Zhejiang Jingxin Pharmaceutical Co., Ltd. (referred to as “Jingxin Pharma”) recently submitted a listing application to the Hong Kong Stock Exchange, with CITIC Securities acting as the sole sponsor. This is not the company’s first use of capital markets to support business expansion. Since 2011, it has raised approximately 2.563 billion yuan through four private placements. The first placement in 2011 raised 453 million yuan, the second in 2014 raised 510 million yuan, the third in 2017 raised about 1.1 billion yuan, and the latest in 2021 raised approximately 500 million yuan.
Now, this frequent capital market participant is once again seeking financing, although its financial statements suggest the company is not short of funds. Annual reports show that a significant portion of its capital is held in bank wealth management products and structured deposits. While earning returns from these investments, Jingxin Pharma also distributed around 300 million yuan in cash dividends to shareholders in 2024, equivalent to 3.5 yuan per 10 shares. This combination of wealth management and dividends, alongside a new fundraising plan, raises questions about the necessity and rationality of the move.
On the one hand, the company holds 1.322 billion yuan in “financial assets at fair value,” all invested in bank financial products and structured deposits. In the first quarter of 2025, it redeemed 1.087 billion yuan in investments but promptly reinvested 524 million yuan in wealth management products, indicating that its financial focus remains on capital management rather than industrial investment or R&D expansion.
On the other hand, dividend payments have not slowed. In 2024, the company paid out approximately 300 million yuan in cash dividends. With substantial funds tied up in wealth management products and generous dividends being distributed, one may question why these resources are not being directed toward R&D or capacity expansion if the company genuinely requires capital for development.
It is worth noting that Jingxin Pharma has a history of frequent fundraising. Since 2011, it has conducted four private placements, raising a total of about 2.563 billion yuan. The most recent placement, completed in September 2021, was originally intended to fund two production capacity expansion projects. However, an employee stock ownership plan worth 100 million yuan was later canceled, leaving only Jingxin Holdings, controlled by chairman Lü Gang, subscribing to the 500 million yuan offering. Given such frequent fundraising and persistent high levels of wealth management activity, doubts arise as to whether the company is raising capital for genuine development or for financial engineering purposes.
On the business side, Jingxin Pharma’s revenue primarily comes from generic drugs, active pharmaceutical ingredients, traditional Chinese medicines, biologics, and medical devices. In 2024, these segments accounted for 45%, 21%, 15.1%, and 16.5% of total revenue, respectively.
In today’s pharmaceutical capital market, companies like Jingxin Pharma face a peculiar dilemma: they are profitable, have stable product lines, and healthier cash flows than many innovative drug firms, yet their valuations remain subdued due to the “generic drug” label. As volume-based procurement becomes routine, profit margins for generics continue to shrink, forcing companies to rely on higher sales volumes to maintain revenue. However, higher volumes do not necessarily translate to stronger pricing power, turning the generic drug business into an increasingly challenging endeavor.
In the Hong Kong stock market, where innovative drug stories dominate, continuing as a generic drug cash cow may ensure stability but will likely result in mediocre valuations. For a company seeking to relist in Hong Kong and reshape its capital market image, this is far from ideal. Jingxin Pharma is eager to rebrand itself as an innovative player to escape the low-valuation trap associated with generic drugmakers.
However, data suggests the company still has a long way to go in its innovation transformation. First, R&D investment intensity remains insufficient. In 2024, R&D expenses amounted to 383 million yuan, representing an R&D expense ratio of about 9.2%. In the same period, sales expenses reached 692 million yuan, highlighting a persistent “heavy marketing, light R&D” approach.
Second, the company’s much-touted innovative pipeline faces challenges of immaturity and obsolescence. Jingxin Pharma’s core innovation narrative revolves around two products: Edivoxetine (Jingnuoning), a Class 1 new drug for insomnia, and JX2201, a cardiovascular drug targeting Lp(a).
Edivoxetine, a benzodiazepine-class sedative-hypnotic drug, was approved in China in November 2023 and included in the National Reimbursement Drug List in November 2024. While it offers certain advantages in reducing side effects compared to traditional benzodiazepines, it faces intense competition from newer mechanisms such as orexin receptor antagonists. In May 2025, Eisai’s lemborexant was approved in China, followed by daridorexant, introduced by Simcere Pharmaceutical Group, in June 2025. With competitors already advancing to next-generation mechanisms, Edivoxetine risks being perceived as outdated shortly after its launch.
Despite its inclusion in the reimbursement list, Edivoxetine’s contribution has so far been limited. In the first three quarters of 2025, the company’s revenue declined by 5% year-on-year to 3.048 billion yuan, marking the first revenue drop in nearly five years. This suggests that the new drug’s incremental revenue has not yet offset the decline in older products, indicating that its role as a new growth driver remains unproven.
As for JX2201, no Lp(a)-targeting drug has been approved globally to date. The drug is currently in Phase I clinical trials in China, with completion expected in the first quarter of 2026. Its eventual success and commercialization timeline remain highly uncertain.
In an investment climate increasingly focused on value logic and execution, it remains to be seen whether Jingxin Pharma, still in the early stages of its innovation transition, can gain market recognition and establish a foothold in a highly competitive and rapidly evolving industry.