Core Viewpoint - A recent whistleblower letter has reignited discussions on corruption in the medical industry, particularly involving Guizhou Xintian Pharmaceutical's Chengdu branch, which is accused of bribing over a hundred doctors across more than 30 medical institutions [1][3]. Group 1: Company Overview - Guizhou Xintian Pharmaceutical, established in August 1995 and listed on the Shenzhen Stock Exchange in May 2017, focuses on the research, production, and sales of traditional Chinese medicine, particularly for urological and gynecological diseases [1]. - In 2023, Xintian Pharmaceutical ranked second in hospital sales and eighth in pharmacy sales for gynecological traditional Chinese medicine, with a comprehensive ranking of second [1]. Group 2: Financial Performance - Despite a reform in its sales and production system initiated at the end of 2022, Xintian Pharmaceutical's sales expenses remain high, amounting to 372 million yuan in 2024, which is 43.34% of its revenue [2][4]. - The company's sales expenses decreased by over 15% year-on-year for two consecutive years, yet they still represented a significant portion of total revenue, with 2022 sales expenses at 532 million yuan (48.93% of revenue) and 2023 at 438 million yuan (45.86% of revenue) [4]. - Revenue for 2023 and 2024 was reported at 954 million yuan and 858 million yuan, respectively, reflecting year-on-year declines of 12.29% and 10.11% [6]. Group 3: Compliance and Regulatory Issues - The Sichuan Provincial Health Commission has mandated investigations into the allegations against Xintian Pharmaceutical, requiring reports on any violations of health laws by May 25, 2025 [3]. - The company is accused of using various covert methods for bribery, including fake case collections and excessive speaker fees for medical seminars [3][5]. - Xintian Pharmaceutical has stated that it is cooperating with investigations and claims that its operations are compliant [3]. Group 4: Industry Context - The pharmaceutical industry is under increasing scrutiny for high sales expenses, which are often linked to risks of commercial bribery and compliance issues [5]. - The industry is experiencing a push towards compliance, with regulatory bodies intensifying efforts to combat corruption, including a report indicating that over 52,000 cases were filed in the medical sector [7]. - Analysts suggest that the ongoing anti-corruption efforts will compel pharmaceutical companies to adopt more compliant marketing strategies and digital methods for market activities [8].