A leading Chinese pharmaceutical company embroiled in a US university admissions scandal has drawn intense public attention, even after the company's chairman issued a statement seeking to distance the scandal of his relative from the company's operations.
The company's history and financial situation have been subjected to intense scrutiny, including its so-called "miracle-making" founder, former instances of bribery and massive sales expenses.
Zhao Tao, chairman of Shandong Buchang Pharmaceuticals (Buchang Pharma), was reported to have paid $6.5 million to an admissions consultant to get his daughter into Stanford University, California. He said on Friday in an official statement that his daughter's studies in the US are a personal matter and she didn't receive any funds from the company. As a listed company, Buchang's operations are independent and will not be influenced by personal matters, Zhao said.
Buchang Pharma, a supplier of traditional Chinese medicine based in Heze, East China's Shandong Province, recorded 13.67 billion yuan ($2.03 billion) in operating revenue in 2018, in sharp contrast to its 8 billion yuan in sales expenses. The company spent only 480 million yuan on research and development. The numbers were contained in its financial statement released in April.
"Such a high proportion of sales expenses means the possibility of a gray profit chain exists, even though certain percentages of rebates are common in the pharmaceutical industry," an Anhui-based pharmaceutical agent surnamed Li told the Global Times Sunday.
Buchang Pharma's financial statement for 2018 also showed that Zhao Tao, a citizen of Singapore, is the legal representative and actual controller of the company, and indirectly holds a 49.79 percent stake in Shandong Buchang Pharmaceuticals through Buchang Holdings (Hong Kong) Ltd and Suremaster International (Hong Kong) Ltd.
According to Buchang Pharma's official WeChat account, Zhao Tao went to Singapore with his father Zhao Buchang in 1992 to attend a Chinese medicine seminar and cured the paralysis of a female cerebral thrombus patient.
Zhao and his father had previously studied Chinese acupuncture techniques that are specially used to treat cardiovascular and cerebrovascular diseases.
After making his first fortune in Singapore, Zhao built a pharmaceutical empire in China that is mainly engaged in the research and development, production and sale of Chinese patent medicines.
Its main products include cardiovascular, cerebrovascular and gynecological Chinese patent medicine. Revenue from cerebrovascular medicine reached nearly 11 billion yuan in 2018, accounting for more than 80 percent of total revenue, with a gross profit margin of 85.16 percent, according to its financial statement.
In October 2018, the Zhao family ranked 82nd on the Hurun rich list in China with wealth of 32 billion yuan, showed data from the Hurun Report.
Buchang Pharma has been involved in bribery scandals, according to media reports.
In 2006, Zheng Xiaoyu, the former head of China's National Medical Products Administration, was investigated for bribery. Many of those who bribed Zheng were also implicated and Buchang Pharma's related companies were on the list, thepaper.cn reported Thursday.
Zhao's daughter was admitted to Stanford in 2017, but she was expelled by the school in early April after US media reports revealed that her parents paid $6.5 million to a college consultant named William "Rick" Singer, who has been the heart of the US college admissions scandal.