Jiaying Pharmaceutical Invests RMB 35.31 Million in Kangci Medical to Enter Dementia Care Market

March 8 (Yiou Health) – Jiaying Pharmaceutical announced that its wholly-owned subsidiary, Jiaying Health, invested RMB 35.31 million of its own funds into Kangci Medical as a capital increase. Of this amount, RMB 32.10 million was subscribed as newly added registered capital for Kangci Medical, with the remaining RMB 3.21 million recorded in Kangci Medical’s capital reserve. Following the capital increase, Jiaying Health holds an 18.55% equity stake in Kangci Medical, becoming one of its shareholders.

It is reported that the target company, “Kangci Hospital,” is a private specialized medical institution focusing on neurodegenerative diseases, primarily serving elderly patients with conditions such as Alzheimer’s disease and Parkinson’s disease, as well as high-end elderly care populations. Kangci Hospital is established in accordance with the standards for tertiary specialized hospitals but is currently still in the preparatory phase.

Nowadays, as the aging population deepens year by year and the prevalence of diseases among the elderly continues to rise, there is an urgent demand for specialized treatment and rehabilitation services for neurodegenerative diseases, creating a vast market space in this medical field. Since 2017, domestic healthcare reform policies have been intensively implemented. Against the backdrop of tiered diagnosis and treatment systems and the complete elimination of drug markups, comprehensive public hospitals and private hospitals are struggling to accommodate the long-term rehabilitation and nursing care needs of patients with neurodegenerative diseases. This has opened up significant market opportunities for specialized medical institutions focusing on neurodegenerative disorders.

Based on the market prospects for neurodegenerative disease treatment, the Board of Directors of Jiaying Pharmaceutical has approved the investment in Kangci Hospital. This decision aims, on one hand, to accelerate Jiaying Pharmaceutical’s strategic layout in the medical services sector, thereby accumulating experience and laying a foundation for investing in and operating hospitals; on the other hand, it seeks to fully leverage capital markets to inject strategic resources into Kangci Medical, meeting its funding requirements and operational needs, and achieving effective integration and synergy between the development and strategic planning of both parties.

As the main entity for this investment, Jiaying Health was established on September 27, 2018. It serves as Jiaying Pharmaceutical’s platform for industrial integration and expansion, primarily providing services such as technology development, technical consulting, and hospital investment and establishment in specialized fields of medical technology. Leveraging this platform, Jiaying Pharmaceutical expands its business scope through capital operation models such as equity investment, effectively integrates resources, and enhances its core competitiveness and profitability.

Jiaying Pharmaceutical is a diversified technology enterprise integrating the research and development, production, and sales of proprietary Chinese medicines. It was established in March 2003 through the restructuring of the Meizhou Pharmaceutical Factory. In December 2007, Jiaying Pharmaceutical was successfully listed on the Shenzhen Stock Exchange. Currently, it has three wholly-owned subsidiaries, including Jiaying Grand Health, and one equity-participating subsidiary. In terms of products, Jiaying Pharmaceutical offers over 70 drug varieties across five dosage forms, primarily covering proprietary Chinese medicines for throat disorders, colds, orthopedics, and rheumatism. Its core products are largely exclusive offerings, nationally protected traditional Chinese medicine varieties, nationally patented varieties, and items included in the National Essential Medicines List and the National Reimbursement Drug List.

In addition to Jiaying Big Health, Jiaying Pharmaceutical had previously invested to establish a wholly-owned subsidiary, “Guangdong Jiaying,” in Meizhou, Guangdong; used its own funds to establish a wholly-owned subsidiary, “Jiaying International Company,” in Hong Kong; and Jiaying Big Health and Jiaying International Company jointly invested to establish “Jiaying Financial Leasing.”

Jiaying Pharmaceutical stated that the establishment of Guangdong Jiaying in Meizhou was intended to streamline the company’s business structure, enhance operational and management efficiency, and meet the requirements for business divestiture. Additionally, Jiaying International Company was established as an investment platform through which Jiaying Pharmaceutical set up a financial leasing company within China. Jiaying Financial Leasing was created to provide services such as medical equipment leasing, thereby further expanding the company’s business scope.

Data shows that from 2014 to 2018, Jiaying Pharmaceutical achieved operating revenues of RMB 566 million, RMB 476 million, RMB 450 million, RMB 468 million, and RMB 537 million, respectively; net profits were RMB 74 million, RMB 66 million, RMB 55 million, -RMB 215 million, and RMB 36 million, respectively. From 2014 to 2017, Jiaying Pharmaceutical’s performance continued to decline, even incurring losses. In 2018, Jiaying Pharmaceutical increased its market share by boosting marketing investments, intensifying market promotion efforts, and integrating sales channels, which accelerated sales collections and led to a recovery in performance.

In 2018, Jiaying Pharmaceutical fought a turnaround battle. In 2019, Jiaying Pharmaceutical took frequent actions; what changes will these bring? Only time will tell.