Shanghai Junshi Biosciences Co.,Ltd. (JUNSHI BIO, stock codes: 688180.SH / 01877.HK) recently released its 2025 annual report. The company achieved annual operating revenue of 2.498 billion yuan, a year-on-year increase of 28.23%. Sales revenue from its core product, toripalimab (TUOYI®), also grew by over 40%.
While the revenue growth and a 32% narrowing of losses, alongside a 65% improvement in operating cash flow compared to the previous year, suggest the business model is gaining traction beyond mere cost-cutting, the company remains far from profitability. Analysts anticipate losses will narrow to around 150 million yuan in 2026, with true self-sufficiency likely achievable only after 2027. A sales expense ratio of 40% is considered medium-high within the innovative drug industry, and the R&D expense ratio of 53%, although high, is deemed a necessary investment. The fundamental issue lies in the persistent negative cash flow, an interest-bearing debt ratio exceeding 33%, a sharp increase in financial expenses, and a narrowing safety margin for the company's funding chain.
Behind these seemingly positive results, the chronic problem of substantial annual losses remains unresolved. The severe financial condition and market environment cast a heavy shadow over the future of this former pioneer in domestic PD-1 inhibitors. The company is experiencing increased revenue without increased profitability, and a turning point to profit appears distant.
The financial report shows that JUNSHI BIO's 2025 net profit attributable to shareholders was -875 million yuan. Although this is an improvement from the -1.281 billion yuan loss in 2024, it marks another year in a prolonged period of deficits. Since its listing in 2020, the company's cumulative losses have approached nearly 10 billion yuan. Data indicates net profits from 2020 to 2025 were -1.669 billion yuan, -731 million yuan, -2.584 billion yuan, -2.536 billion yuan, -1.38 billion yuan, and -1.009 billion yuan respectively, totaling 9.909 billion yuan in losses over six years.
The company attributes this to the long R&D cycles and heavy investments characteristic of the biopharmaceutical industry, stating that operating revenue still cannot cover R&D expenses and other costs. The question of when JUNSHI BIO will achieve a positive net profit remains unanswered.
High R&D expenses continue to be a major drag on profits. In 2025, the company's R&D investment reached 1.342 billion yuan. Although the ratio to operating revenue decreased, it remained high at 53.72%. This means for every yuan earned, over half is reinvested into R&D. This high level of investment carries risk, as the company's pipeline projects require an estimated total investment exceeding 12.7 billion yuan, necessitating significant expenditures over the next three years.
JUNSHI BIO also faces operational risks. Nearly 90% of its revenue, or 2.301 billion yuan from drug sales, came from toripalimab, with 2.068 billion yuan attributable specifically to that product. Other commercialized products are either co-developed with profit-sharing arrangements or have limited market potential.
Concurrently, the company's ability to generate its own cash flow is a concern. Despite revenue growth, the net cash flow from operating activities last year was still negative 520 million yuan. This indicates that day-to-day operations are not generating positive cash flow but are instead consuming it, forcing reliance on external financing and bank loans to sustain operations and R&D. For instance, the company raised approximately 1.026 billion Hong Kong dollars through a placement in the Hong Kong market last year.
This points to a potential cash flow crisis. At the end of 2025, JUNSHI BIO had combined monetary funds and financial assets at fair value of approximately 3.215 billion yuan. However, given annual R&D expenses exceeding 1.3 billion yuan, nearly 1.1 billion yuan in sales expenses, and follow-up investment needed for 2.57 billion yuan in construction in progress, these funds would only support operations for about two years without additional external financing.
Notably, JUNSHI BIO's asset-liability ratio increased from 44.98% to 51.09%. Within this, the company's long-term borrowing has multiplied over fivefold in the past five years. Whether JUNSHI BIO can find a true balance between spending and self-sufficiency will determine its ability to transition from merely reducing losses to achieving genuine profitability.
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