Hunan Nucien Pharmaceutical Co., Ltd. (688189) recently disclosed its 2025 performance forecast, revealing a challenging financial year. The forecast indicates full-year operating revenue of 142 million yuan, a sharp decline of 46.09% compared to the previous year, while net profit attributable to shareholders showed a loss of 137 million yuan. Although this represents a significant reduction in losses from 2024, the company remains unprofitable, highlighting ongoing operational difficulties.
The company gained recognition as the developer of China's first independently developed anti-influenza innovative drug, Peramivir Sodium Chloride Injection. In its first year on the market in 2020, the drug generated impressive revenue of 1.029 billion yuan and a net profit of 128 million yuan, positioning the company as a promising player in the pharmaceutical sector. However, this success proved short-lived. Since 2021, the company's performance has been volatile, with losses recorded in 2021 and 2022, a brief return to profitability in 2023, and a return to losses in 2024 and 2025.
Despite emphasizing efforts to improve operations through cost reduction, efficiency enhancements, and optimized impairment provisions, core data suggests these measures have not fundamentally reversed the operational decline. Deeper issues, including the diminished performance of its core product, challenges in transitioning its business, and compliance pressures, are becoming increasingly apparent behind the numbers in the performance forecast.
The root of the company's troubles lies in the declining contribution of its former flagship product, Peramivir Sodium Chloride Injection, which can no longer support the company's revenue needs. A narrow product pipeline has left the company struggling to find new growth drivers after its core product lost market dominance.
The drug's market exclusivity period ended on April 4, 2018, after which generic manufacturers entered the market, rapidly turning competition from a blue ocean into a red ocean. By April 2025, there were 32 approved versions of Peramivir Injection in China, involving several major pharmaceutical companies, directly squeezing the company's market share.
In an attempt to maintain market share, the company adopted a strategy of reducing prices to boost volume. It cut the price of Peramivir Sodium Chloride Injection by 43.51% in 2023 and adjusted prices again in 2024. Following the 2023 price cut, sales volume initially increased from 4.39 million units to 11.24 million units, and sales revenue grew from 462 million yuan to 667 million yuan. However, in 2025, lower-than-expected influenza incidence during the first three quarters led to weak demand for anti-flu products. Sales of Peramivir fell short of expectations, resulting in a vicious cycle of declining both price and volume, which continued to erode gross profit margins. The company's overall gross margin dropped from 52.00% in the first quarter of 2025 to 33.44% in the third quarter.
The company's over-reliance on a single core product has not been adequately addressed through timely adjustments to its product portfolio. Its main products are concentrated in the anti-influenza sector, including Peramivir Sodium Chloride Injection and Oseltamivir Phosphate Dry Suspension, leaving it without new growth drivers to support performance. Although the company mentioned maintaining high research and development investment, with a Peramivir inhalation solution entering Phase 3 clinical trials and a Phase 2 trial for Hydrochloride Mefunidone tablets completing patient enrollment, these projects are unlikely to contribute meaningfully to revenue in the short term, unable to fill the gap left by the declining core product.
Compounding the problem, high R&D expenditures are further depleting financial reserves amid declining revenue, creating a cycle where increasing revenue is difficult and reducing losses is challenging. Financial data shows that as of September 30, 2025, the company's total assets were 1.034 billion yuan, a decrease of 15.42% from the end of 2024.
In response to its core product's decline, the company attempted to diversify through an external acquisition to create new growth avenues and enhance its product pipeline. However, this high-stakes transformation effort ended in failure, exacerbating financial pressures and damaging market confidence. Concurrently, weak internal financial controls and an investigation into suspected information disclosure violations have brought additional scrutiny, creating a dual crisis of funding and trust.
In August 2025, the company announced a plan to acquire assets related to a multi-trace elements injection from Future Pharmaceutical for up to 480 million yuan in cash. The acquisition was intended to diversify the product portfolio and strengthen its presence in anti-infectives, chronic disease management, and nutritional support. However, the feasibility of the deal was questionable from the start, given the company's cash balance of 439 million yuan as of the end of June 2025. Acquiring the assets would have nearly exhausted its cash reserves, putting significant strain on its financial chain.
The acquisition was terminated on September 30, 2025, just 35 days after its announcement, due to an inability to agree on core terms. Subsequently, the same asset group was acquired by Zuoli Pharmaceutical in December 2025 for 356 million yuan, a price lower than what the company had offered. This outcome highlighted the company's weak negotiating position and the rushed nature of its transformation strategy, causing it to miss a key opportunity to diversify its pipeline.
Amid the failed acquisition, financial pressures continued to mount. To alleviate liquidity constraints, the company resorted to measures such as publicly listing for transfer a portion of its subsidiary's accounts receivable in February 2026. As of the assessment date of September 30, 2025, the book balance of these receivables was 489.784 million yuan, but after provisions for bad debts of 459.7945 million yuan, their net book value was only 29.9895 million yuan. While this move may provide short-term cash relief, it underscores severe challenges in collecting receivables and insufficient liquidity.
More critically, compliance issues have continued to develop. In April 2025, the company announced corrections to prior accounting errors, acknowledging insufficient conditions for recognizing certain sales revenue at the end of December 2023. It adjusted downward that year's revenue by 24.5397 million yuan, representing 3.4% of its annual operating revenue, revealing weaknesses in financial controls.
Furthermore, due to suspected violations in annual report information disclosure, the company received a formal investigation notice from the China Securities Regulatory Commission on September 30, 2025. The investigation is ongoing, and since its announcement, the company's operations and financing activities have faced restrictions. Investor claims for compensation have also begun, with the resolution dependent on the final outcome of the regulatory investigation.
In an effort to reverse its performance decline, the company recently completed a management change, appointing Chen Jianxu as General Manager. It is also持续推进 cost-cutting and efficiency measures, with full-year sales and administrative expenses showing a significant decrease compared to the previous year. However, these initiatives are still in early stages, and their effectiveness remains unproven.
As consolidation in the pharmaceutical industry accelerates and centralized procurement policies deepen, the survival space for small and medium-sized pharmaceutical companies is narrowing. Only firms with core technology, diversified product pipelines, and robust internal control systems are likely to withstand competitive pressures. For the company, multiple challenges—including a declining core product, failed transformation attempts, compliance pressures, and financial constraints—are intertwined. Achieving a turnaround will require not only accelerating the development of pipeline projects and diversifying its product offerings but also strengthening financial controls, resolving compliance risks, and alleviating funding pressures.