"Ownerless" for sixteen years, the leading vaccine company's founder withdraws billions in a major exit

Ask AI · How does Watson Biotech leverage state-owned resources to achieve a rapid rise?

On December 4, 2014, at Christie’s auction house in New York, there was a special auction item:

**A Nobel Medal.
**

This was the world’s first Nobel Medal that was publicly auctioned, and it ultimately sold for $4.75 million. The owner of the medal was James Watson, the discoverer of the DNA double helix structure and a towering figure in biology.

At that time, Watson was already over eighty years old. Because of reckless remarks about racial discrimination he made earlier in his career, the laboratory he had served for 40 years expelled him, leaving both his reputation and income at zero.

The old man publicly lamented that he had become “inhuman,” so desperate that he couldn’t even afford to buy a painting.

On the other side of the vast ocean, there was a company bearing his name—Watson Biotech. In just over ten years, the company’s bosses carried out a “search, strike, and withdraw” campaign across the A-share market, finally executing a large retreat worth tens of billions.

1

In 1997, China launched market-oriented reforms in the pharmaceutical sector, completely dismantling the administrative boundaries of the planned-economy era.

After working 12 years at the Kunming Institute of Medical Biology (abbreviated as “Kunming Biological Institute”) as director of the sales department, Li Yunchun sensed the pulse of the times.

In early 2001, he gathered a group of old colleagues and registered and founded Watson Biotech at the Yunnan University Science Park. The startup capital was said to have been borrowed from everywhere:

**500,000 yuan in high-interest loans.
**

Although the company was privately owned, the core team was all from the “national team”: the chief scientist was the old director Guo Ren, the vice chairman Dong Shaozhong was director of quality control and deputy director of the institute, and the vice president Liu Hongyan was director of the research office…

In Watson Biotech’s early R&D team:

**Seven people directly came from Kunming Biological Institute.
**

Mr. Li was quite kind. Instead of waiting for colleagues to retire, he preferred to let the technology “retire” first to himself.

Kunming Biological Institute is China’s largest production base for hepatitis A vaccines. As early as 1985, it undertook a national key project, and in 1999 it successfully developed an inactivated hepatitis A vaccine. The core personnel involved in that project were basically absorbed by Li Yunchun.

After founding Watson, Li Yunchun obtained the approval for the hepatitis A vaccine in less than three years, and then quickly transferred it—getting the company its first bucket of money:

**20 million yuan.
**

Generally, the development cycle of a vaccine is 5 to 10 years. But in just 8 years, Watson completed the development of 9 vaccines, including the Hib vaccine and the lyophilized A/C group meningococcal polysaccharide conjugate vaccine.

Coincidentally, during the same period, these products were also being developed by Chengdu Institute of Biological Products, which received approval in 2004. Huang Zhen, Watson’s technology director at that time, was from Chengdu Institute of Biological Products.

Li Yunchun’s luck was simply too good. Besides the speed of its R&D, the company also ran into many “noble helpers.”

The following year after its establishment, Yunda Technology, a listed company with state-owned capital holding, made a move to invest. Not only did it bring funds, it also handed over its vaccine enterprise, Dalian Hanxin, to Li Yunchun and others for management.

As a result, Watson’s revenue kept climbing, while Dalian Hanxin’s revenue declined year by year.

In 2004, Yunda Technology sold its shares in Watson back to Li Yunchun and others, yet it still hired them to continue managing Dalian Hanxin.

In 2005, Watson began planning hepatitis B vaccines. A year earlier, Dalian Hanxin had already obtained approval numbers for the same kind of vaccine.

Li Yunchun’s old employer, Kunming Biological Institute, was also always supportive toward him.

In 2004, Kunming Biological Institute, Yunda Technology, and Watson shareholder Liu Junhui jointly established Kunming Shangcheng. That same year, Yunda Technology transferred its shares to Liu Junhui, and the actual controlling rights of Kunming Shangcheng quietly fell into Watson’s hands.

Also that year, Kunming Shangcheng approached the Yuxi municipal government to plan the construction of a vaccine production base locally. The government showed great sincerity, offering to transfer land for 13 million. The result was awkward: Kunming Shangcheng couldn’t even come up with those 13 million.

