China Resources Double-Crane Pharmaceutical acquires 100% equity of Nanjing Xinbai Pharmaceutical for 235 million RMB in its own funds

On April 25, China Resources Double-Crane Pharmaceutical issued an announcement to acquire 100% equity of Nanjing Xinbai Pharmaceutical Co., Ltd. ("Xinbai Pharmaceutical" or the target company) for 235 million RMB in its own funds. These include: 99.999% of Xinbai Pharmaceutical equity held by Boya Bio-pharmaceutical; and 0.001% of Xinbai Pharmaceutical equity held by Boya Pharmaceutical Investment.

This transaction constitutes a related-party transaction within the China Resources system and does not constitute a major asset reorganization. The transaction amount does not exceed 5% of China Resources Double-Crane Pharmaceutical's audited net assets for the fiscal year 2025. The transaction has now been successfully approved by the board of directors of China Resources Double-Crane Pharmaceutical and does not require submission to the shareholders' meeting for approval.

This acquisition not only marks another key addition to China Resources Double-Crane Pharmaceutical's strategic positioning in the biochemical and prescription drug sectors, but also continues the high-frequency and precise merger and acquisition integration pace of the China Resources pharmaceutical division over the past two years, representing an important step in strengthening its prescription drug landscape.

Xinbai Pharmaceutical is a biochemical pharmaceutical enterprise with a deep historical foundation and a rare high-quality niche asset within the China Resources pharmaceutical system. The company, with a registered capital of 148 million RMB, is registered in the Nanjing Economic and Technological Development Zone and boasts four major production workshops: small-volume injections, lyophilized powder injections, biochemical extraction, and oral solid preparations. Its overall asset operation remains stable.

Its predecessor was the Nanjing Biochemical Pharmaceutical Factory established in 1958. As one of the earliest key biochemical pharmaceutical enterprises in China, the company's Ossotide Injection won the National Major Contribution Award at the 1978 National Science Conference, and its products such as Sodium Heparin and Insulin have repeatedly received national gold and silver medals as well as provincial and ministerial honors for high-quality products. In 2001, the company completed its restructuring; In 2015, Xinbai Pharmaceutical became a wholly-owned subsidiary of Boya Bio-pharmaceutical. In 2021, it was officially incorporated into the China Resources pharmaceutical landscape together with Boya Bio-pharmaceutical.

In terms of business strategy, Xinbai Pharmaceutical focuses on biochemical drugs as its core business, supplemented by chemical drugs. Its product pipeline is highly synergistic with the existing core business of China Resources Double-Crane Pharmaceutical. The core products mainly cover three key areas: women's health, cardiovascular and cerebrovascular health, and orthopedics, including key varieties such as heparin sodium, oxytocin, carboprost tromethamine, and bone peptide series. This aligns closely with the strategic direction of China Resources Double-Crane Pharmaceutical to become the top prescription drug brand in China during the "15th Five-Year Plan" period. It directly fills the product gap in the biochemical injectable drug segment for China Resources Double-Crane Pharmaceutical and further enriches its prescription drug product portfolio.

In addition, Xinbai Pharmaceutical has established a comprehensive R&D system, with multiple scientific research platforms such as the Jiangsu Province Academician Workstation and a substation of the Postdoctoral Workstation. It holds several new drug production licenses and authorized patents. Currently, it focuses on the in-depth development of polypeptide drugs and continuously advances the iteration of its product series, including Bone Peptide and Oxytocin.

From the perspective of financial performance and valuation, this acquisition takes September 30, 2025, as the evaluation base date, with an acquisition premium rate of only 0.40%. The pricing is fair and fully compliant with state-owned asset transaction regulations. Financial data shows that Xinbai Pharmaceutical's profitability is resilient, with a clear growth trend. In the fiscal year 2025, the company achieved revenue of 182 million RMB and a net profit of 15.0628 million RMB. In the first quarter of 2026, the company’s performance continued to improve, achieving revenue of 45.8713 million RMB, a year-on-year increase of 27.6%, and a net profit of 3.6942 million RMB, a year-on-year increase of 37.7%.

