In a recent conversation, Fu Lichun, a member of the Financial Committee of the Chinese Market Society, shed light on the unprecedented wave of executive turnover in the biopharmaceutical sector this year, marking the highest number of departures across all industries, with more than 700 executives leaving their posts.
Fu identified three key factors driving this trend among A-share listed companies. First, shifts in ownership structures frequently lead to changes in leadership, particularly when there are adjustments in controlling shareholders. Second, significant variations in business performance or major strategic pivots can trigger changes at the top management level. Lastly, as anti-corruption initiatives and stricter party governance measures become more prevalent, some executives may opt to resign proactively to avoid potential risks.
Recent figures reveal that at least 18 publicly listed pharmaceutical firms have reported executive changes since early September. A notable incident occurred at Shiyao Group’s subsidiary, Shiyao Innovative Pharmaceutical, where Chairman Pan Weidong and Director Yang Dong tendered their resignations on September 23, despite having around 18 months left in their terms. Their announcement cited “work changes” as the reason for their departure, after which they will no longer hold any positions within the company.
Earlier in the year, Shiyao Innovative Pharmaceutical also experienced the resignations of General Manager Han Feng and board member Wang Huaiyu. Additionally, Liu Yongjun was appointed as the Executive President and Global R&D President of Shiyao Group in early September.
Other state-owned enterprises are witnessing similar executive reshuffles. For instance, Sinopharm announced on September 14 the appointment of Zhao Bingxiang as a non-executive director, while Lian Wanyong stepped into the role of executive director. Zhao had previously served as president of China Resources Sanjiu Medical. Following this, on September 7, China Resources Sanjiu introduced Wu Wendo as their new president and nominated him for the board.
Industry experts suggest that these leadership shifts are closely tied to changing business focuses. Recent turnover in pharmaceutical companies has predominantly involved executives managing research and development.
For example, Liu Yongjun, the new R&D head at Shiyao Group, brings substantial academic and industry experience, having contributed significantly to immunology and oncology research through past leadership roles at firms like Innovent Biologics and Sanofi.
In a similar vein, Betta Pharmaceuticals announced the resignation of senior VP and chief scientist Wang Jiabing, who oversaw the new drug R&D center. Current VP Lan Hong will now assume those responsibilities. It’s important to note that Betta has experienced a considerable reduction in its R&D workforce, decreasing from 647 employees in 2022 to 562 in 2023, which represents a decline of over 13%.
Despite Chairman Ding Lieming’s insistence on prioritizing quality over quantity in R&D, the company’s performance has been lackluster, with only two traditional drugs making a significant contribution to revenues despite having five commercialized products.
Additionally, a new generation of executives, often referred to as “the second generation of medicine,” is beginning to take charge in various companies. For example, on September 25, Lepu Medical announced that General Manager Zhang Zhibin and Deputy General Manager Zheng Guorui resigned for personal reasons, paving the way for Pu Fei, the daughter of Chairman Pu Zhongjie, to take on the role of new General Manager.
Born in 1989, Pu holds degrees from MIT and Harvard and has experience in finance and the medical industry. Nonetheless, Lepu Medical has faced challenges, reporting a 24.78% decline in revenue in 2023 compared to the previous year.
Another noteworthy transition is Jiang Lingfeng, who has recently been appointed as president of Zhifei Biological Products. His extensive tenure within the company offers a contrast to Pu’s diverse background; however, both leaders face similar hurdles as Zhifei grapples with significant revenue and profit declines in the shifting market for HPV vaccines.
For these emerging leaders, the pressing challenge will be steering their companies through turbulent times while leveraging their inherited legacies to sustain competitiveness and profitability in an ever-evolving marketplace.