So the local government staged a “nanny-style” rescue: first, it used 10 million in real cash to buy shares in Watson, and then transferred the land to Watson. Watson then took that land to the bank to secure a collateral-backed loan, only then making up the money to buy the land.

In 2005, Kunming Biological Institute issued the “Science and Technology Secrets Guarantee Book for Research at the Institute,” stipulating that during the period of engaging in scientific research within the institute, all achievements would be job inventions, owned by the state, and held by the biological institute:

**I have no right to dispose of them privately.
**

You could say it was to prevent another Watson from appearing—yet they had already been gone for 4 years. You could also say it was to help Watson stop the appearance of the next Watson—but I have no evidence either way.

In 2008, a new director took office at Kunming Biological Institute and wanted to reclaim control over the core technology.

Watson’s conditions were: they wanted the Yuxi production base, and they wanted Kunming Biological Institute to supply 6 million doses of hepatitis A vaccine at a low price.

Kunming Biological Institute agreed. The prospectus showed that in those years, Watson earned a “small target” merely by turning vaccines around from its old employer.

Wang Jianlin didn’t lie to me—earning 100 million yuan really is easy. The old employer is, forever, the best supplier.

2

In November 2010, Watson Biotech listed on the ChiNext board. The issue price was 95 yuan, and the P/E ratio was 133.8 times—both set records, and it raised more than 1.8 billion yuan.

At that time, analysts even coined a phrase like “Maotai of medicine” to join the praise. But the celebration only lasted half a year. Watson then announced that the three core vaccines promised in the prospectus:

**We won’t do them anymore.
**

What does that mean? You received shareholders’ money, but you stop doing the projects?

Then we’ll find your mother—not, the sponsor Ping An Securities. Ping An Securities’ response was even more fresh and unique: “We believe these three vaccines are fundamentally not important.”

Shareholders: You took our money, and now you’re not doing the projects?

Ping An Securities: Not important.

Shareholders: Then why was it worth 95 yuan in the beginning?

**Ping An Securities: Not important either.
**

Please note, this was only the beginning.

Among the three vaccine products, one project was a collaboration between Watson and a company called Changchun Huapu, and Watson also held part of Huapu’s equity. In 2017, Watson sold its Huapu shares to Changchun Changsheng. A year later, Changchun Changsheng’s executives were convicted one after another due to a fake vaccine case.

In the following years, Watson launched a wild “money-sending” mode.

In 2012, it spent 800 million to acquire Daan Pharmaceutical, a Hebei blood products company with negative book assets. And just a few months before Watson acted, mysterious businessman Su Zhonghai had only just bought Daan for 20 million.

This operation was effectively Watson giving Mr. Su a gift of 700 million.

Right after that, Ms. Su Lihong made her appearance. She bought 51% of Shandong Shijie for 5.1 million, and a few months later Watson took over Shijie at a high price of 153 million.

At the entrance of the Huayue Holiday Scenic Area in Taian City, Shandong, there was an unremarkable four-story building—this was the headquarters of Shandong Shijie.

How big were these companies, really? A reporter went to the local area to interview. When the deputy director of the local drug administration bureau heard that Shijie would be acquired at a valuation of 300 million, the deputy director’s first reaction was only one word—surprised.

Even local staff at the Center for Disease Control and Prevention admitted that Shijie was not a major enterprise locally; in their supplier list, it could only rank eighth.

Did Su Zhonghai and Su Lihong know each other? Business registration information shows that both of them appeared on the same company’s shareholder list earlier, meaning there was an existing connection.

Two and a half years after Watson acquired Shandong Shijie from Su Lihong, in 2016 the Shandong fake vaccine case broke out, and Shandong Shijie landed on the blacklist of China’s National Medical Products Administration:

**Selling fake vaccines.
**

That year, Watson sold its shares in Shijie for 820 million. One of the buyers was Yuxi Woyun, whose controlling shareholder was Watson’s chairman Li Yunchun.

Bought for more than 300 million and sold for more than 800 million—was it profit? Don’t rush. After acquiring Shijie, Watson merged three other companies, and the total expenditures added up to more than 1.1 billion yuan.