As of the end of March 2026, Xinbai Pharmaceutical's total assets reached 359 million RMB, with owner's equity at 244 million RMB. Its liability structure is healthy, and there are no risk-related items such as external guarantees or entrusted wealth management. After being integrated into China Resources Double-Crane Pharmaceutical, it can quickly contribute to stable profitability and enhance the company's performance.

Over the past two years, the China Resources pharmaceutical division has been driven by a dual-engine strategy of external expansion through acquisitions and internal integration, with intensive M&A activities and clearly defined strategic direction, forming a highly distinctive M&A logic.

In terms of sector selection, the China Resources system focuses on four core areas — traditional Chinese medicine, biochemical drugs, prescription drugs, and pharmaceutical distribution — avoiding scattered diversification into non-core businesses.

For example, China Resources Sanjiu acquired Tasly Pharma for 6.2 billion RMB, further strengthening its leading position in the TCM field. China Resources Pharmaceutical Commercial acquired a controlling stake in Zhenyuan Pharmaceutical for 120 million RMB, improving its pharmaceutical distribution network in the Yangtze River Delta region. Jiangzhong Pharmaceutical acquired 70% equity of Jingcheng Huiyao Pharmaceutical for 70.78 million RMB, filling a gap in its tonic-focused OTC product portfolio.

At the same time, the China Resources system places particular emphasis on internal synergy, frequently carrying out asset transfers and integrations within the system to optimize resource allocation, resolve horizontal competition issues, and unlock synergies.

For instance, China Resources Sanjiu transferred its 51% stake in China Resources Shenghuo to KPC Pharmaceuticals for 1.791 billion RMB. This not only resolved horizontal competition between the two companies in the Xuesaitong single-product category but also promoted the integration and upgrading of the Panax notoginseng industry chain. Jiangzhong Pharmaceutical's acquisition of a 51% stake in Jiangzhong Herbal Pieces under China Resources Jiangzhong effectively improved its upstream positioning in the TCM field, reduced related-party transactions, and achieved coordinated development across the industry chain.

Furthermore, the M&A strategy of the China Resources system also emphasizes regional and R&D positioning, targeting pharmaceutical industry hubs such as Nanjing and Shaoxing, acquiring localized R&D and channel platforms. The current acquisition of Xinbai Pharmaceutical by China Resources Double-Crane is a key move in establishing a strategic R&D high ground in Nanjing and building a localized innovation platform.

In terms of valuation, the China Resources system has always maintained a rational approach to M&A, typically determining transaction prices based on valuation reports, with low premiums and a focus on synergies, effectively avoiding operational risks associated with high goodwill. The premium rate of only 0.40% in this Xinbai Pharmaceutical acquisition fully reflects this prudent M&A logic.

For China Resources Double-Crane itself, the acquisition of Xinbai Pharmaceutical not only fills the product gap in the biochemical drug segment, further strengthening its market position in women's health, cardiovascular and cerebrovascular health, and orthopedics, thereby enriching its prescription drug pipeline, but also leverages local pharmaceutical industry resources in Nanjing to build a localized R&D innovation platform, accelerating the company's innovation transformation and enhancing its comprehensive competitiveness.

For the China Resources system as a whole, this transaction further improves the configuration of its chemical and biochemical drug segments, creating complementary positioning with platforms such as China Resources Sanjiu, KPC Pharmaceuticals, and Jiangzhong Pharmaceutical. It promotes the development of the prescription drug segment toward scale and systematization, further consolidating the leading advantages of this central government-owned pharmaceutical platform.

From an industry perspective, the ongoing M&A activities of the China Resources system also reflect the overall consolidation trend in China's pharmaceutical industry. Currently, leading pharmaceutical companies are acquiring high-quality niche assets in various segments to alleviate pressure from volume-based procurement policies, broaden product portfolios, and strengthen their channel and R&D barriers. Meanwhile, state-owned pharmaceutical platforms are leveraging their resource advantages to accelerate internal asset optimization and external positioning in key sectors, driving continued industry consolidation in areas such as biochemical drugs and prescription drugs. China's pharmaceutical industry is gradually entering a new phase of "intensive focus on niches and integrated efficiency enhancement." The strategic positioning of the China Resources system undoubtedly provides a replicable model for industry consolidation.