Core Viewpoint - Nanjing New Pharmaceutical is under investigation by the China Securities Regulatory Commission (CSRC) for suspected violations in annual report disclosures, linked to frequent accounting errors, including premature revenue recognition and failure to adjust overreported income [3][4][6] Financial Performance - The company reported a significant decline in financial performance, with revenues dropping from 7.44 billion in 2021 to 2.63 billion in 2024, and net profits turning from a profit of 595 million to a loss exceeding 1 billion after accounting adjustments [9][10] - In the first half of 2023, the company achieved revenue of 61.84 million, a decrease of 71.28% year-on-year, and a net loss attributable to shareholders of 40 million [10][11] Accounting Issues - In April 2023, the company acknowledged accounting errors, adjusting 24.54 million in revenue for 2023, which constituted 3.4% of that year's total revenue [4][6] - Historical issues include a 2020 overreporting of income by 58.98 million, which was not adjusted until 2023, violating disclosure regulations [6] Stock Performance and Corporate Actions - The company's stock price experienced a dramatic rise of over 100% in July 2023, followed by a sharp decline of nearly 60% by October 13, 2023, coinciding with the announcement of the investigation [3][8] - Prior to the investigation, the major shareholder announced a plan to reduce holdings, indicating potential insider knowledge of forthcoming issues [8] Industry Context - Nanjing New Pharmaceutical operates in a highly competitive pharmaceutical industry, facing pressures from centralized drug procurement policies and a saturated market for generic drugs, which has led to declining profit margins [11]