Wego Biotech embroiled in 'bribery scandal': cash gifts, gold bars, and high kickbacks; despite continuous share buybacks, stock price still drops by 30%

As a leading enterprise in the medical device and consumables sector, Wego Biotech (01066.HK) has been continuously increasing its shareholdings recently, but its stock price keeps falling.

At the same time, the company has also been embroiled in a bribery scandal, which has drawn widespread criticism. This is directly reflected in two bribery cases disclosed by the National Healthcare Security Administration in January and February this year.

According to the official website and Tianyancha, Shandong Weigao Group Medical Polymer Company Limited, abbreviated as Weigao Medical, is a holding subsidiary of Shandong Weigao Group, focusing on the development of the medical device sector. In 2004, the company was listed on the Hong Kong Stock Exchange. Every day, more than 2 million healthcare professionals worldwide work with Weigao to create a healthier future. Every day, over 20 million patients around the globe alleviate suffering or regain health through Weigao's products.

It is reported that Weigao Medical has participated in the formulation and revision of industry standards over 100 times, exporting its products to more than 100 countries and regions globally, and collaborating with over 10,000 hospitals and medical institutions.

Despite continuous share buybacks, the stock price still dropped by 30%.

From February 12th to 23rd, the company issued five share repurchase announcements. On February 23rd, the company spent HKD 314,200 to repurchase 60,000 shares at a repurchase price of HKD 5.23-5.24 per share. Looking at a longer timeframe, since November 2025, Weigao Medical has been continuously repurchasing shares.

According to incomplete statistics, the total amount of Weigao Medical’s share repurchases throughout 2025 reached hundreds of millions of yuan.

However, share repurchases seem not to have restored investor confidence. Since the end of July 2025 up until now (March 5th), the stock price of Weigao Medical has fallen by more than 30%. In other words, based on recent purchase prices, the company continues to face 'paper losses'.

Institutional analysis shows that Zhongtai International released a research report in November 2025, setting Weigao Medical’s target price at HKD 5.94 and assigning it a “Buy” rating. Considering the overall situation, the firm reduced its revenue forecasts for 2025-27E by 5.2%, 5.9%, and 6.0%, respectively. Shareholder net profit forecasts were lowered by 6.4%, 5.4%, and 5.8%, respectively, though both revenue and profit are still expected to grow positively.

Zhongtai International pointed out in detail that the company’s revenue in Q3 2025 increased by 2.6% year-over-year to RMB 3.26 billion (RMB, hereafter). Therefore, its cumulative revenue for the first three quarters of 2025 rose by 0.9% year-over-year to approximately RMB 9.81 billion. The revenue slightly missed expectations but still achieved positive growth. Among various segments, the medical device and pharmaceutical packaging businesses were affected by the centralized procurement of low-value consumables and flush syringes, while orthopedic product sales improved in the second half of the year. Revenue from interventional and blood management products maintained rapid growth. Due to the centralized procurement of flush syringes, the company’s pharmaceutical packaging business revenue fell by 0.1% year-over-year in the first half of the year, with only single-digit growth in the third quarter. The firm expects the impact of centralized procurement to persist in the short term, thus reducing its revenue forecasts for the pharmaceutical packaging business in 2025-27E by 8.9%, 13.5%, and 13.4%, respectively.

Goldman Sachs also believed at the same time thatWeigao Group's pharmaceutical packaging and general medical consumables businesses continue to face pressure as sales growth is insufficient to offset the pricing pressures brought by Volume-Based Procurement (VBP), particularly in the flush syringe business. Moreover, the rollout of surgical products is progressing slower than expected amid a weak macroeconomic environment.

Details of the bribery case: cash payments, gold bars, and high kickbacks

In addition to the pressure on its performance, Weigao Group has also drawn significant attention due to a series of recent bribery incidents. The official website of the National Healthcare Security Administration disclosed two bribery cases: 'The Ci Moulong Bribery Case' and 'The Hao Mougang Bribery Case'.

Notably, in both bribery cases, the name 'Weigao' was implicated.

The 'Ci Moulong Bribery Case' shows that the People's Procuratorate of Simao District, Pu'er City, Yunnan Province charged the defendant Ci Moulong with bribery and unit bribery. The case was brought to the People's Court of Simao District, Pu'er City, Yunnan Province on June 20, 2023. After accepting the case, the People's Court of Simao District formed a collegiate panel and held a public trial in September 2023. Upon investigation, it was found thatDefendant Ci Moulong, a sales representative of the Kunming Sales Branch of Shandong某某Group Medical Polymer Products Co., Ltd., bribed staff at Pu'er People's Hospital with 395,000 yuan in cash, 9,900 US dollars in cash, and one 200-gram commercial gold bar; he also provided kickbacks totaling 1.1912 million yuan in cash for medical consumable sales to internal departments of Pu'er People's Hospital.

