Hongfeng Technology: Dual-Engine Growth Driven by Platform and Resources to Reshape the Chain Pharmacy Ecosystem

Under the dual pressures of intensive pharmaceutical policy adjustments and increasingly fierce market competition, the chain pharmacy industry is undergoing a profound systemic transformation.

On the one hand, policies such as the “Two-Invoice System” and “Centralized Drug Procurement” continue to squeeze pharmaceutical companies’ profit margins, driving them to accelerate their expansion into the out-of-hospital market. Meanwhile, the “Zero Markup” policy and “Medical Insurance Cost Containment” measures have narrowed the profit space for hospital pharmacies, compelling pharmaceutical companies to urgently explore new channels such as retail terminals. Although chain pharmacies have undergone a valuation reassessment, they also face challenges including declining gross margins and intensified competition. The traditional model of “store expansion + drug sales” is no longer sustainable, leading to a wave of store closures across the industry, with net profits of leading enterprises generally under pressure.

On the other hand, the accelerating aging of the population has heightened patients’ demands for convenience in medication purchasing and accessibility to pharmaceuticals. Public health consciousness continues to evolve, shifting from a sole focus on disease treatment to an emphasis on full-cycle health management, personalized experiences, and social value. Patient needs have upgraded from merely “buying medications” to “purchasing services and health,” rendering the traditional single-function sales model of pharmacies inadequate to meet market expectations.

Against this backdrop, the chain pharmacy industry as a whole is transitioning from “scale expansion” to a new phase of “service upgrading,” actively exploring user-centric models of health services. At the policy level, there is clear momentum driving pharmacies to transform into “health service hubs,” encouraging them to provide chronic disease management, health monitoring, and other services. Pilot programs for “pharmaceutical care service fees” at pharmacies have been launched in select regions, further recognizing the value of pharmacies in national health management.

In the face of industry upheaval, Tan Weifeng, Vice President of Zhenghexiang and Head of HONGFENG KEJI, pointed out: “The future core competitiveness of pharmacies will be primarily reflected in team operational capabilities and locational advantages. The traditional model of scale expansion is unsustainable precisely because it has overly focused on increasing the number of stores while neglecting the in-depth development of service capabilities and intensive cultivation of regional markets.”

This judgment directly drove Zhenghexiang’s strategic transformation and business innovation.

As the leading pharmacy chain in Southwest China, Zhenghexiang incubated HONGFENG KEJI in 2022, a technology company dedicated to facilitating the service-oriented digital transformation of pharmaceutical and medical device enterprises. Leveraging the group’s industrial resources, including over 10 million members, 1,500 pharmacies, and nearly 200 clinics, HONGFENG KEJI has carved out a new path for the transformation and upgrading of chain pharmacies through its unique business positioning and innovative commercial model.

Backed by Zhenghexiang’s robust industrial resources, HONGFENG KEJI was arguably “born with a silver spoon in its mouth.” However, the establishment of its strategic positioning was not achieved overnight; rather, it underwent an exploratory journey from internal integration to external distribution.

Tan Weifeng candidly admitted that the company went through a period of exploration after its establishment. Initially, the team focused on integrating internal resources, aiming to leverage an internet hospital to connect Zhenghexiang’s pharmacy, clinic, and insurance businesses. This concept possessed inherent advantages: HONGFENG KEJI’s internet operations were supported by clinical physician resources from the clinics, backed by a member traffic base from the pharmacies, and further strengthened by a complete supply chain system and insurance payment capabilities.

However, in actual operations, the team quickly identified issues, with the most critical challenge being a lack of service delivery capabilities. “Although we have doctors and patients, we lack the management capability for disease-specific services, making it difficult to achieve true business synergy,” said Tan Weifeng.

After the initial exploration failed to meet expectations, the team recalibrated its strategy in 2023 by seeking external partners. However, it once again encountered challenges at the critical juncture of “how HONGFENG KEJI can establish effective collaborations with partners.”

