Chongqing's Largest State-Owned Pharmaceutical Firm Completes RMB 2.206 Billion Equity Transfer

On September 15, C.Q. Pharmaceutical Holding Co., Ltd. (hereinafter referred to as “C.Q. Pharmaceutical Holding”) received a Notification Letter from Chongqing Yijian, and learned that the equity transfer of its controlling shareholder, Chongqing Yijian, had completed the registration procedures with the Administration for Industry and Commerce.

In fact, as early as June 19, C.Q. Pharmaceutical Holding disclosed that Chongqing Yufu, a shareholder of its controlling shareholder Chongqing Medical Health, had publicly listed for transfer a 24% equity stake in Chongqing Medical Health on the Chongqing United Assets and Equity Exchange. On August 22, C.Q. Pharmaceutical Holding issued another announcement, disclosing that the final transferee of the transaction was General Technology Group. On August 25, Chongqing Yufu and General Technology Group signed the "Property Rights Transaction Contract," with a transaction amount of RMB 2.206 billion.

Upon completion of this transfer, General Technology Group and China Meheco Group Co., Ltd. will hold 48% and 27% equity interests in Chongqing Medical & Health, respectively, while Chongqing Yufu will hold a 25% equity interest in Chongqing Medical & Health. This transfer will not result in any change in the control of Chongqing Medical & Health, nor will it cause any change in the number of shares or shareholding percentage of C.Q. Pharmaceutical Holding held by Chongqing Medical & Health. After the transfer, Chongqing Medical & Health will remain the controlling shareholder of C.Q. Pharmaceutical Holding, and the actual controller will remain the State-owned Assets Supervision and Administration Commission of the State Council.

Chongqing Medical and Health Group was established in 2018 as a joint venture invested by Chongqing Chemical & Pharmaceutical Holding Group (under the Chongqing Municipal State-owned Assets Supervision and Administration Commission), China General Technology Group (a central state-owned enterprise), and its subsidiary, China Meheco. It serves as Chongqing’s financing, investment, and industrial integration platform for the state-owned pharmaceutical and health industry, and is one of the pilot enterprises in the “Double Hundred Action” for state-owned enterprise reform implemented by the State-owned Assets Supervision and Administration Commission of the State Council. The company is committed to the coordinated development of three core sectors: pharmaceutical commerce, pharmaceutical manufacturing, and medical-elderly care health services.

Its pharmaceutical commerce segment is centered on C.Q. Pharmaceutical Holding.C.Q. Pharmaceutical Holding (Shenzhen Stock Exchange Code: 000950) is the listed entity of Chongqing Pharmaceutical (Group) Co., Ltd., with a registered capital of RMB 1.728 billion; Chongqing Pharmaceutical (Group) Co., Ltd. serves as the operational and investment platform, whose predecessor was the Southwest Branch of China National Pharmaceutical Corporation established in 1950. The two entities operate under “one management team, two brand names.”

As the largest state-controlled pharmaceutical enterprise in Chongqing, C.Q. Pharmaceutical Holding reported an operating revenue of RMB 80.562 billion in 2024, ranking 306th among China’s Top 500 Enterprises. The company has been listed on the Fortune China 500 for six consecutive years. Its business spans the entire pharmaceutical industry chain, including pharmaceutical commerce, warehousing and logistics, pharmaceutical manufacturing, and research and development. Its marketing network covers 32 provinces, municipalities, and autonomous regions across China, with a long-standing leading market share in Chongqing.

In the pharmaceutical commercial sector,C.Q. Pharmaceutical Holding is a designated reserve entity for pharmaceuticals and medical devices at both the central and local government levels. Its core business encompasses hospital direct sales, commercial wholesale, retail chain operations, warehousing and logistics, and supply chain value-added services for pharmaceuticals, medical devices, traditional Chinese medicine decoction pieces, and health products, with a marketing network covering all of China.

Notably, C.Q. Pharmaceutical Holding is one of only three nationwide wholesalers in China authorized to distribute narcotic drugs and Class I psychotropic substances.The company primarily deals in narcotic drugs, Class I psychotropic substances, Class II psychotropic substances, and single-ingredient preparations of drug precursors, among others. Its distribution network for narcotic and psychotropic drugs covers all 31 provinces, municipalities, and autonomous regions across China, with a competitive advantage in five regions: Sichuan, Chongqing, Guizhou, Qinghai, and Tibet. In 2024, the narcotic and psychotropic drug segment of C.Q. Pharmaceutical Holding generated operating revenue of RMB 3.022 billion.

