wang Xing
Simultaneously, the board nominated six new non-independent directors:
1. Jia Jinbin: Medical/finance dual PhD
2. Chen Ke: CPA and new President
3. Chen Dunfei
4. Zhang Guangyang
5. Chen Ronghui
6. Li Tongyao
This clean-slate approach suggests the new controlling shareholder intends complete strategic redirection rather than incremental reform.
New Leadership Profiles
The incoming leadership brings cross-industry expertise critical for *ST Sailong’s rehabilitation:
Jia Jinbin: Pharmaceutical Strategist
– Medical PhD, Finance PhD, Surgical Postdoc
– Former leadership roles at CMS Pharma
– Current: Chairman of Shenzhen Joinrank Technology
His appointment signals renewed focus on *ST Sailong’s core pharmaceutical value chain spanning intermediates, APIs, and finished dosages.
Chen Ke: Financial Architect
The newly appointed President (age 39) brings essential financial restructuring credentials:
– CPA qualification
– KPMG Huazhen audit background
– Former corporate development at Qihoo 360
– Current investment partner at Suzhou Huxiang Investment
His financial engineering expertise proves vital for renegotiating debt, attracting strategic investors, and optimizing capital structure during this control change transition.
Post-Control Change Challenges
The new leadership confronts three existential challenges:
Immediate Delisting Risk Mitigation
– Must achieve >300M yuan revenue in 2025
– Requires asset sales or strategic partnerships within months
– Needs working capital injection for production normalization
Business Model Restructuring
*ST Sailong’s integrated pharma model—spanning R&D through commercialization—proved capital inefficient. Likely pivots include:
– Outsourcing non-core intermediate production
– Focusing API development on niche therapeutic areas
– Terminating unviable pipeline projects
Investor Confidence Restoration
Since the control change announcement:
– Stock price volatility increased 42%
– Trading volume shows speculative rather than strategic investment
– Bond yields indicate high default probability perception
Successful navigation requires transparent communication of the post-control change roadmap during this leadership transition.
Broader Market Implications
This control change exemplifies three trends in China’s capital markets:
Distressed Asset Transfers Accelerating
Shenzhen Stock Exchange has seen 17 similar control changes in 2025 among ST firms—a 210% YoY increase. Regulatory tolerance for ownership rescues has increased following 2024’s delisting spike.
Pharmaceutical Sector Consolidation
With China’s drug volume procurement policy squeezing margins, smaller players like *ST Sailong face acquisition or collapse. This control change likely precedes eventual merger with larger regional pharma.
New Investment Vehicles Emerging
Special purpose entities like Hainan Yayi—established specifically for single-asset control changes—now account for 63% of distressed acquisitions versus 28% in 2020.
Path Forward
For *ST Sailong to capitalize on this control change, the new leadership must execute a three-phase plan:
1. Stabilization (0-6 months): Secure bridge financing, halt cash-burning operations, retain key technical staff
2. Restructuring (6-18 months): Divest non-core assets, refocus R&D, renegotiate supplier contracts
3. Growth (18-36 months): Forge commercialization partnerships, explore export markets, consider strategic M&A
Investors should monitor:
– Q3 revenue figures for delisting risk assessment
– New strategic partnerships announcements
– Changes to pharmaceutical product licenses
– Debt restructuring progress
The coming months will determine whether this control change represents a rebirth or final chapter for *ST Sailong. For stakeholders, proactive engagement with the new leadership during this transitional period proves essential.