Rui'ang Gene (ticker 688217), a Shanghai‑listed molecular diagnostics company, disclosed that its ultimate controllers — siblings Xiong Hui and Xiong Jun — have been formally indicted on suspicion of fraud. The case, which has been moving through Chinese criminal procedures since mid‑2024, marks a sharp escalation from earlier investigations that were originally described as probes into illegal business activity.
The company said the siblings no longer hold board or senior management roles and insisted that day‑to‑day operations are being run by the executive team under an intact governance framework. Rui'ang also reported that ongoing business activities continue, but simultaneously warned investors that the group expects a material deterioration in performance for its 2025 fiscal year: revenue is forecast at RMB 170–176 million and attributable net loss at roughly RMB 40–60 million, with adjusted losses deeper once non‑recurring items are stripped out.
Rui'ang traces its scientific credentials to work led by Xiong Hui — a Fudan‑trained microbiologist credited with developing China’s first clinically approved next‑generation sequencing reagent for detecting HBV drug‑resistance mutations. The pedigree underscores why the prosecution of founders can have outsized reputational effects in biotech, where trust in data, regulatory compliance and supply‑chain continuity are central to commercialisation.
Management attributed the company’s revenue slide, roughly 27–30% year‑on‑year, to intensifying industry competition, slower downstream customer payments that forced credit impairment provisioning, suspension of a molecular‑diagnostics R&D and industrialisation project that triggered impairment charges, and a goodwill write‑down at a struggling subsidiary. Rui'ang also said it will reverse previously recognised deferred tax assets in light of the weaker outlook, a move that further depresses reported earnings.
The criminal case timeline is precise: in July 2024 public security authorities placed Xiong Hui (then chair and general manager), Xiong Jun (then director and deputy general manager) and a vice‑president under residential surveillance on suspicion of illegal business practices, while another executive was criminally detained. By October 2024, the restrictive measures were upgraded to criminal detention and the alleged offence was reclassified as fraud; in December the siblings were formally arrested and the case entered prosecutorial review. On January 23, prosecutors filed public indictments.
For investors, customers and partners, the combination of legal jeopardy and worsening financials raises three immediate concerns: potential asset freezes and further leadership vacuum if convictions follow; operational disruption if key approvals or supplier contracts are questioned; and a broader hit to investor confidence in a sector already grappling with overcapacity and pricing pressure. The company’s reassurances about governance are standard in such situations, but legal uncertainty coupled with a clear earnings decline will complicate refinancing, fundraising and strategic partnerships.