(Yicai) Sept. 2 -- Shares of Baiyunshan Pharmaceutical Holdings fell after the Chinese drugmaker said Zhang Chunbo resigned as executive director for “personal reasons,” with sources saying Zhang, a rising star in the company, is under official investigation. Baiyunshan’s chairman exited last month and is also the subject of an official probe.

Baiyunshan [SHA: 600332] sank 7.2 percent to end at CNY26.71 (USD3.76) a share in Shanghai today, the lowest closing price since early February, while its Hong Kong-traded stock [HKG: 0874] fell 5.9 percent to HKD18.30 (USD2.35). That was its lowest closing price since the start of April.

Zhang will no longer serve in any roles at Baiyunshan, the Guangzhou-based firm announced in a bourse filing late yesterday. He was also a vice general manager at its parent company Guangzhou Pharmaceutical Holdings, a leading manufacturer of traditional Chinese medicine.

Independent sources told Yicai that Zhang was taken away for investigation, with one key source noting that regulators came and removed him from a “meeting attended by Baiyunshan's top management last Thursday.”

Li Chuyuan, who had been Baiyunshan’s chairman for 11 years and chaired its parent firm, quit on July 22 for “personal reasons,” the company said at the time. A provincial party member of the discipline committee said recently that Li is under investigation on suspicion of serious violations of party discipline and law.

Born in 1976, Zhang is still in the early stages of his career, with many employees at Baiyunshan seeing him as “tomorrow’s star." In November 2020, he was named National Model Worker, an honor usually awarded to just a small number of outstanding people recognized for making a special contribution to their profession.

“Zhang was Baiyunshan's youngest vice GM," the key source said. "Majoring in pharmaceuticals, he also has a rich experience in sales and business management and was indeed ‘tomorrow’s star,’" the person added.

Zhang worked for many years at another subsidiary Baiyunshan Zhongyi Pharmaceutical, starting as an executive before being promoted to vice GM, executive vice GM, GM, and then chairman. "He was quite capable, and I didn't expect such a thing to happen to him," the source noted.

Zhang’s career path was deeply intertwined with Li, starting his career at the now-defunct Baiyunshan Traditional Chinese Medicine Plant, then led by Li, according to the resume Baiyunshan released. He was an executive at Baiyunshan Zhongyi in 2013, when Li stepped in as chairman of the parent company and Baiyunshan.

In January 2015, Zhang was appointed vice GM of Baiyunshan at a board meeting Li presided over. In 2021, he was promoted to vice GM of the parent company and kept an executive directorship at the unit.

Baiyunshan’s net profit fell 9.3 percent to CNY2.6 billion (USD366 million) in the six months ended June 30 from a year earlier on a 2.7 percent dip in operating revenue to CNY41 billion (USD5.8 billion), its first-half earnings report showed on Aug. 30. Its assets-to-liability ratio was just over 51 percent. 

Editors: Tang Shihua, Martin Kadiev