An executive director of CSPC PHARMA (1093.HK) has been fined 5 million yuan by China's securities regulator for alleged insider trading ahead of a subsidiary's restructuring deal.

On November 3, CSPC PHARMA disclosed in a filing that its executive director, Pan Weidong, received a "Penalty Decision" from the China Securities Regulatory Commission (CSRC). The CSRC investigation found that Pan, who was aware of undisclosed information about the restructuring of CSPC Innovation Pharmaceutical (Xinnuowei, 300765), used the securities account of CSPC PHARMA's wholly-owned subsidiary, CSPC EBP Pharma, to purchase 2.74258 million shares of CSPC Innovation between December 8 and December 20, 2023, totaling 99.9888 million yuan. This constituted insider trading under China's Securities Law.

The CSRC ordered Pan to dispose of the illegally held shares and imposed a 5 million yuan fine. Pan retains the right to apply for administrative reconsideration or file a lawsuit. CSPC PHARMA stated that, as of the announcement date, the company holds 1.037 billion shares and 11.5872 million shares of Xinnuowei through EBP Pharma and another wholly-owned subsidiary, CSPC Ouyi Pharma, respectively, collectively representing approximately 74.66% of CSPC Innovation's total equity (including the additional shares, accounting for about 0.23% of Xinnuowei's total equity). The company emphasized that its operations remain unaffected by the penalty.

According to Xinnuowei's 2023 annual report, Pan Weidong, born in December 1969, holds a master's degree and previously worked at Shijiazhuang Art Center, Hebei Pharmaceutical Group, and Zhongnuo Pharma. Pan served as Xinnuowei's chairman but resigned on September 23, 2024, citing "job changes." His original term was set to expire on April 6, 2026.

Originally named CSPC Xinnuowei Pharmaceutical, the subsidiary was established in 2006 and went public on the ChiNext board in 2019 as the first red-chip spin-off listing in China. In November 2023, it was renamed CSPC Innovation Pharmaceutical.

On October 27, Xinnuowei reported a 15.9% year-on-year revenue increase to 1.59 billion yuan for the first three quarters of 2025, but net losses attributable to shareholders widened to 24.05 million yuan, down 117.3% year-on-year.

The restructuring deal referenced in the penalty decision involved Xinnuowei's planned acquisition of CSPC Baike (Shandong) Biopharmaceutical for 7.6 billion yuan, announced in January 2024 but terminated on April 28, 2025. Xinnuowei attributed the termination to market conditions, stating it would not materially impact operations.

CSPC PHARMA reiterated that the penalty would not adversely affect its business.