Shanghai Huilun Pharmaceutical Co., Ltd. has submitted a listing application to the main board of the Hong Kong Stock Exchange, with CITIC Securities acting as the sole sponsor. Prior to this, the company attempted a listing on Shanghai's STAR Market in 2022, but the plan failed to progress due to tightening IPO policies for the biopharmaceutical sector. Subsequently, market rumors suggested it would be acquired and restructured by Xintian Pharmaceutical, but that transaction was also terminated. Since its establishment, Huilun Pharma has completed 10 rounds of financing, with its valuation rising from 225 million RMB to 3.4 billion RMB. Investors include local state-backed institutions and various PE/VC firms. The current move to list in Hong Kong appears to be a practical choice forced by circumstances.
However, information from the prospectus reveals that Huilun Pharma's recent performance has been unsatisfactory: losses are widening, core product sales are declining, and several products are impacted by volume-based procurement. Whether the company can successfully list on the HKEx remains uncertain.
Losses continue to widen, with high expenses eroding profits. The prospectus shows Huilun Pharma focuses on therapeutic areas including immunology/inflammation, oncology, pain management, cardiovascular, gynecology, and andrology. Its product portfolio comprises over 10 commercialized products and several innovative drugs in development, with a strategic focus on innovative drugs for major diseases and critical illnesses. In 2024, Huilun Pharma ranked among China's top 100 chemical drug R&D companies. As of the latest practicable date, it held 107 granted patents and had 109 patent applications.
Despite impressive R&D capabilities, the company's financial performance in recent years has been concerning. From 2023 to 2025, Huilun Pharma reported revenues of 985 million RMB, 686 million RMB, and 686 million RMB, respectively. Revenue in 2024 fell significantly by 30.4% year-on-year, and growth was nearly stagnant in 2025. Performance on the profit side was more dismal. Net profit for the same periods was 20.659 million RMB, -124 million RMB, and -174 million RMB, respectively. The company turned from profit to loss in 2024, and the loss widened by 40.3% in 2025, with cumulative losses over two years approaching 300 million RMB.
The revenue surge in 2023 was primarily driven by demand for the core product Xiweina during the pandemic. As pandemic-related demand subsided, revenue declined rapidly, and profitability continued to deteriorate. Although gross margins remained relatively high during the reporting period, this did not prevent the company from sinking into losses.
Reasons for the losses include a sharp contraction in core product revenue dragging down overall sales, coupled with persistently high sales and R&D expenses further eroding profits. In 2025, sales and marketing expenses reached 376 million RMB, while R&D expenses were 234 million RMB. Combined, these two items totaled 610 million RMB, accounting for 89% of annual revenue. Specifically, from 2023 to 2025, sales and marketing expenses were 476 million RMB, 365 million RMB, and 376 million RMB, consistently representing over half of revenue. By the end of 2025, the sales and marketing team numbered 720 people, accounting for 50.7% of total employees. The substantial marketing investment reflects the high commercialization costs associated with maintaining product market penetration.
The cash flow situation is also concerning. Net cash generated from operating activities was -37.475 million RMB and -155.8 million RMB in 2023 and 2024, respectively, negative for two consecutive years. Although it turned positive to 8.544 million RMB in 2025, the amount was small, and sustainability remains highly uncertain. More worryingly is the short-term debt pressure. As of the end of 2025, cash and cash equivalents on the books stood at only 137 million RMB, while short-term debt due within one year was as high as 249 million RMB, indicating a clear funding gap. Given such tight liquidity, this IPO attempt likely includes the practical consideration of securing timely financing.
Generic drugs face VBP impact, highlighting over-reliance on a single product. Currently, Huilun Pharma's marketed products are primarily high-end generics and improved new drugs, with generics forming the foundation of its performance. The company's R&D focuses on areas like immunology/inflammation, pain management, oncology, and chronic diseases. It has commercialized over ten products, including Xiweina® and two domestically first-to-market generics.
Revenue composition shows an extremely high reliance on single products, indicating weak overall risk resistance. During the reporting period, revenue primarily came from Xiweina® and Zuoyu®. Although the innovative pipeline includes four Category I and three Category II improved new drugs, these are all in clinical stages and have not contributed any revenue.
The core product, Xiweina®, is currently the first and only domestically approved Sivelestat Sodium in China. Revenue from Xiweina® contributed 745 million RMB in 2023, representing 75.7% of total revenue. However, as pandemic-related demand subsided and distributors reduced inventory, sales of this product plummeted to 424 million RMB and 370 million RMB in 2024 and 2025, respectively, with its revenue share dropping accordingly. The decline in sales of this core product directly dragged down the company's overall performance.
To reduce over-reliance on Xiweina, the company has focused on cultivating products like Zuoyu and Dinuan in recent years, hoping to create new growth engines. However, although these products are growing rapidly, their sales have not yet broken the 100 million RMB mark, far from Xiweina's peak level, and are insufficient to effectively fill the performance gap left by the core product's decline.
Beyond over-reliance on a single product, VBP pressure is another major challenge for its generic drug business. While Xiweina maintains high margins as it is not included in VBP, five of the company's other products have been included in national or provincial VBP lists. The prospectus acknowledges that while VBP guarantees volume, it also creates significant pricing pressure. Furthermore, one of the key products, Dinuan, failed to win in a VBP tender in the second half of 2025, leading to an inventory impairment loss.
In terms of competitive landscape, the market for Zuoyu is becoming increasingly competitive. Overall, the growth space for the company's marketed products is clearly constrained, and future performance prospects are not optimistic under the dual pressures of VBP failures and price declines.
The innovative drug business is still in its early stages, with several globally unique candidates. Facing the reality of compressed profit margins for generics due to VBP and the fading红利 of the core product, Huilun Pharma is increasing its focus on innovative drug R&D, attempting a path of "generics funding innovation" to break the structural dilemma of over-reliance on one drug.
Strategically, the company adopts a "generic-innovation combination" model. Reportedly, the innovative pipeline has made some progress, with four Category I innovative drugs and three Category II improved new drugs, all in clinical development. However, most of these candidates are still in early clinical stages, far from commercialization, and carry significant failure risks.
Key pipeline assets include HL-1186, YD0293, and H057. Overall, the company's pipeline possesses certain uniqueness and market potential, but there is a considerable distance from the current stage to actual commercialization. Subsequent clinical trials, registration, and market access all require sustained, substantial capital investment.
From 2023 to 2025, Huilun Pharma's R&D expenditures were 211 million RMB, 195 million RMB, and 234 million RMB, respectively, with cumulative R&D investment exceeding 640 million RMB over three years. The increase in R&D spending in 2025, against the backdrop of stagnant revenue and widening losses, demonstrates the company's commitment to transformation but also exacerbates its financial strain.
In summary, Huilun Pharma's strengths and weaknesses are equally prominent. The company has built an integrated structure from R&D to sales, and its commercialization capability has been market-validated. Several products in its pipeline have first-in-class or best-in-class potential, potentially opening new growth space. However, the company's performance remains under pressure, revenue is highly dependent on a single product, and while the innovative pipeline is promising, it is in early stages and cannot address immediate financial needs. The success of this IPO is crucial not only for the company's future development but also for its ability to achieve a commercial闭环 for its innovative drugs before funds are depleted. While investors may focus on its innovation potential, they also need to maintain a cautious attitude towards the inherent risks.
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