The Hong Kong stock market's biopharmaceutical sector has experienced a long-awaited upward trend. Leading stocks like BeiGene and Hansoh Pharma have seen their share prices climb steadily. Seizing this golden window of opportunity, A-share STAR Market pharmaceutical company Youcare Pharmaceutical Group Co.,Ltd. (688658.SH) has quietly pressed the "accelerator button" for its Hong Kong listing.

By the end of 2025, Youcare Pharmaceutical submitted its listing application to the Hong Kong Stock Exchange, planning a dual primary listing on the main board, with CITIC Securities acting as the sole sponsor. This company, with a total market capitalization of approximately 12 billion yuan, is deeply mired in the pains of transition: revenue and net profit have declined for three consecutive years from 2022 to 2024, and it even shifted from profit to loss in the first seven months of 2025. Its core product, Youcare Tong, has seen both volume and price drop, causing the revenue contribution from its cardiovascular business to plummet from 61% to 39%.

Paradoxically, despite performance pressure and tightening cash flow, the company still distributed cumulative dividends exceeding 890 million yuan from 2022 to 2024. The controlling shareholder, the Yu Weishi family, with 49.26% of the voting rights, received nearly half of this amount. The trade-offs and ambitions behind this "A+H" listing sprint have attracted widespread market attention.

In its current push for a Hong Kong listing, Youcare Pharmaceutical aims to replenish its capital through fundraising, betting heavily on innovative pipelines like oligonucleotide drugs and mRNA vaccines. However, is this fundraising journey a critical step towards a transformative breakthrough, or merely a desperate move under performance pressure?

Youcare Pharmaceutical's development trajectory serves as a microcosm of the transformation within China's pharmaceutical industry. Since its founding in 2001, the company started with generic chemical drugs. Leveraging established products like Youcare Tong (Ginkgo Biloba Extract Injection) and Liweike (Omeprazole Enteric-Coated Capsules), it quickly captured hospital channel markets, with cardiovascular products contributing over 60% of revenue at its peak.

However, amid the dual industry shifts of "normalized volume-based procurement" and "accelerated innovation transition," profit margins for generic drugs have been continuously squeezed, forcing Youcare Pharmaceutical to accelerate its突围 into innovative drug领域.

The company has built a dual-track pipeline combining "in-house R&D" and "licensed-in" assets, covering 11 oligonucleotide drugs, 2 mRNA vaccines, 3 peptide drugs, and 3 innovative traditional Chinese medicine (TCM) drugs, targeting core therapeutic areas like cardiovascular metabolism, infectious diseases, and oncology.

Judging by its布局, Youcare Pharmaceutical is attempting to position itself in cutting-edge technological fields to avoid the bloody competition of traditional innovative drugs. Among these, the licensed-in innovative TCM drugs YKYY001, YKYY002, and YKYY006 are expected to gain approval and launch in the first quarter of 2026, potentially becoming the first innovative products to contribute revenue.

But the reality is that most innovative pipelines are still in early-stage R&D, with a long cycle remaining before commercialization, making it difficult to offset the decline in generic drug业务 in the short term. This predicament—where the old business drags performance down while the new business's benefits are too distant—is the core矛盾 facing Youcare Pharmaceutical.

In the first seven months of 2025, the company's R&D expenditure increased to 238 million yuan, while sales expenses soared to 357 million yuan. However, this innovation investment has not yet translated into actual profits, instead further exacerbating profitability pressures.

Youcare Pharmaceutical's listing prospectus exposes multiple underlying operational concerns. On the revenue side, sales fell continuously from 4.521 billion yuan in 2022 to 3.767 billion yuan in 2024, and plummeted 39.4% year-on-year to 1.304 billion yuan in the first seven months of 2025.

On the profit side, net profit dropped from 339 million yuan in 2022 to 121 million yuan in 2024, with a net loss of 146 million yuan recorded in the first seven months of 2025. Gross profit margin also declined yearly from 63.5% to 45.7%, indicating a持续 weakening of profitability.

