Changchun High-Tech Industry (Group) Co., Ltd., once a star stock, has recently submitted an application for overseas listing (H-shares) to the Hong Kong Stock Exchange.

Since 2021, the stock price of Changchun High-Tech has experienced a continuous decline, with a drop of over 70% to date. The substantial decline in stock price is attributed to its core product, growth hormone, being included in centralized procurement in several provinces, which led to a significant decrease in pricing. As a result, the company reported its first decline in both revenue and net profit in nearly 20 years in 2024, a trend that has continued into the first half of 2025.

As of October 15, Changchun High-Tech closed at 127.16 yuan per share, with a latest market capitalization of 51.9 billion yuan.

For the first time in nearly 20 years, both revenue and net profit saw a simultaneous decline in 2024. The company achieved operating revenue of 13.466 billion yuan, a year-on-year decrease of 7.55%, and a net profit of 2.583 billion yuan, down 43.01%. This negative trend persisted into the first half of 2025, with operating revenue of 6.603 billion yuan, a 0.54% year-on-year drop, and a net profit of 983 million yuan, down 42.85%.

The gross profit margin for Changchun High-Tech's pharmaceuticals decreased from 91.6% in 2022 to 88.6% in the first half of 2025.

From 2022 to the first half of 2025, the gross profits of its two core subsidiaries, Jinsai Pharmaceutical and Baike Biological, declined significantly, with Jinsai dropping from 93.5% to 90.9%, and Baike from 87.2% to 78.4%.

In terms of cash flow from operating activities, the net cash flow decreased by 39.18% in 2024, continuing to drop by 38.25% in the first half of 2025.

The core products are facing significant market impact, and the performance of new growth points is underwhelming. Currently, the two main businesses of Changchun High-Tech are the growth hormone from Jinsai Pharmaceutical and the vaccine business from Baike Biological. Jinsai Pharmaceutical contributes the majority of the company’s revenue and profit. However, the poor financial performance reflects the market challenges facing these core businesses.

In 2024, Jinsai Pharmaceutical reported revenues of 10.671 billion yuan, a decline of 3.73%, and net profit of 2.678 billion yuan, down 40.67%. In the first half of 2025, its revenue rose by 6.17% to 5.469 billion yuan, while net profit fell by 37.35% to 1.108 billion yuan.

Since 2022, growth hormones have been gradually included in centralized procurement in multiple provinces, leading to a sharp drop in product prices. Additionally, competitors like Tebao Biological have gained approval to market similar products, disrupting the market monopoly.

According to the prospectus for Changchun High-Tech's Hong Kong listing, as of the last actual feasible date, their SaiZeng powder injections were affected by centralized procurement in Hainan, Henan, Guangdong, Shanxi, Xinjiang, Qinghai, Fujian, Zhejiang, Yunnan, and Hebei. Furthermore, a specific specification of the SaiZeng water injection (2IU pre-filled type) was influenced by similar procurement in Zhejiang and Yunnan. It is anticipated that the centralized procurement initiatives will continue to affect the company’s product portfolio, with the extent depending on the speed and scope of policy expansion.

As the growth hormone business faces severe challenges, the cultivation of new growth points is also hindered, with Baike Biological underperforming. In 2024, Baike Biological achieved revenues of 1.229 billion yuan, a 32.64% year-on-year decline, and net profit of 232 million yuan, down 53.67%. In the first half of 2025, revenues dropped by 53.93% to 285 million yuan, incurring a loss of 74 million yuan.

On the other hand, Changchun High-Tech's innovative drugs are still in the early stages of research and development, facing substantial uncertainty. Its international expansion is also in the nascent stages, with overseas revenues of only 130 million yuan in 2024, accounting for merely 0.97%, and just 1.13% in the first half of 2025.