Fosun Pharma (600196.SH; 02196.HK) has drawn regulatory scrutiny after its controlling subsidiary announced plans to acquire a 53% stake in Shanghai Green Valley Pharmaceuticals (Green Valley) for approximately RMB1.412 billion ($200 million). The deal would transfer ownership of the controversial Alzheimer's drug Sodium Oligomannate (GV-971, marketed as "Nine One" or "971"), which has been out of production for over a year.
The Shanghai Stock Exchange issued a regulatory inquiry letter following the December 15 announcement. Fosun Pharma described this as a "routine exchange inquiry" without further comment.
Green Valley reported net assets of just RMB10.36 million as of September 30, raising questions about the acquisition's valuation. The drugmaker posted a RMB67.61 million net loss in the first three quarters of 2025, with total liabilities reaching RMB795 million against RMB1.02 billion in revenue.
GV-971, conditionally approved in 2019 for mild-to-moderate Alzheimer's, was China's first domestically developed neurological drug to receive priority review. However, production halted in November 2024 when its registration certificate expired without renewal, after the company failed to complete required post-market confirmatory studies.
Fosun Pharma stated the acquisition aligns with its strategy to strengthen its central nervous system portfolio. The company plans to invest RMB685 million in domestic Phase III trials and may pursue international multicenter studies later.
The deal has sparked debate among industry observers. Lin Xianping, deputy secretary-general of China Urban Expert Think Tank, noted that while the premium valuation appears inconsistent with current market emphasis on cash flow discipline, it reflects strategic considerations in pharmaceutical innovation. "For companies facing pipeline gaps, paying premiums for assets with unique market potential may represent calculated risk-taking," Lin said.
GV-971's unconventional "gut-brain axis" mechanism—targeting intestinal microbiota to reduce brain inflammation—has faced scientific skepticism since its approval. In 2022, prominent scientist Rao Yi publicly questioned the drug's mechanism and Green Valley's decision to terminate its global Phase III trial, citing pandemic-related challenges.
Despite controversies, GV-971 was included in China's national reimbursement drug list in 2021, reducing its price from RMB895 to RMB296 per box. Fosun Pharma's acquisition now places the drug's future in its hands, as the healthcare conglomerate seeks to expand its innovative drug pipeline amid slowing growth in its core businesses.
Fosun Pharma reported RMB29.39 billion in revenue for the first three quarters of 2025, down 4.91% year-on-year, though net profit rose 25.5% to RMB2.52 billion. The company attributes the revenue decline to China's volume-based procurement policy impacts, offset by 18.09% growth in innovative drug sales.
Industry analysts suggest the acquisition represents a high-risk bet on China's growing Alzheimer's market, projected to reach RMB1.47 billion in 2024 according to IQVIA data, compared to global sales of $2.09 billion. Zhang Xinyuan, research director at Kfounder Think Tank, noted that such "potential premiums" ultimately depend on clinical validation and commercial execution.
As of December 19, Fosun Pharma's A-shares closed at RMB27.27, up 2.21%, with a market capitalization of RMB72.82 billion.