In the Pharmaceutical Industry and R&D Sector, C.Q. Pharmaceutical Holding operates under an asset-light model,C.Q. Pharmaceutical Holding primarily enters the pharmaceutical industry through equity participation, covering sectors such as chemical drugs, biologics, modern traditional Chinese medicine, and medical devices. By taking equity stakes in pharmaceutical manufacturing, the company achieves a comprehensive layout across the entire pharmaceutical industry chain—from product introduction and participation in drug R&D to securing distribution rights for products with competitive advantages. Furthermore, C.Q. Pharmaceutical Holding integrates the assimilation of introduced technologies with independent innovation, adhering to the strategy of “developing one batch, launching one batch, following up on one batch, and monitoring one batch.” Guided by clinical needs and international standards, the company continuously develops new products aligned with its corporate strategy.

The warehousing and logistics segment serves as a critical support for the pharmaceutical commerce sector.C.Q. Pharmaceutical Holding is a leading force in pharmaceutical distribution and delivery in southwestern provinces, owning 10 self-built provincial-level modern logistics bases and more than 160 warehousing centers at various levels, with a total warehousing area exceeding 700,000 square meters. To support nationwide business development and establish a pharmaceutical logistics network covering the entire country, C.Q. Pharmaceutical Holding has successively built multiple provincial logistics centers and established numerous distribution centers across China. To expand its third-party storage and distribution services, nearly 20 subsidiaries under C.Q. Pharmaceutical Holding are engaged in related businesses, providing high-quality pharmaceutical storage and distribution services to over 410 third-party cargo owners. The client base and product categories have expanded beyond traditional manufacturers and distributors of chemical drugs to include more fields such as traditional Chinese medicine decoction pieces, e-commerce, medical devices, and radiopharmaceuticals.

In response to dynamic market demand, C.Q. Pharmaceutical Holding is also pursuing a diversified strategy. Currently, the company offers more than 280,000 product specifications, including chemical drugs, narcotic and psychotropic substances, medical devices, traditional Chinese medicine products, as well as new offerings such as medical aesthetics products, foods for special medical purposes (FSMP), and general health and wellness products.

Since the beginning of this year, Chongqing Yujian, the controlling shareholder of C.Q. Pharmaceutical Holding, has undergone two significant changes in its equity structure, both involving the transfer of its equity interests in Chongqing Yujian by Chongqing Yufu.Although these two changes did not alter the actual controller of C.Q. Pharmaceutical Holding, we can still dissect numerous details from the information disclosed in the transactions and analyze the related impacts.

First, this represents an optimization of the layout of state-owned assets.All parties involved in the equity change (Chongqing Huayi, Chongqing Yufu, and China General Technology Group) are enterprises under the supervision of either the State-owned Assets Supervision and Administration Commission (SASAC) of the State Council or the Chongqing SASAC. The equity transfers were conducted entirely within the state-owned assets system, constituting an optimization and restructuring among state-owned capital aimed at improving resource allocation efficiency. Announcements by C.Q. Pharmaceutical Holding further corroborate this point, repeatedly emphasizing that the change will not alter the company’s business structure or affect its normal operations, indicating that the adjustment is more akin to capital-level integration rather than operational intervention.

Second, control remains unchanged, but shareholder strength has increased.China General Technology (Group) Holding Co., Ltd., a large central state-owned enterprise directly under the central government, possesses substantial resources in pharmaceuticals and healthcare, international trade, and technical services. Introducing it as a key shareholder of Chongqing Medical & Health Group will help enhance the competitiveness of C.Q. Pharmaceutical Holding in China’s pharmaceutical distribution and supply chain services.

In fact, equity changes in pharmaceutical companies with state-owned capital participation or controlling stakes have become increasingly common in recent years. Since the beginning of this year, the “Sinopharm Group” alone has completed several equity or asset transactions in rapid succession. The frequent equity changes in state-owned enterprises are driven by policy. In 2022, the Three-Year Action Plan for State-Owned Enterprise Reform called for “increasing the injection of high-quality assets into listed companies.” By the end of 2024, the State-owned Assets Supervision and Administration Commission (SASAC) of the State Council proposed that “central state-owned enterprises should accelerate their layout in strategic emerging industries through mergers, acquisitions, and reorganizations,” all of which have accelerated the wave of consolidation in pharmaceutical assets.

From this perspective, the change in the equity structure of C.Q. Pharmaceutical Holding’s controlling shareholder is primarily driven by the need to optimize the layout of state-owned capital, introduce stronger strategic shareholders, and enhance corporate competitiveness. Although the control rights and daily operations of C.Q. Pharmaceutical Holding remain unaffected, the upgrading of shareholder resources will bring broader development space and potential synergy opportunities to the company.