Pharmaceutical commercial enterprises have often been "invisible" in the secondary market. In the final month of 2025, these companies captured significant attention—HeFu China emerged as a stock tied to the concept of cross-strait unification, with its share price climbing steadily, driven by gains detached from its fundamentals, making other pharmaceutical commercial companies envious. Similarly, companies like LuYan Pharmaceutical, RenMin TongTai, and HuaRen Health became "influenza concept stocks," while SaiLi Medical (Rights Protection) was labeled an "AI healthcare + innovative drug" concept, all experiencing substantial stock price surges in 2025. However, aside from price fluctuations triggered by specific events, pharmaceutical commercial companies typically languish in obscurity within the secondary market for most of the time. Compared to innovative drug and medical device firms, the common industry traits of pharmaceutical commercial companies include low gross and net profit margins, high asset-liability ratios, long account settlement periods, and modest earnings growth, offering limited room for imagination. These characteristics have resulted in not a single listed company within the pharmaceutical commercial sector achieving a market capitalization exceeding 100 billion yuan; even Shanghai Pharmaceuticals, the highest-valued player, relies on its pharmaceutical manufacturing division to unlock potential for valuation upgrades. The majority of these companies have market caps below 30 billion yuan, with some persistently hovering under 10 billion, effectively becoming "small transparent" entities in the secondary market.
Objectively speaking, pharmaceutical commercial companies operate at the downstream end of the entire pharmaceutical industry chain, engaging in various business types such as circulation, distribution, hospital access, wholesale, retail, SPD (Supply, Processing, Distribution), and online sales. Large conglomerate-style pharmaceutical commercial companies have diverse shareholder backgrounds, which dictates their specialized domains and regional strengths. Those controlled by central state-owned enterprises (SOEs) typically handle massive business volumes, often penetrating major first and second-tier cities nationwide, exemplified by China National Medicines Corp./China National Accord Medicines (China National Pharmaceutical Group system), China Meheco/Chongqing Pharmaceutical (Genertec system), and Cashway (Everbright system).
State-owned capital-controlled pharmaceutical commercial companies, like Shanghai Pharmaceuticals with its 200 billion yuan revenue scale, stand in a league of their own among A-share listed pharmaceutical firms. Approximately 90% of its revenue stems from commercial operations—distribution, retail, etc.—yet, although the industrial segment contributes only about 10% of the business volume, it accounts for the majority of net profit. In terms of business scale, excluding Zhejiang Zhenyuan which focuses on the Zhejiang region, other state-owned pharmaceutical commercial companies all boast revenues exceeding 10 billion yuan, highlighting the significant operational support from their major shareholders. Regarding net profit margins and asset-liability ratios, there is considerable variation among companies. Due to needs like "account period differentials" and "inventory stockpiling," most pharmaceutical commercial companies maintain asset-liability ratios above 50%, requiring flexible capital management to sustain their vast operational scales.
Jiuzhoutong is the only privately-backed pharmaceutical commercial company with revenues surpassing 100 billion yuan, holding a commanding lead over the second and third-ranked players. Given the high similarity in certain business operations, privately-owned pharmaceutical commercial companies exhibit net profit margins and asset-liability ratios largely comparable to their state-owned counterparts. The key distinction lies in the more conservative operational strategies and internal risk controls of state-owned companies, which almost never experience annual operating losses or asset-liability ratios exceeding 80%.
The operational philosophy and business evaluation logic for retail pharmacy chains differ entirely from those of pharmaceutical circulation/distribution companies. Pharmacy chains emphasize regional concentration in their business approach, unlike the nationwide expansion strategies of circulation/distribution firms. Recently, pharmacy chains have entered a wave of store closures, marking the end of the era of rapid territorial expansion; future focus shifts towards refined operations. Companies like Yifeng Pharmacy and LaoBaiXing are rooted in Hunan, while YiXinTang and JianZhiJia originated in Yunnan, and DaSenLin has a strong presence in the Pearl River Delta. These chains exhibit strong business clustering effects within their home provinces, making it difficult for competitors from other regions to capture their market share. Overall, pharmacy chains demonstrate higher net profit margins compared to pharmaceutical circulation/distribution companies, attributable to their different end-consumer bases. Many public hospitals implement zero markup drug pricing, and centralized procurement and医保 negotiations have made drug prices fully transparent, leaving little room for price variation for hospital-admitted drugs. In contrast, pharmacy chains have flexibility in adjusting both purchase prices and final retail prices, securing relatively higher net profit margins. However, similar to circulation/distribution companies, most pharmacy chains also maintain asset-liability ratios above 50%, testing their financial agility.
In September 2025, JianFa ZhiXin debuted on the A-share market. As a leader in the medical device distribution sector, it immediately attracted strong investor interest, with its stock price surging 418% on the first day of trading. Since the overall market size for medical devices is smaller than for pharmaceuticals, related commercial companies in this segment show similar performance patterns. JianFa ZhiXin is the only company with revenues breaking the 100 billion yuan mark, while several others even report losses. Despite being the top revenue performer, JianFa ZhiXin carries the highest asset-liability ratio in the sector. Businesses involving medical devices, IVD (In-Vitro Diagnostics), and SPD are arguably even more margin-compressed than pharmaceutical distribution, often described as earning "hard-won money." Finding promising device products and adjusting business strategies through equity investments or M&A integration might represent new pathways forward. Additionally, BaiYang Pharmaceutical, originating from Shandong, and YaoYiGou, from Sichuan, represent the most unique entities among pharmaceutical commercial companies. These firms cannot be simply categorized as pure-play pharmaceutical circulation/distribution/pharmacy chains; they are better described as specialized pharmaceutical commercial companies building novel industrial ecosystems.
Looking ahead, pharmaceutical commercial companies can proactively seek breakthroughs and transformation in their traditional businesses. Future healthcare scenarios will undoubtedly emphasize "healthcare consumerization," "home-based diagnostics and treatment," and "convenient services." Companies should focus more on consumer healthcare, rehabilitation medicine, and chronic disease management. Products like CGM (Continuous Glucose Monitoring), fetal heart rate monitors, POCT (Point-of-Care Testing) kits, and home-use beauty devices hold vast market potential amid rising health consumption demands. Beyond devices, specialized medical foods, formula foods for specific dietary purposes, and health supplements are also key battlegrounds. Particularly for specialized medical products, currently limited to self-pay routes due to医保 reimbursement code constraints, strengthening market education and channel promotion, and recognizing their future commercial prospects, are crucial strategic pivots for these companies. Pharmacy chains should develop a matrix strategy combining retail pharmacies, internet hospitals, and online private domains. Physically, pharmacies need to be embedded within residential communities; psychologically, they must earn a place in patients' minds. Utilizing livestreaming, official accounts, and community groups can attract core users and members, especially in areas like consumer healthcare, rehabilitation, and chronic disease management where patients require long-term medication, necessitating enhanced customer loyalty. On another front, pharmaceutical commercial companies should fully leverage capital as a tool, collaborating with other GPs, LPs, and local state-owned capital to establish equity investment funds and M&A funds. As industry investors, they are adept at building platforms for translating scientific research achievements, providing R&D support, clinical trial assistance, and corporate governance resources to innovative companies at various lifecycle stages, thereby fostering innovation and commercialization. As acquirers, they can also utilize M&A funds to venture into promising pharmaceutical manufacturing sectors, creating industrial synergies with their commercial operations, thereby boosting gross and net profit margins and, while ensuring compliance, enhancing their secondary market valuations. In 2026, the path forward for pharmaceutical commercial companies lies clearly ahead.
Comments