48 Scientists Rally as CRO Giant Faces 1.8 Billion RMB Dispute and Criminal Allegations

Renowned pharmacokinetics expert Zhong Dafang, who has contributed to over 20% of China’s novel drug metabolism studies, is embroiled in a high-profile legal battle with CRO company Novogene. On June 19, Novogene confirmed Zhong’s arrest for extortion, accusing him of using withheld documents and falsified agreements to delay the company’s IPO and demand billions of RMB.

The dispute traces back to a 2016 equity transfer, where Zhong and his protégé Chen Xiaoyan exchanged 80% of Suzhou Haike’s shares for 0.8% of Novogene’s equity. Suzhou Haike became a key revenue driver for Novogene, contributing 7.39% of its income in 2020. However, Zhong later claimed the deal was unfair, citing unrealized promises of a 100-billion RMB valuation.

In 2018, a supplementary agreement allegedly granted Zhong and Chen 3.2% additional equity, contingent on meeting profit growth targets. When Suzhou Haike failed to meet these conditions, disputes escalated, leading to a series of lawsuits. Zhong’s 1.8-billion RMB compensation claim was repeatedly rejected by the courts. The conflict reached its peak in 2021, with public accusations, and now, criminal charges.

Novogene, a veteran CRO established in 2008, has struggled to match its competitors despite a domestic clinical CRO boom. In 2024, Novogene reported 7.4 billion RMB in revenue and 1.4 billion RMB in net profit, trailing newer rivals like Proswell, which outpaced it with 8.04 billion RMB in revenue. Novogene's limited international revenue (12%) and operational setbacks have compounded its challenges.

While the company has announced plans for acquisitions and collaborations with top global pharmaceutical firms, the ongoing legal and criminal disputes risk undermining its already fragile 44-billion RMB market valuation, which has been halved from its peak.