Mr. Li’s luck really was off the charts. The old employer delivered technology, the government delivered land, the listed company delivered money, and even the fake vaccine case had someone accurately helping him with timing.

3

On February 19, 2009, Hesheng Biochemical of Shanghai and Sinopec CNPC Sichuan signed a major contract:

**In the Pengzhou Petrochemical Project valued at 38 billion yuan, Shanghai Hesheng took the overall contracting for six sets of units.
**

At the signing venue, the atmosphere was lively. Hesheng’s representative Huabang Song and CNPC’s representative Li Dongsheng both wore bright smiles.

Later, CNPC’s top executive Jiang Jiemin was removed from office. Li Dongsheng was sentenced to 13 years, and Huabang Song was also sentenced to 3 years for bribery.

What is little known is that Huabang Song didn’t just work in oil—he also got involved in vaccines.

As early as 2004, he, together with Wu Ke, director of the Wuhan Institute of Biological Products, acquired that hepatitis A vaccine from Watson for 20 million.

The company later changed its name to:

**Zerun Biological.
**

As early as 2003, Watson had already become one of Zerun’s shareholders. In 2012, Watson further acquired 50.69% of Zerun for 260 million.

Zerun’s most important product is the HPV vaccine developed under the leadership of Wu Ke.

However, by 2020, Watson suddenly announced it would sell off Zerun cheaply—because it intended to fully shift to mRNA.

When acquiring Daan, it said the vaccine track was too crowded and it had to open up a new business. When selling Daan, it said it would focus on HPV. Now it wants to abandon HPV and bet on mRNA…

Whether good or bad, Watson has said everything. But angry institutional investors still roared during the phone conference:

**Are you treating us like idiots?
**

**Don’t you believe in the law of cause and effect?
**

Faced with the siege, Li Yunchun said you can question our management level, but you can’t question our character and integrity.

When he said this, Li Yunchun and the founding elders were busy queuing at the block trade window. Since 2016, Li Yunchun had cashed out a cumulative total of more than 4 billion, and his shareholding ratio had fallen from 20% down to 1.7%. The other founding teams had also already fully cashed out.

As for the small portion of shares Li Yunchun had left, it was probably just so that later, when attending shareholders’ meetings, he could still have a seat to listen to his former dreams being read out as slides.

Many people know that since listing, Watson has had no actual controlling person; Li Yunchun is only the chairman.

But all the actions of this listed company seem to be operated by an invisible hand.

Before 2017, all approved products of the listed company were held by its subsidiary, Yuxi Watson. In the fourth quarter of that year, this subsidiary—holding the listed company’s lifeline—introduced a batch of new shareholders in two rounds.

After the second round of shareholders was introduced, only 5 days later, the listed company announced a Phase III clinical trial of the “13-valent pneumococcal polysaccharide conjugate vaccine”—the vaccine that was about to be launched and would inevitably succeed—also held by Yuxi Watson.

Two batches of shareholders rushed in at the last moment and took away 21.74% of Yuxi Watson’s equity. At that time, Yuxi Watson’s valuation was only around 40 to 50 billion yuan.

In the following years, the sales of the “13-valent pneumococcal polysaccharide conjugate vaccine” skyrocketed. Yuxi Watson’s valuation surged to a peak of 188.61 billion yuan, even higher than Watson Biotech’s parent company’s market value.

An even more bizarre thing happened last year. Yuxi Watson first paid dividends, and the minority shareholders holding 21.74% received more than 700 million yuan.

By the end of last year, the listed company announced that it would use 2 billion yuan to acquire all the Yuxi Watson shares held by the two main minority shareholders, Huixiang Yuetai and Tianjin Lanwo.

Look at them—something like 300% gains, no matter what. Why can’t you make money in A-shares? Have you ever thought it might be your own problem?

In March 2026, Watson announced the end of its 16-year “no actual controlling person” status. The party taking over was not a peer in pharmaceuticals, but Huang Tao, the head of the Fujian real estate firm Century Golden Source.

At the end of the laboratory, of course, it’s back to the sales office.

After all, it’s all just a rigid-demand industry.