The true turning point occurred in 2024. The team realized that although HONGFENG KEJI was born within the Zhenghexiang system, its service targets should be external specialized disease enterprises or pharmaceutical companies. Tan Weifeng explained this transformation: “The core logic of the e-commerce operation agency, internet hospital construction, and private domain operation services we subsequently launched is no longer to empower the group, but to stand from the customer’s perspective, helping partners achieve their business goals by introducing Zhenghexiang’s resources outward.”

This transition has clarified HONGFENG KEJI’s role—shifting from “importing resources” to “distributing resources”—and firmly established its brand positioning as a “commercial incubation platform for disease-specific service enterprises.”

Practice has validated the effectiveness of the new positioning: by serving clients such as Changfeng Pharmaceutical, Yongfeng Pharmaceutical, Rensheng Pharmaceutical, and Gandanxiangzhao, and helping them build private-domain, public-domain, and conversion systems, HONGFENG KEJI’s business logic has finally proven viable and gained market recognition.

Today, HONGFENG KEJI has established a clear business model: leveraging its core capabilities in internet hospitals, private-domain operation systems, public-domain omnichannel managed services, and customized insurance products to build comprehensive commercialization infrastructure for partner enterprises. More importantly, through its unique platform positioning, HONGFENG KEJI has developed a mechanism that both safeguards data security and facilitates resource circulation.

“We are addressing precisely the two major pain points in the industry: first, pharmacies are reluctant to share core data due to concerns about losing their private-domain members; second, companies lack professional service capabilities, making it difficult to effectively activate pharmacies’ existing customer base,” summarized Tan Weifeng.

Under this mechanism, HONGFENG KEJI, as a trusted third-party platform, not only ensures the security of Zhenghexiang’s membership system but also helps partner companies gain access to precise user outreach channels. By leveraging Zhenghexiang’s store network, membership system, medical insurance qualifications, and other resources as a “validation ground,” HONGFENG KEJI provides enterprises with real-world business environment testing, significantly reducing trial-and-error costs and accelerating the market validation process for their products.

This unique “platform + resources” model enables HONGFENG KEJI to build an efficient collaborative bridge between chain pharmacies and pharmaceutical companies, revitalizing Zhenghexiang’s membership base of over ten million and ultimately maximizing value for all stakeholders.

In an era where private-domain operations have become the industry standard, HONGFENG KEJI has chosen the “specialized disease model” as its strategic breakthrough.

“The key to private-domain operations lies not only in reach, but also in activation,” emphasized Tan Weifeng. “By leveraging disease-specific management—a high-frequency, essential-need scenario—we transform pharmacies’ vast member bases into precise users with clear health needs, while driving high-quality growth for partner enterprises.”

Currently, HONGFENG KEJI has established partnerships with approximately 20 companies specializing in specific disease areas, covering conditions such as respiratory sleep disorders, diabetes, and liver diseases. By building private-domain platforms, internet hospitals, and e-commerce channels for these enterprises, and by strategically directing Zhenghexiang’s member resources to them, the company has effectively facilitated the integrated implementation of “products + services.”

Specifically, HONGFENG KEJI's business model is built around three core pillars:

At the level of private-domain operations, the company has converted Zhenghexiang’s more than 10 million members into controllable private-domain traffic. By focusing on specific diseases as an entry point and leveraging channels such as Enterprise WeChat, official accounts, and a private-domain e-commerce platform, it delivers personalized health services ranging from product education and expert consultations to disease management, significantly enhancing member stickiness and repurchase rates.

At the level of ecosystem integration, HONGFENG KEJI leverages its proprietary internet hospital and prescription circulation platform to integrate resources across healthcare, pharmaceuticals, diagnostics, and insurance, creating a closed-loop health service model that seamlessly merges online and offline channels. Patients can access one-stop services including online consultations, electronic prescriptions, medication delivery, and health monitoring; pharmaceutical companies can achieve precise marketing and market expansion for their products; and insurance companies can collaborate to develop customized disease-specific insurance products, thereby building an ecosystem where patients, healthcare providers, and pharmaceutical companies all benefit.