Ci Moulong’s bribery activities spanned from 2012 to 2020. Several instances directly involved Weigao: between 2015 and 2016, defendant Ci Moulong bribed Luo Mouqiong, then head nurse of the Endocrinology Department at Pu'er People's Hospital, with rebates for precision infusion sets from Shandong Weigao Company, totaling 20,000 yuan in cash. Luo Mouqiong accepted the bribe and used it for departmental expenses and distributed it among the nurses in the department.

One day at the end of 2017, defendant Ci Moulong bribed Li Mou, deputy head nurse of the Endocrinology Department, with rebates for disposable infusion sets and venous indwelling needles from Shandong Weigao Company, totaling 25,000 yuan in cash. Li Mou accepted the bribe and used it for departmental expenses.

One afternoon in the second half of 2018, defendant Ci Moulong bribed Huang Mou, deputy head nurse of the General Surgery and Burns Department at Pu'er People's Hospital, with rebates for venous indwelling needles and ultra-low-density precision infusion sets from Shandong Weigao Company, totaling 20,000 yuan in cash. Huang Mou accepted the bribe and used it for departmental expenses.

Between 2015 and 2018, defendant Ci Moulong bribed Liu Mou, head nurse of the Anesthesiology Department at Pu'er People's Hospital, four times with rebates for disposable venous indwelling needles and other medical consumables from Shandong Weigao Company, totaling 100,000 yuan in cash. Liu Mou accepted the bribe and used it for departmental expenses and distributed it among the nurses in the department.

Between 2012 and 2018, the defendant Ci Long bribed Wan Mou, head nurse of the Pediatrics Department at Pu'er People's Hospital, Liu Mouying, and others seven times with kickbacks on medical consumables such as intravenous indwelling needles from Shandong Weigao Company, amounting to 408,200 RMB in total and 500 supermarket gift vouchers each valued at 50 RMB. Wan Mou and Liu Mouying accepted the bribes and used them for department expenses and distributed them among the department nurses.

The National Healthcare Security Administration emphasized that pharmaceutical commercial bribery essentially influences prescription rights by offering undue benefits, disrupts normal medical practices, impedes fair competition, and increases healthcare costs. This shifts the focus of medical product sales away from actual clinical value and product competitiveness toward improper competition driven by high rebates and kickbacks. In this case, the briber repeatedly gave kickbacks to internal departments of the hospital regarding low-value consumables like infusion products, aiming to gain competitive advantages and boost sales volumes. The continuously inflated prices due to these kickbacks clearly deviate from the pricing principle of 'fairness, reasonableness, honesty, and value-for-money,' and the inflated portion does not translate into legitimate corporate profits or fund innovation and quality but rather obstructs fair competition. Recently, various regions have initiated centralized bulk procurement efforts for infusion sets and needle-type medical consumables. While fully respecting clinical needs and ensuring supply, these efforts further eliminate inflated price margins, reducing patients' medical expenses. Next, the National Healthcare Security Administration will guide Yunnan Province's healthcare security bureau to conduct credit evaluations lawfully and in compliance, urging dishonest companies to promptly correct their misconduct. Those who refuse to make corrections will be dealt with accordingly, effectively safeguarding the safety of healthcare funds.

The case of Hao Gang's bribery is similar. From August 2006 to August 2022, Hao Gang served as the head of orthopedics at a hospital in Pingdu, leading the department. Between June 2012 and August 2022, utilizing his official capacity, Hao Gang provided assistance to medical device suppliers Li Gang and Chen Jun in areas such as procurement, usage, and settlement of medical devices, and repeatedly illegally received 2.38498 million RMB from Li Gang and a total of 1.27147 million RMB from Chen Jun, amounting to 3.65645 million RMB. These funds were used for his family and personal consumption expenditures.

In 2010, Li Gang invited Xu Baobao, the head of the hospital’s equipment department, and Hao Gang to Weihai to inspect the WEGO brand steel plate medical devices he represented. In 2011, after obtaining Hao Gang’s approval, both the steel plate medical devices represented by Li Gang and Chen Jun entered the hospital’s procurement catalog. At the end of each month, the supplier would verify the usage details with defendant Hao Gang, who would sign the verification documents before confirming with the equipment department. The supplier then submitted the signed invoices to finance for payment.

In May 2012, Li Gang proactively agreed with Hao Gang that every month, he would give a cash rebate of 30% of the price of steel plate medical devices (excluding those with low profit margins). Of this, Hao Gang personally took a 10% cut, while the department received a 20% cut. From June 2012 to September 2022, Hao Gang individually pocketed a total of 2.38498 million RMB in kickbacks. This portion was mixed with family assets and used for household expenses and personal consumption.

