1. China Everbright Group's sale of its entire 28.48% stake in Cachet Pharmaceutical Co. Ltd. to Beijing Tongrentang (Group) for about 1.5 billion yuan marks the culmination of the subsidiary's weakening earnings, unresolved tax issues, and growing exposure to China's sweeping anti-corruption campaign in the medical sector [para. 1][para. 2][para. 5]. Everbright has framed the sale as part of a shift toward its core financial and industrial businesses, but people familiar with the matter told Caixin the divestment was driven by deep-seated management and compliance problems at Cachet, effectively sidelining Everbright's broader healthcare and eldercare platform [para. 3][para. 4].
2. Cachet's financial decline was steep. Revenue peaked at nearly 30 billion yuan in 2023 before falling to 19.5 billion yuan in 2025, while net profit dropped by more than half to 111 million yuan over two years, extending a four-year earnings slump [para. 9]. The company also faced severe tax compliance issues. A Beijing-based subsidiary used invalid value-added-tax invoices in 2015 and 2016 to avoid over 25 million yuan in taxes, accumulating late-payment fees expected to exceed 40 million yuan [para. 10]. Additionally, between 2019 and 2020, the same subsidiary obtained fraudulent invoices to channel funds toward off-book expenses, a practice a medical-industry insider described as common for generating cash for kickbacks to clients [para. 11].
3. Adding to these troubles, Cachet endured a wave of leadership upheaval closely linked to the government's anti-corruption drive. From late 2024 through early 2026, authorities detained more than 10 middle- and senior-level managers, most from its lucrative medical-device and consumables division [para. 6][para. 19]. The detained included two successive board secretaries, Wang Dike and Wang Wending, both of whom had previously overseen medical-device sales in southern provinces and were drawn into investigations involving local health-care officials over alleged bribery tied to hospital procurement contracts [para. 15][para. 16]. Between early 2024 and end of 2025, the company experienced over eight senior leadership changes, including the July 2024 resignation of Chairman Xu Wenli [para. 13][para. 14].
4. The core of Cachet's regulatory troubles was its most profitable business: medical devices and high-value consumables, which generated 10.7 billion yuan, or 55% of total revenue in 2025, particularly in cardiology where it had strong hospital ties [para. 18][para. 21]. A July 2024 administrative penalty from Guangzhou market regulators provided a glimpse into the business's operations, revealing a Cachet subsidiary paid hospitals a 5% rebate and provided doctors a 12% clinical fee and a 10% benefit fee, resulting in a 2 million yuan fine and confiscation of 2.9 million yuan in illegal gains for commercial bribery [para. 20]. Facing the relentless nationwide anti-corruption campaign, which disrupted this model and focused on key markets like Jiangsu, Cachet voluntarily exited business lines associated with heavy marketing expenses to strengthen compliance [para. 22].
5. The sale reflects Beijing's broader push to tighten oversight of a hospital procurement system long seen as vulnerable to entrenched interests [para. 23]. The transaction allows the state-owned Everbright Group to exit a sector carrying heightened compliance risk [para. 5]. For Cachet, now under the potential control of Beijing government-backed Tongrentang, the path forward involves navigating intense regulatory scrutiny that has reshaped the industry, forcing a retreat from the high-risk sales practices that had once driven its growth [para. 2][para. 22].
AI generated, for reference only
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