At the data-driven level, HONGFENG KEJI integrates multi-dimensional data from offline pharmacies, internet hospitals, and pharmaceutical e-commerce platforms through its data middle platform to construct comprehensive patient profiles. This enables precise product selection, repurchase prediction, and consumer trend analysis. This model not only enhances marketing conversion efficiency but also provides partners with deeper market insights and decision support.

“We do not engage in the substitution of existing stock; we focus solely on creating incremental growth,” stated Tan Weifeng. “All collaborative products are innovations outside the traditional categories offered by pharmacies, which not only safeguards pharmacy interests but also opens up entirely new growth avenues for enterprises.”

HONGFENG KEJI has also innovatively integrated insurance products into the closed-loop management of specific diseases, with its single-disease insurance policies selling over 4,000 units in a single month. The combined strategy of “product + service + insurance” has significantly enhanced users’ willingness to pay and adherence.

In Tan Weifeng’s view, the current adjustments in the chain pharmacy industry are an inevitable process of “good money driving out bad,” representing a healthy transition from extensive growth to standardized consolidation. Ultimately, competitiveness will be reflected in operational efficiency and capabilities for deep regional penetration.

Against this backdrop, HONGFENG KEJI is committed to building a “high-speed channel” for its ecosystem partners to access the chain pharmacy market. Its open collaboration model creates unique value for various partners:

For pharmaceutical companies, HONGFENG KEJI has transformed the traditional “listing fee + marketing investment” model into a “platform co-construction + sales revenue sharing” model, significantly lowering the barrier to entry for large pharmacy chains. Pharmaceutical companies can leverage HONGFENG KEJI’s e-commerce operation capabilities to rapidly establish B2C networks on platforms such as JD Health, Ali Health, Pinduoduo, and Douyin, while receiving fully managed support spanning product selection, traffic acquisition, and pharmaceutical care services.

For testing and medical device companies, HONGFENG KEJI not only provides an O2O instant delivery network covering Sichuan, Guizhou, Chongqing, and Hunan, enabling “online orders with offline delivery within 30 minutes,” but also helps them upgrade from “product sales” to “service solution providers” through specialized disease management services, thereby enhancing product value-added and user stickiness.

For insurance companies, HONGFENG KEJI leverages its own insurance brokerage license to jointly design specialized disease insurance service packages, which are promoted through Zhenghexiang’s offline channels, thereby achieving integrated delivery of “medical services and risk protection.”

“Our short-term goal is to validate more disease-specific care models within the Zhenghexiang system; our mid-term goal is to help partner enterprises achieve scalable revenue in the out-of-hospital market; and our long-term goal is to replicate this model across other pharmacy chains nationwide,” outlined Tan Weifeng, mapping out a clear development path.

This vision rests on a solid foundation: Haidian Software, part of the Zhenghexiang ecosystem, is an industry-leading provider of pharmacy ERP solutions, serving approximately 200,000 chain pharmacies. Once this model has been validated and matured within Zhenghexiang, it can be rapidly replicated across the national market through Haidian’s channel network, which represents the greatest growth potential for HONGFENG KEJI in the future.

In Tan Weifeng’s vision, HONGFENG KEJI aspires to become the “Baixiang Pharmaceutical of the out-of-hospital market”—not merely a product distributor, but a commercial incubation platform focused on pharmacy channels and dedicated to supporting the growth of innovative enterprises.

“We firmly believe that a cohort of star products will inevitably emerge in the pharmacy channel, winning market share through professional services. HONGFENG KEJI aspires to be their preferred partner,” concluded Tan Weifeng.

At a critical juncture in the transformation and upgrading of the chain pharmacy industry, HONGFENG KEJI has adopted a dual-drive strategy of “platform + resources” to explore a new development path centered on “customer service.” As Tan Weifeng has observed, the direction of industry transformation is now clear, with ultimate competition hinging on operational efficiency and execution speed. Through its clear strategy and flexible mechanisms, HONGFENG KEJI is demonstrating its unique advantages and potential in this industry-wide变革.