Luoxin Pharmaceuticals' recent announcement regarding the transfer of its controlling subsidiary has drawn significant market attention. The company plans to sell 100% equity of its subsidiary Lekang Pharmaceutical for 62.5 million yuan to Junkang Biotechnology, an entity established just two years ago with a registered capital of only 200,000 yuan. Notably, as of September 30, 2025, Lekang Pharmaceutical's net assets stood at 73.2383 million yuan, making the transaction price significantly lower than its net asset value.
This "low-price sale" not only highlights the operational difficulties of the target company, including continuous losses and asset shrinkage, but also reflects the complex situation Luoxin Pharma faces as it frequently divests assets to reverse losses amid growing debt pressure. Concerns over the weak qualifications of the counterparty, questionable business relevance, and the recovery of historical receivables further cast a shadow over this transfer.
The target of this transfer, Lekang Pharmaceutical, was established in 2018 with a registered capital of 420 million yuan and a paid-in capital of 379 million yuan. However, its operational performance has continuously deteriorated: it reported a net loss of 143 million yuan in 2024, followed by an additional loss of 14.4473 million yuan in the first three quarters of 2025. Its asset scale also contracted from 132 million yuan at the end of 2024 to 120 million yuan by the end of September 2025.
It is noteworthy that when Luoxin Pharma first disclosed its intention to sell via listing in November 2024, the listing price was set at 190 million yuan. One year later, citing a failure to "identify qualified potential buyers," the company switched to a negotiated transfer, slashing the price sharply to 62.5 million yuan—a drop of 67%. The company explained this as a "fair price determined after comprehensive consideration of net assets and debt levels," yet this has done little to dispel market suspicions of an "asset fire sale."
Even more concerning is the acquirer—Junkang Biotechnology. Established in July 2023 with a mere 200,000 yuan in registered capital, its business scope primarily includes biomass energy technical services and real estate leasing, which shows no obvious connection to Lekang Pharmaceutical's strictly regulated businesses like drug production, wholesale, and retail. Whether its legal representative and sole shareholder, Liu Huanting, can effectively take over and operate a pharmaceutical enterprise has become a major market worry.
Furthermore, after the transaction's completion, Lekang Pharmaceutical still owes 2.8005 million yuan in principal and interest to its original shareholder, Shandong Luoxin, which will "passively form an external financial assistance." The repayment schedule stipulates clearance only by October 2026. Although the transaction includes a guarantor, the limited strength of the acquirer casts uncertainty over the timely recovery of this receivable.
Lekang Pharmaceutical is not the only asset Luoxin Pharma has recently sold. In December 2025, the company also transferred a 20% equity stake in Luoxin Anruoweita Pharmaceutical (Chengdu) Co., Ltd. Earlier, in 2022, it sold a 70% stake in Shandong Luoxin Pharmaceutical Modern Logistics Co., Ltd. for 415 million yuan; however, as of July 2025, 26.3428 million yuan of the equity transfer payment remained unrecovered.
Behind these frequent "subsidiary sales" lies Luoxin Pharma's persistently pressured financial performance. Financial reports show that the company's net profit attributable to shareholders was negative for three consecutive years from 2022 to 2024, recording losses of 1.226 billion yuan, 661 million yuan, and 965 million yuan, respectively. The 2024 loss expanded by 46.04% year-on-year, partly due to a 213 million yuan loss from changes in the fair value of contingent consideration related to subsidiary disposals and a 315 million yuan asset impairment loss.
The company admitted that the widening losses were related to increased market promotion expenses, underperformance of subsidiaries, and impairment provisions for Lekang Pharmaceutical. By shedding loss-making assets, the company finally returned to profitability in the first three quarters of 2025, posting a net profit attributable to shareholders of 22.9268 million yuan, a 108.64% year-on-year increase. However, this profit heavily relies on the sales volume growth of its core innovative drug, Tegoprazan tablets, and the sustainability of this performance remains to be seen.
Despite achieving profitability in the first three quarters of 2025, Luoxin Pharma's operating revenue still fell by 8.37% year-on-year, indicating weak growth momentum in its main business. Simultaneously, the company's debt pressure continues to climb: short-term borrowings increased from 742 million yuan at the start of the year to 970 million yuan, while long-term borrowings rose from 133 million yuan to 232 million yuan.
To alleviate funding pressure, the company proposed a private placement plan at the end of September 2025, aiming to raise up to 842 million yuan, primarily for innovative drug R&D, technical upgrades of active pharmaceutical ingredient workshops, and supplementing working capital. Although net cash flow from operating activities surged 272.42% year-on-year to 280 million yuan, the cash and cash equivalents balance at period-end was only 318 million yuan, indicating still-tight liquidity relative to the scale of short-term debt.
This low-price transfer of Lekang Pharmaceutical may allow the company to remove the loss-making asset from its books and optimize its financial statements in the short term. However, risks such as the weak strength of the counterparty, questionable business integration, and a prolonged receivables recovery period could pose future challenges. Striking a balance between "bleeding control" and sustainable development remains a critical task for Luoxin Pharma's management.