China National Accord Medicines Corporation Ltd. (SZSE: 000028) recently released its performance forecast for the first half of 2026, revealing a period of weakening financial health. The report shows total revenue of RMB 36.266 billion for the period, a year-on-year decrease of 1.44%, while net profit attributable to the parent company fell by 8.97% to RMB 606 million, with both top and bottom lines trending downward. The core pharmaceutical platform under Sinopharm Group is now facing the dual challenge of a dragging retail segment and concerns over the substance of its earnings.

Paper Profits "Inflated" and the Retail Segment's Deep-Rooted Woes

Looking back at the 2025 annual report, China National Accord Medicines had posted seemingly impressive results, with full-year net profit attributable to the parent surging 76.80% year-on-year to RMB 1.136 billion. However, this high growth was not driven by improvements in core operations; the primary factor was a significant contraction in asset impairment provisions. In 2024, due to setbacks in the retail business, the company booked RMB 970 million in goodwill and intangible asset impairments, which directly eroded net profit attributable to the parent by RMB 561 million. In 2025, this impairment figure plummeted to RMB 284 million, essentially creating a profit rebound by reducing the "bleeding."

As the company's core retail vehicle, Guoda Pharmacy had previously relied on acquisitions to achieve its scale of over 10,000 stores. Starting its national acquisition push in 2010, it continuously integrated local pharmacy chains, spending RMB 1.86 billion in 2020 to acquire Liaoning Chengda Fangyuan. By 2023, its store count surpassed 10,000, establishing it as a central state-owned enterprise-backed pharmacy giant. However, following the implementation of centralized procurement and outpatient coordination policies, the drawbacks of the previous rapid, land-grab expansion model have erupted. In 2023, Guoda Pharmacy's revenue and net profit were still at high levels, but by 2024, the situation took a sharp turn for the worse, with operating revenue of RMB 22.357 billion and a net loss of RMB 1.104 billion. The company subsequently launched a large-scale store closure campaign to stem the losses, shutting down over 1,270 directly-operated stores in 2024 and another 1,140 in 2025, reducing its store count from over 10,000 to 8,221. However, the continued closures have not quickly reversed the decline. In the first half of 2026, Guoda Pharmacy's net profit still fell by nearly 20%, making it the primary drag on the listed company's performance. The historical goodwill burden left by rapid acquisitions remains a risk hanging over the company. If the retail business fails to see a substantial recovery, the possibility of further impairment charges in the future persists, injecting uncertainty into future profits.

Management Overhaul and the Growing Pains of Reform

Amidst performance pressure, China National Accord Medicines is also undergoing a wide-ranging internal reshuffle, with key positions including the Chairman, General Manager, Deputy General Managers, and Independent Directors experiencing successive changes. In March 2026, Wang Chu, the Deputy General Manager overseeing commercial sales, resigned, and the company simultaneously appointed three new Deputy General Managers from Sinopharm Holding Guangzhou Company. In June, Independent Director Li Honghai resigned, and in August, the shareholders' meeting elected Xue Lei as the new Independent Director. In July, Guoda Pharmacy completed a leadership change, appointing Lai Weifeng, who has regional cost-control experience, as Party Secretary and Chairman to take on the governance of the retail segment. These frequent personnel adjustments reflect, on one hand, the company's desire to use a management refresh to drive loss remediation and reverse the retail business's decline. On the other hand, the concentrated changes in core management also carry uncertainties regarding strategic alignment and execution continuity. The new management team faces multiple tasks, including clearing out loss-making stores, optimizing the supply chain, and improving per-store profitability, and the effectiveness of these reforms will take time to verify.

The current environment for the pharmaceutical retail industry has not improved. Outpatient coordination policies are diverting customers away from pharmacies, industry competition is intensifying, and online pharmaceutical channels continue to squeeze the living space of offline brick-and-mortar pharmacies. Although Guoda Pharmacy has already divested loss-making assets through large-scale store closures, the data from the first half of 2026 suggests that the "stopping of the bleeding" is not yet complete. With sluggish growth in the distribution business in the Guangdong and Guangxi regions, compounded by the persistent drag from the retail segment, China National Accord Medicines will continue to face significant hurdles in restoring profitability.