Puli Pharmaceuticals Faces Delisting Warning for $1 Billion Fraud

Puli Pharmaceuticals announced on January 5, 2025, that it is under investigation by the China Securities Regulatory Commission (CSRC) for suspected violations of information disclosure laws. The company received an "Administrative Penalty Notice" from the CSRC on January 4. According to the notice, Puli Pharmaceuticals had false records in its annual reports for 2021 and 2022, with the total amount of false operating revenue reaching 1.03 billion yuan, accounting for 31.08% of the total annual operating revenue disclosed for those two years; the total amount of false profits reached 695 million yuan, accounting for 76.72% of the total annual profits disclosed for the same period.

Puli Pharmaceuticals' stock and its convertible bonds were suspended for one day on January 6, 2025, and resumed trading on January 7. Starting January 7, the company's stock will be subject to a "delisting risk warning," changing its stock name from "Puli Pharmaceuticals" to "*ST Puli," while the stock code remains "300630." After the implementation of the delisting risk warning, the daily price fluctuation limit for the stock remains at 20%.

This financial fraud has led to a dramatic drop in Puli Pharmaceuticals' stock price, highlighting the importance of compliance for pharmaceutical companies. In the currently competitive pharmaceutical industry, companies must adhere to compliance standards to ensure that information disclosures are true, accurate, and complete. Any attempt to mislead investors through false information will ultimately backfire.

The violation incident at Puli Pharmaceuticals serves as a warning to the entire pharmaceutical industry. In recent years, with tightening pharmaceutical policies and increased regulatory scrutiny, compliance pressure on pharmaceutical companies has intensified. However, some companies still take risks, attempting to gain unfair advantages through illegal means. Notably, Puli Pharmaceuticals is not the only pharmaceutical company facing delisting risks recently. Within a week, several companies, including ST Dayao, ST Jiyuan, ST Longjin, and ST Jingfeng, have also disclosed potential announcements regarding termination of listings. Additionally, Shuangcheng Pharmaceutical is also at risk of being "capped."

The series of concentrated delisting risks reflects the severe challenges currently faced by the pharmaceutical industry. As policies continue to adjust and market competition intensifies, the profitability of some pharmaceutical companies is impacted, while serious compliance issues lead to frequent occurrences of low-quality information disclosure and financial fraud.

On April 12, 2024, the CSRC released "Opinions on Strictly Implementing the Delisting System," aiming to elevate the revenue delisting indicators for loss-making companies, eliminate companies lacking sustainable operation capabilities, and improve market capitalization standards and other trading delisting indicators. Analysts quoted by Yicai believe that increasing the delisting efforts for poorly performing companies is beneficial for cultivating a market value investment philosophy, allowing quality companies to achieve more reasonable valuations.