The slowdown of core products is a key driver. As the former revenue pillar, Youcare Tong faces dual pressures from intensifying market competition and policy adjustments, leading to simultaneous declines in price and sales volume, which directly caused a sharp contraction in cardiovascular business revenue.

Furthermore, the company's inventory turnover days extended from 151.6 days in 2022 to 195.3 days in the first seven months of 2025, reflecting issues with product sell-through and inventory buildup.

More notably is the deterioration in cash flow. By the end of July 2025, cash and cash equivalents had decreased to 875 million yuan, down 30% from the end of 2024. Net cash flow from operating activities turned negative, recording -27.322 million yuan, indicating a significant decline in its造血 capability.

However, against this backdrop of declining performance and tightening cash flow, Youcare Pharmaceutical's dividend policy has sparked market controversy. From 2022 to 2024, the company distributed cumulative dividends of 890 million yuan to shareholders, with the 2023 dividend alone reaching 495 million yuan, far exceeding that year's net profit of 187 million yuan.

As the controlling Yu Weishi family collectively holds 49.26% of the voting rights, nearly half of these dividend payments flowed into the family's pockets. This practice of "generous dividends despite falling profits" has raised questions about whether it harms the company's long-term development interests, especially during a critical转型 period requiring substantial funding for innovative R&D.

Choosing to sprint for a Hong Kong listing at the end of 2025 makes Youcare Pharmaceutical's core objective evident: fundraising to replenish capital. According to the prospectus, IPO proceeds will be primarily used for innovative drug R&D, production facility construction, and supplementing working capital, directly addressing the company's current funding pressures and转型 needs.

From an industry perspective, the recovery of Hong Kong's biopharmaceutical sector in 2025 provides a favorable listing window for Youcare Pharmaceutical. With optimizations to the HKEX's Chapter 18A rules and a re-rating of innovative drug valuations, market acceptance of quality biopharmaceutical firms has significantly improved. The rising share prices of companies like BeiGene also provide a valuation reference for Youcare Pharmaceutical.

Additionally, a Hong Kong listing could help Youcare Pharmaceutical achieve two key goals: first, broadening financing channels to reduce reliance on the A-share market alone, providing a stable funding source for long-term R&D. Second, leveraging the international platform of the HKEX to enhance brand influence, laying the groundwork for future overseas expansion of innovative drugs and international cooperation.

But this listing gamble carries inherent risks. Firstly, Hong Kong investors apply stricter valuation logic to innovative drug companies. Youcare's current innovative pipeline lacks a商业化梯队, and its core product growth is weak, raising doubts about market acceptance.

Secondly, pharmaceutical R&D involves high investment, long cycles, and significant risk. Even with successful fundraising, if innovative product development falls short of expectations or post-launch sales miss targets, the company could still face持续 performance pressure.

Finally, valuation disparities and liquidity differences between the A-share and Hong Kong markets could lead to a situation of "dual listing but valuation inversion."

For investors, the core investment value of Youcare Pharmaceutical hinges on three points: first, whether the three innovative TCM drugs nearing approval can successfully launch and achieve significant sales volume. Second, whether R&D progress for前沿 pipelines like oligonucleotides and mRNA can exceed expectations. Third, whether the company can effectively control sales expenses, improve its profit structure, and rebuild its造血 capability.

From an industry perspective, Youcare Pharmaceutical's转型 path is one that many Chinese generic drug companies must navigate. Under the industry trends of normalized volume-based procurement and innovation-driven growth, only those enterprises capable of sustained R&D investment, building core technological moats, and balancing short-term performance with long-term development will emerge successfully from the转型浪潮.

Youcare Pharmaceutical's journey to a Hong Kong listing is about to begin. But will the destination be the dawn of an innovative breakthrough, or merely a continuation of performance pressures? The answer may only be revealed when its innovative pipelines truly achieve commercialization.