At the end of 2013, Chen Jun voluntarily agreed with Hao Gang that monthly rebates would be given based on about 40% of the price of Chuangsheng steel plate medical devices and about 20% for joint medical devices, transferring the funds via bank transfer to an account controlled by Hao Gang, which he split evenly with the department. From February 2014 to September 2021, Hao Gang personally received 1.27147 million RMB in kickbacks, which he also combined with family assets for household expenses and personal consumption.

How to move from 'formal compliance' to 'substantive compliance'?

It is reported that Weigao stated that Ci Long’s actions were personal and the company has strengthened internal compliance management. However, this explanation clearly failed to convince the public.

Renowned lawyer and director of Henan Zejin Law Firm, Fu Jian, pointed out that the individuals involved conducted business under the guise of company salespeople and agents, demonstrating long-term, organized, and interest-driven behavior. Weigao’s attempt to attribute bribery solely to employees’ personal issues and mask internal compliance gaps not only severely damaged brand reputation and eroded market trust but also directly impacted business layout, channel networks, and capital market valuations. On the business expansion front, Weigao should conduct risk assessments, restructure its sales model, eliminate rebate-based marketing, and establish risk control mechanisms throughout the entire business process. Actively investing in core business development and enhancing innovation capabilities can help form unique competitive advantages.

Fu Jian stressed that a sales model reliant on bribery significantly damages corporate credibility and industry reputation, potentially leading to credit penalties, procurement restrictions, and hindered business expansion. It also exposes listed companies' clear deficiencies in information disclosure and compliance governance, further suppressing capital market valuation and financing opportunities. Even if the company shifts blame to individuals, it cannot conceal the flaws in non-compliant business practices during rapid expansion. Companies must completely abandon reliance on traditional kickback-based approaches, proactively report rectifications to regulators, and fulfill information disclosure obligations promptly. Simultaneously, they should accelerate product innovation, cost reduction, and explore other competitive advantages to fundamentally mitigate legal risks and restore market and investor confidence.

Bai Wenxi, Vice Chairman of the China Enterprise Capital Alliance, also pointed out that the high-value medical consumables sector where Weigao Co., Ltd. operates is inherently a hotspot for healthcare corruption. Compared to pharmaceuticals, consumables have stronger customization features and a facade of technical barriers - for instance, orthopedic steel plates of the same type can vary in price by several times between different brands, but the differences in clinical outcomes are often difficult to quantify. This information asymmetry creates room for power rent-seeking.The bribery case involving Hao Mougang spanned a decade-long cycle of corruption, while the Ci Moulong case demonstrated a 'dual-track' bribery model: offering bribes both individually (cash + US dollars + gold bars) and providing sales kickbacks to departments. This 'point-to-point + point-to-area' three-dimensional bribery strategy reflects how the hidden rules in the consumables sales field have become highly systematic and institutionalized.

Bai Wenxi further analyzed: The process in the Hao Mougang case, where usage details were reconciled at the end of each month and signed off on, exposed systemic loopholes where clinical doctors were deeply involved in procurement decisions. When sales personnel's KPI is directly tied to the number of products entering hospitals and their usage volume, commercial bribery evolves from an individual moral issue into an organizational survival strategy.

Bai Wenxi stated that the bribery scandal will force Weigao Co., Ltd. to bear three layers of cost transfers: Rising sales costs - compliance transformation requires rebuilding the sales team, shifting from 'relationship-driven' to 'academic promotion,' which will significantly increase expenses for staff training, compliance reviews, and third-party audits; Increased opportunity costs - the cycle for new products to enter hospitals will extend, rendering the previous 'rapid breakthrough' strategy ineffective, possibly leading to loss of market opportunities compared to competitors like Lepu Medical and MicroPort Medical who are building compliance frameworks; Higher capital costs - ESG rating downgrades, risk of institutional investor withdrawals, and tightened bank credit will all drive up financing costs. The amount involved in the Hao Mougang case was RMB 3.65 million, but the potential market value erosion could reach hundreds of millions.

Companies should transition from 'formal compliance' to 'substantive compliance': Independent Compliance Committee - establish a compliance committee under the board of directors consisting of external legal and ethics experts, reporting directly to the audit committee, cutting off management interference in compliance matters; Chief Compliance Officer (CCO) system - appoint a chief compliance officer with 'veto power' to conduct prior reviews of high-risk businesses and clients; Whistleblower protection mechanism - set up anonymous reporting channels to internally investigate abnormal fund flows and contracts in the sales process, preventing prolonged loss of control over 'Ci Moulong-style' individual actions. Compliance is not a cost, but the longest-term investment; integrity is not a burden, but the strongest moat.

Public data shows that Weigao Co., Ltd. has established 25 sales offices, 38 customer contact centers, and 170 city representative offices nationwide. (Produced by Harbor Finance)

Harbor Business Observer, authored by Shi Zifu and Wang Lu

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