Spending 70 million yuan on "new purchases" while decisively "disposing of" old assets, Jiangzhong Pharmaceutical is initiating a corporate "reshuffle."

**Jiangzhong Acquires 70% Stake in Jingcheng Huiyao**

On September 27, Jiangzhong Pharmaceutical Co., Ltd. (hereinafter referred to as "Jiangzhong Pharmaceutical") announced that it plans to acquire a 70% stake in Jingcheng Huiyao Pharmaceutical Co., Ltd. (hereinafter referred to as "Jingcheng Huiyao") through public bidding at a transaction price not exceeding 70.78393 million yuan.

If this transaction is completed successfully, Jiangzhong Pharmaceutical will achieve actual control over Jingcheng Huiyao and incorporate it into its consolidated financial statements. Jiangzhong Pharmaceutical stated that this move aims to supplement its traditional Chinese medicine tonic product portfolio and enrich its OTC product matrix.

In Jiangzhong Pharmaceutical's business landscape, OTC represents the undisputed main force, accounting for approximately 70% of revenue for many years. The Compound Caoshanhu Tablets launched in 1986, Jianwei Xiaoshi Tablets introduced in 1994, and Lactobacillus Tablets launched in 2013 are all "veterans" that have withstood market tests.

However, it cannot be denied that after decades on the market, these products face growth pressures. Data shows that in the first half of 2025, Jiangzhong Pharmaceutical's OTC business revenue was 1.55 billion yuan, down 10.14% year-over-year.

Jiangzhong Pharmaceutical acknowledged that in the first half of 2025, the "Consensus on Drug Listing Rules for Provincial Medical Procurement Platforms" was introduced, highlighting cross-regional price comparison pressures faced by traditional retail channels. Meanwhile, the widespread adoption of real-time price comparison functions on online platforms further compressed product pricing space.

With classic products under growth pressure, developing new products becomes crucial. However, insufficient R&D investment is a common situation faced by OTC pharmaceutical companies. Jiangzhong Pharmaceutical's R&D investment in 2024 was 130 million yuan, accounting for less than 3% of revenue and decreasing 7.77% year-over-year. At this time, external mergers and acquisitions obviously become a more realistic choice for Jiangzhong Pharmaceutical.

The acquired Jingcheng Huiyao, formerly the Bengbu Traditional Chinese Medicine Factory and Fukang Pharmaceutical established in 1968, has flagship products including Liuwei Dihuang Oral Liquid, Naoliling Syrup, Zaoshen Mixture, and Shenling Gejie Mixture, among other tonic products. Its products are distributed across more than 40 countries and regions worldwide, with exports to the Middle East, Africa, South Asia, and Southeast Asia.

According to RPDB pharmaceutical retail database and China Pharmaceutical Industry Information Center data, in the first half of 2025, tonic medications achieved sales of 12.394 billion yuan in retail pharmacies, with a market scale far exceeding cardiovascular and cerebrovascular disease medications (8.286 billion yuan) and cold medications (8.283 billion yuan).

In recent years, Jiangzhong Pharmaceutical has also been expanding into the tonic field, developing health consumer products such as Shenlingcao and Ganchun Tablets. In the first half of 2025, although its health consumer products segment revenue was only 228 million yuan, it showed significant growth of 21.41% - these data confirm the considerable incremental space in the tonic track.

**Buying and Selling Simultaneously: China Resources Group's Intensive Asset Reorganization in 2025**

While announcing its planned acquisition of Jingcheng Huiyao, Jiangzhong Pharmaceutical is accelerating optimization of its assets.

First, capital reduction for "slimming down." Accelerating the transfer of Sanghai Pharmaceutical, a subsidiary it previously controlled with an investment of 164 million yuan. Jiangzhong Pharmaceutical will jointly with another shareholder, Sanghai Technology, transfer their combined 100% stake in Sanghai Pharmaceutical through public listing.

To improve transfer success rates and accelerate disposal progress, Jiangzhong Pharmaceutical will conduct a capital reduction of 19.8917 million yuan for Sanghai Pharmaceutical (maintaining Jiangzhong Pharmaceutical's shareholding ratio unchanged), reducing Sanghai Pharmaceutical's registered capital from 51.0155 million yuan to 12.0155 million yuan.

Second, controlled subsidiary Jisheng Pharmaceutical will internally absorb and merge Sangji Project Company. This changes from the original plan of externally listing and transferring 100% equity in Sangji Project Company to Jisheng Pharmaceutical absorbing and merging Sangji Project Company.

After the absorption and merger is completed, Jisheng Pharmaceutical will continue operations, while Sangji Project Company will be legally cancelled, with all its assets, creditor rights, and debts legally inherited by Jisheng Pharmaceutical.

In 2024, Jisheng Pharmaceutical achieved revenue of 668 million yuan and net profit of 29.22 million yuan. Sanghai Pharmaceutical had revenue of only 6.91 million yuan and net profit of 2.5 million yuan. By the first half of 2025, Jisheng Pharmaceutical achieved revenue of 203 million yuan and net profit of 5.87 million yuan, while Sanghai Pharmaceutical did not disclose data.

In January this year, a Jiangxi Provincial Drug Administration announcement showed that Sanghai Pharmaceutical continued production suspension due to "internal company reasons," with the suspension period from December 31, 2024, to October 25, 2025.

Industry analysts point out that Jisheng Pharmaceutical and Sanghai Pharmaceutical have many similarities in business operations, making their coexistence unnecessary and intensifying internal competition. From Jiangzhong Pharmaceutical's disposal results, it retained the more profitable Jisheng Pharmaceutical while accelerating divestiture of the operationally pressured Sanghai Pharmaceutical.

Behind asset disposals are often corporate trade-offs between companies with different performance based on industry development trends. According to industry analysis, since 2025, China Resources Group's asset buying and selling activities have been quite frequent, with the main logic being to focus on high-value tracks while divesting low-value assets.

China Resources Group's strategic choices and asset integration in the pharmaceutical field also represent a microcosm of accelerated consolidation in the pharmaceutical industry.