In just six months, Guizhou Bailing, a company listed for 15 years, has been slapped with an ST label twice. On December 19, it was penalized for inflating profits by 650 million yuan over three years, further eroding market trust. A notice from the Guizhou branch of the China Securities Regulatory Commission (CSRC) exposed a four-year financial fraud scheme at this "flagship of Chinese Miao medicine." Once valued at 53.1 billion yuan, Guizhou Bailing's market cap has plummeted to 7.868 billion yuan, a drop of over 85%. From 2018 to 2023, its debt-to-asset ratio surged from 38.6% to 54.7%, with short-term loans skyrocketing to 1.436 billion yuan by the end of 2023—hinting at underlying issues. This case is emblematic of the 14 major financial frauds uncovered in the healthcare sector in 2025.

The year began with Puli Pharmaceutical's scandal, followed by mid-year blowups at Saili Medical, Weikang Pharma, Nuotai Biotech, and Guangji Pharma. Guizhou Bailing's four-year fraud now caps the year. Each case exposes the industry's deepest wounds: financial misconduct, fund misappropriation, earnings bombs, and governance failures.

**1. The Four-Year Fraud of the "Miao Medicine Leader"** Originally established in 1999 as Anshun Pharmaceutical Factory, Guizhou Bailing specializes in Miao medicine R&D, production, and sales. It went public on the Shenzhen Stock Exchange in 2010, earning the title "China's Miao Medicine Leader." Its flagship products include Yindan Xinnaotong Soft Capsules, Kesuting Syrup, Yizhihuanghua Spray, and non-Miao drugs like Jigan Capsules and VC Yinqiao Tablets.

Yet, this once-revered company has fallen from grace. On December 19, the CSRC issued an advance penalty notice, revealing that from 2019 to 2021, Guizhou Bailing underreported sales expenses to inflate profits: - **2019**: Understated sales expenses by 350.1249 million yuan, overstating profits by 95.73% of reported totals. - **2020**: Understated by 240.8095 million yuan, overstating profits by 115.35%. - **2021**: Understated by 63.7916 million yuan, overstating profits by 45.04%. Cumulatively, profits were inflated by 654.726 million yuan, with 2020's fraud exceeding 100% of reported profits. In 2023, it overstated expenses to understate profits by 459.411 million yuan (93.17% of reported totals).

Regulators plan to fine Guizhou Bailing and 10 executives 25.6 million yuan, with the company and Chairman Jiang Wei receiving maximum penalties of 10 million and 5 million yuan, respectively. Jiang also faces a 10-year market ban.

Trading of Guizhou Bailing shares was suspended on December 22, 2025, resuming on December 23 with the ticker changed to "ST Bailing" (code unchanged at 002424). This marks its second ST designation in 18 months, following a May 2024 ST label due to internal control failures. After a brief "de-ST" in June 2025, it relapsed by year-end.

**2. Over 14 Major Fraud Cases in 2025** Financial fraud remains among the most egregious violations for investors. In 2025 alone, over 14 major healthcare frauds were exposed: - **Puli Pharmaceutical**: Falsified revenues exceeding 1 billion yuan (31.08% of two-year totals) and profits of 695 million yuan (76.72%). It was delisted after a *ST label and entered a liquidation phase on April 8. - **Jiangsu Wuzhong**: Also delisted. - **Others**: Nuotai Biotech, Fujian Pharma, Weikang Pharma, and Xiangxue Pharma faced fines, while Sichuang Medical and Humanwell Pharma saw state-backed rescues amid scandals.

**3. Common Red Flags** - **Cash Flow and Solvency Crises**: Puli Pharma reported negative operating cash flow (-174 million yuan) for nine months in 2024, while Guizhou Bailing's short-term loans (1.436 billion yuan) dwarfed its cash reserves (418 million yuan). - **Stock Plummets**: Guizhou Bailing's market cap crashed 85%; Sichuang Medical fell 42% in two years; Puli Pharma dropped 64.26% in 15 days to 0.89 yuan/share. - **Investor Trust Erosion**: Exposure of frauds has shattered confidence in these firms.

The downfall of these healthcare giants underscores systemic risks and governance failures, leaving stakeholders disillusioned.