GPHL Group to Acquire 26.63% Stake in Daan Gene for Over RMB 9 Billion, Filing Prospectus for Strategic Integration

On the evening of November 17, DaAn Gene issued a tentative announcement regarding the proposed change in its indirect controlling shareholder. The announcement revealed that on November 15, Guangzhou Financial Holdings Group, Guangzhou Health Industry Investment, and Guangzhou Pharmaceutical Holdings Limited signed a Framework Agreement.

The agreement indicates that Guangzhou Financial Holdings Group intends to transfer its 100% equity interest in Guangyong Technology (including its 16.63% stake in DaAn Gene) and a 5% stake in DaAn Gene to Guangzhou Pharmaceutical Holdings Limited or an affiliate designated by it; Guangzhou Health Industry Investment intends to transfer its 5% stake in DaAn Gene to Guangzhou Pharmaceutical Holdings Limited or an affiliate designated by it. The consideration for this agreed transfer is calculated at RMB 6.47 per share, totaling RMB 908 million.

Prior to this change in equity interests, Guangzhou Financial Holdings Group was the indirect controlling shareholder of DaAn Gene, holding a total of 31.63% of its shares through direct and indirect means; Guangzhou Pharmaceutical Holdings Limited did not hold any shares in DaAn Gene.

Shareholding Structure of DaAn Gene Prior to the Change in Equity Interests

Upon completion of this change in equity interests, Guangzhou Pharmaceutical Holdings Limited will become the indirect controlling shareholder of DaAn Gene, collectively controlling 370 million shares of DaAn Gene, accounting for 26.63% of the total share capital. However, the controlling shareholder of DaAn Gene will remain Guangyong Technology, and the actual controller will remain the People's Government of Guangzhou Municipality, with no changes thereto.

 Shareholding Structure of DaAn Gene Following Changes in Equity Interests

DaAn Gene was founded in 1988, with its predecessor being Guangdong Province Kesida Medical Instrument Industrial Company. On August 9, 2004, DaAn Gene was listed on the SME Board of the Shenzhen Stock Exchange, becoming the first listed company among university-run enterprises in Guangdong Province.

After more than three decades of accumulation, DaAn Gene has developed into a leading enterprise in China’s molecular diagnostics industry. It has established a fully integrated PCR technology value chain encompassing R&D and manufacturing, core raw materials, quality control materials, instrument R&D and manufacturing, and testing services. Its business scope covers medical devices based on diagnostic technologies such as molecular diagnostics, immunoassays, clinical chemistry, and POCT; healthcare services; elderly care and wellness; food safety; and industrial investment. The company has comprehensively structured its in vitro diagnostics (IVD) portfolio across multiple product lines, including infectious diseases, eugenics and reproductive health, precision medicine, blood screening, public health, instruments and consumables, and scientific research services, while continuously extending its industrial layout into the broader big health sector.

Currently, the company has established a diverse portfolio of product lines centered around DaAn Gene, including instruments and testing workflows, pathology products, chemiluminescent immunoassay products, and time-resolved fluorescence immunoassay (TRF) products. Its products and services are distributed across China and more than 140 countries and regions worldwide. In the domestic market, the company holds the industry-leading “DaAn Gene” brand, the market-leading “Darui Biotech” brand, and the regionally advantageous “Zhongshan Bio” brand. It is also vigorously developing the “Datai Bio” brand in the field of biochemical diagnostics. By implementing and executing a multi-brand parallel and specialized development strategy, the company possesses strong competitive capabilities in the diagnostic market.

From 2020 to 2022, DaAn Gene experienced rapid growth driven by sales of its novel coronavirus nucleic acid testing reagents. In 2022, its revenue reached RMB 12.046 billion, with net profit amounting to approximately RMB 5.412 billion and net profit excluding non-recurring items at around RMB 5.176 billion. The cumulative net profit over the three-year period from 2020 to 2022 totaled approximately RMB 11.48 billion, accounting for about 90% of the company’s total earnings since its listing two decades ago.

From Peak to Trough: DaAn Gene Took Only Two Years

In 2023, DaAn Gene barely managed to remain profitable, with an annual net profit of approximately RMB 100 million. However, its revenue decreased by 90.2% year-on-year, net profit declined by 98.07% year-on-year, and net profit after deducting non-recurring gains and losses dropped by more than 100%. In 2024, DaAn Gene’s profitability continued to deteriorate. Its revenue for the year was approximately RMB 853 million, a year-on-year decrease of 27.27%, while net profit stood at approximately -RMB 925 million, representing a year-on-year decline of 983.98%. According to Wind data, this marks the first time in nearly two decades that DaAn Gene has reported a negative net profit, as well as its first loss since its listing in 2004.

