With the exception of three companies, including BeiGene, which are scheduled to disclose their third-quarter reports in mid-November, A-share pharmaceutical companies have now released their Q3 financials. A review reveals that many of these firms are grappling with high accounts receivable.

According to East Money Choice data, 14 listed pharmaceutical companies reported accounts receivable exceeding 10 billion yuan by the end of Q3. Among them, Shanghai Pharmaceuticals, Jointown Pharmaceutical Group, and Chongqing Pharmaceutical led the pack. Notably, the blood product sector saw a widespread surge in accounts receivable year-over-year. Additionally, companies such as Lingkang Pharma and MicroPort CardioFlow reported increases exceeding 100%.

In terms of accounts receivable as a percentage of total assets, eight companies exceeded 50%, with People's Tongtai topping the list at 62.1%. Other firms with high ratios included *ST Suwu, Chongqing Pharmaceutical, and Neptunus Bio.

**High Accounts Receivable in Pharmaceutical Distribution Sector** East Money Choice data shows that among 499 A-share pharmaceutical firms, 14 reported accounts receivable surpassing 10 billion yuan by Q3-end. Shanghai Pharmaceuticals topped the list with 88.78 billion yuan, followed by Jointown Pharmaceutical Group at 39.09 billion yuan. A total of 380 companies had receivables exceeding 100 million yuan.

Notably, firms with high receivables are predominantly from the pharmaceutical distribution sector, with eight of the top ten companies belonging to this category. Deng Yong, Director of the Health Law Research and Innovation Center at Beijing University of Chinese Medicine, explained that distributors primarily serve medical institutions, especially public hospitals, which dominate the market. Due to their bargaining power, public hospitals often negotiate extended payment terms—typically 6–12 months—while distributors must settle with upstream suppliers in 3–6 months. This mismatch creates a cash flow gap, leading to receivables accumulation.

Deng added that to gain market share in a competitive landscape, distributors may adopt lenient credit policies, further inflating receivables. However, Zhifei Biological, previously criticized for high receivables, reported a significant reduction to 12.81 billion yuan from 21.39 billion yuan year-over-year.

**Blood Product Sector Sees Rising Receivables** Year-over-year, multiple blood product companies reported substantial increases in receivables. Tiantan Biological led with receivables surging to 1.12 billion yuan from 25 million yuan. Boya Bio, Bioheng Innovation, and others also saw doubling receivables. Even Pailin Biological, with the smallest increase, reported growth to 644 million yuan from 571 million yuan.

Zhang Yue, Chairman of Aoyou International, attributed this trend to companies adjusting client payment terms to adapt to market dynamics and offering relaxed credit policies to boost market share. Some blood product firms, like Bioheng Innovation, even swung to a net loss in Q3.

**High Receivables-to-Assets Ratio Raises Concerns** Accounts receivable as a percentage of total assets reflects financial stability. East Money Choice data shows 176 pharmaceutical firms had receivables exceeding 10% of assets, with 30 surpassing 30% and eight exceeding 50%.

People's Tongtai reported the highest ratio at 62.1%, with receivables of 4.36 billion yuan against total assets of 7.02 billion yuan. The company also set aside provisions for bad debts, writing off 22.24 million yuan in Q3. *ST Suwu followed with receivables at 56.28% of assets, doubling year-over-year to 2.1 billion yuan. Chongqing Pharmaceutical and Neptunus Bio also reported receivables exceeding 10 billion yuan.

Zhang Yue warned that high receivables tie up capital, reduce turnover, and increase credit risks, potentially disrupting cash flow. However, some analysts argue that if receivables grow in line with healthy revenue and profit, and clients are creditworthy, investors need not worry.