In 2025, the semi-annual report of DaAn Gene revealed that the company remained in a net loss position amid multiple challenges, including centralized volume-based procurement policies, market competition, technological iterations, and increased management complexity. In the first half of 2025, it achieved operating revenue of RMB 339 million, representing a year-on-year decline of 15.44%. The net profit attributable to shareholders of the listed company was -RMB 182 million, marking a 54.37% year-on-year improvement as the loss narrowed compared to the RMB 399 million loss recorded in the same period last year. The year-on-year improvement in net profit was primarily driven by an increase in the fair value of other non-current financial assets, which is classified as non-recurring gains and losses.

From 1988 to 2022, DaAn Gene spent more than three decades growing into China’s leading molecular diagnostics company. However, from 2023 to 2025, its operational performance declined sharply. How can this former segment leader leverage the current equity restructuring to stage a comeback?

The acquirer in this transaction, Guangzhou Pharmaceutical Holdings Limited (GPHL), is the world’s first Fortune Global 500 company whose core business is traditional Chinese medicine. It is primarily engaged in the research, development, production, and sales of products broadly related to the pharmaceutical sector—including Chinese and Western medicines, general health products, medical devices, biopharmaceuticals, and medical services—as well as the provision of healthcare, wellness, and lifestyle services. In the Fortune Global 500 list for the pharmaceutical sub-sector, released in late July 2025, GPHL was the only Chinese enterprise to make the cut. This marks GPHL’s third consecutive year on the pharmaceutical sub-sector list, where it ranked 14th this year, just behind GlaxoSmithKline.

Guangzhou Pharmaceutical Holdings Limited currently holds a controlling stake in the listed company “Guangzhou Baiyunshan Pharmaceutical Holdings Co., Ltd.” (Hong Kong H Shares: 00874; Shanghai A Shares: 600332) and, through Guangdong Shennongshi Enterprise Management Partnership (Limited Partnership), has invested in Kangmei Pharmaceutical (Shanghai A Shares: 600518).

The group comprises more than 30 member enterprises, including 13 China Time-Honored Brands such as Wang Lao Ji, Chen Li Ji, Jing Xiu Tang, Pan Gao Shou, Cai Zhi Lin, and Cai Shan Tang. Among these, 11 brands have a history spanning over a century. The oldest, Chen Li Ji, was founded in 1600 and boasts a heritage of more than 400 years, holding the Guinness World Record for the “World’s Oldest Pharmaceutical Factory.” The entire group holds 12 national- and provincial-level intangible cultural heritage designations and 10 well-known trademarks, having developed major product lines including Wang Lao Ji Herbal Tea, Baiyunshan Jinge, Xiao Chai Hu Granules, Zishen Yutai Pills, and Qingkailing.

Guangzhou Pharmaceutical Holdings Limited has acquired a 26.63% stake in DaAn Gene through a two-step plan involving “equity transfer via acceptance + agreed transfer,” thereby becoming the new indirect controlling shareholder. As both parties to the transaction are under the control of the Guangzhou Municipal People’s Government, the actual controller remains unchanged.Thus, on the surface, this acquisition appears to be a strategic integration of resources by Guangzhou’s state-owned assets in the biopharmaceutical and healthcare sectors. However, taking a broader view and considering the respective resources and industry cycles of DaAn Gene and Guangzhou Pharmaceutical Holdings Limited, it becomes evident that this move represents a strategically significant “value chain complement.”

First,Guangzhou Pharmaceutical Holdings Limited operates four major segments—traditional Chinese medicine, chemical drugs, biologics, and vaccines—but has virtually no presence in the IVD and companion diagnostics fields. DaAn Gene, by contrast, possesses three core platforms (PCR, NGS, and mass spectrometry), with the majority of its revenue derived from infectious diseases and early cancer screening, naturally aligning with Guangzhou Pharmaceutical’s anti-tumor and antiviral pipelines.

Second,Guangzhou Pharmaceutical Holdings Limited has multiple Grade-A tertiary hospitals under its umbrella that can provide real-world data (RWD) for DaAn Gene’s new products, thereby shortening their product development and registration cycles. Furthermore, Guangzhou Pharmaceutical Holdings Limited boasts a robust in-house sales force and pharmaceutical distribution network, which can reduce channel promotion costs for DaAn Gene’s products and accelerate their market commercialization.

Therefore, through this equity change, DaAn Gene can form an industrial closed loop of "pharmaceuticals + diagnostics" with Guangzhou Pharmaceutical Holdings Limited. Upstream pharmaceutical companies can directly access real-time data ranging from molecular testing to patient stratification, while IVD enterprises can transition from the fragmented, highly competitive reagent market to an ecosystem of co-managed "diagnostics–therapeutics." It is anticipated that DaAn Gene will upgrade from an in vitro diagnostics supplier to a comprehensive diagnostic solutions platform.

References: “Introduction to Guangzhou Pharmaceutical Holdings Limited”, “DaAn Gene Reports First Loss in Nearly 20 Years”