Hisun Pharmaceutical Sells Off Non-Core Drug Distribution Unit for RMB 430 Million to Refocus on Core Pharma Business

On August 26, HISUN proposed to transfer its wholly-owned subsidiary through public listingZhejiang Pharmaceutical Industry Co., Ltd.(hereinafter referred to as “Provincial Pharmaceutical Company”) 100% equity interest. The assessed value corresponding to the 100% equity interest in Provincial Pharmaceutical Company is RMB 392.2339 million, and the proposed starting price for public listing is RMB 430 million.

HISUN stated that this divestiture aims to optimize its business structure, focus on core strengths in pharmaceutical manufacturing, and enhance overall profit margins and resource allocation efficiency.

On the same day, the 2025 semi-annual report showed that HISUN achieved an operating revenue of approximately RMB 5.25 billion in the first half of the year, a year-on-year increase of 0.13%, while operating costs decreased by 7.41% compared to the same period last year. The net profit attributable to owners of the parent company was RMB 299.0706 million. During the reporting period,Net profit attributable to shareholders of the listed company, after deducting non-recurring gains and losses, was RMB 321.2256 million, representing a year-on-year increase of 23.92%.

HISUN 2025 Semi-Annual Report: Key Accounting Data

Cost Reduction, Efficiency Enhancement, and Innovative Transformation Will Remain the Main Themes for HISUN in 2025.

The announcement pointed out that in recent years, the pharmaceutical distribution industry has shown development trends such as continuous improvement of concentration, constant sinking of channels, and accelerated digitalization of the supply chain. The key lies in“Pharmaceutical distribution is not a core area of strength for the company.”This divestiture facilitates the optimization of our business structure and capital recovery, enabling us to focus on strategic sectors such as complex formulations and synthetic biology. It aligns with the Company’s strategy to concentrate on its core pharmaceutical manufacturing operations and achieve the strategic reallocation of resources.

This is a drastic measure:Upon completion of the equity transfer and realization of the change in control, Provincial Pharmaceutical Company will no longer be included in the scope of consolidated financial statements. Consequently, the scale of the Company’s consolidated main business revenue will decline in subsequent periods. Based on the operating revenue from pharmaceutical distribution in 2024,It is expected to reduce the consolidated operating revenue by more than RMB 3 billion annually.

The immediate cause of the drastic cutback was that, in the first half of 2025, the provincial pharmaceutical company’s revenue nearly halved to RMB 1.689 billion, while its net profit excluding non-recurring items stood at a loss of RMB 19 million.

Zhejiang Pharmaceutical Industry Co., Ltd. Key Financial Information (Unit: 10,000 Yuan; Excluding Guarantees)

As a regional pharmaceutical commercial enterprise, the Provincial Pharmaceutical Company’s core business is pharmaceutical distribution (referred to as “pharmaceutical distribution business” in the 2024 Annual Report and “pharmaceutical circulation business” in this announcement). Its sales model primarily involves procuring pharmaceutical products from pharmaceutical manufacturers or other pharmaceutical distributors and subsequently selling them to medical institutions, drug retailers, and wholesalers within Zhejiang Province.

Overall, the pharmaceutical distribution of Zhejiang Provincial Pharmaceutical Corporation, together with the import of finished drugs by Hanhui Pharmaceuticals and the introduction of third-party formulation promotion, jointly constitute HISUN'sPharmaceutical Commerce Business Module, engaging in third-party business as the general agent or primary distributor for pharmaceutical companies in Zhejiang Province. From a group-wide perspective, partners in the pharmaceutical commercial segment include multinational corporations such as Pfizer, Janssen, Wyeth, Bayer, Takeda, and AstraZeneca, as well as domestic pharmaceutical enterprises including China Resources Sanjiu, Jiangsu Simcere, Minsheng Pharmaceutical, Shineway, and Shenzhen Kangzhe.

The difference lies in the fact that the procurement for the pharmaceutical distribution business of the provincial pharmaceutical company is mainly conducted throughDirectly to pharmaceutical companies or their agentsProcurement of pharmaceuticals is conducted through consignment sales, with products ranging from anti-tumor drugs and biochemical agents to raw materials such as tea seed oil. Huiyi Pharmaceutical handles the manufacturing and market promotion of formulations.Primarily to the parent company, HISUN, and business partnersProcurement is conducted on an order basis, with major suppliers including Pfizer, Novartis, CURIA, HISUN, and Hisun Hangzhou. Consignment products are more focused on anti-tumor drugs and other pharmaceuticals.

By clarifying this distinction, HISUN’s strategic adjustments in its pharmaceutical commercial segment become clear: reduce low-margin API distribution businesses, enhance the management of existing products and the introduction of new ones, thereby improving net profit margins.In fact, clear trends toward this adjustment emerged in 2024: two new suppliers with annual revenues exceeding RMB 100 million were added, and more than 300 new products were introduced.

In contrast, the direct listing for sale of 100% equity in the Provincial Pharmaceutical Company, which is expected to reduce annual revenue by more than RMB 3 billion, constitutes a “major stride.”In addition to the lackluster first-half performance marked by declines in both revenue and profit, pharmaceutical distribution within the pharmaceutical commerce sector has effectively dragged 2024’s performance growth into negative territory.——In 2024, HISUN achieved an operating revenue of RMB 9.787 billion, representing a year-on-year decrease of 5.65%. The decline in operating revenue was primarily attributed to the impact of its pharmaceutical distribution business.Revenue excluding pharmaceutical distribution business reached RMB 7.10 billion, a year-on-year increase of 8.00%, primarily driven by robust growth in pharmaceutical formulations and active pharmaceutical ingredients (APIs).。

Further breakdown,The gross profit of the pharmaceutical commerce segment increased by RMB 132 million year-on-year,Among them,Pharmaceutical distribution generated revenue of RMB 2.687 billion, a year-on-year decrease of RMB 1.112 billion, primarily due toDecline in Revenue from Raw Material Distribution Businessimpact. Meanwhile, imported pharmaceutical preparations and outsourced drug marketing servicesAchieved revenue of RMB 822 million, a year-on-year increase of RMB 181 million,The primary driver was intensified marketing efforts, which led to a year-on-year increase in revenue for products such as omadacycline (Nuzyra) and sirolimus tablets (Rapamune).

On one hand, compliance risks, limited distribution channels, and difficulties in hospital access remain significant hurdles for high-margin pharmaceutical products. Meanwhile, merely retaining existing customers and markets fails to address the declining revenue from raw material businesses and the continuous drop in net profit. On the other hand, its channel network strategy, deeply rooted in Zhejiang Province, imposes certain constraints on market expansion.In this regard, the Provincial Pharmaceutical Company needs market expansion and new product development, while Hanhui Pharmaceuticals needs to deepen its market presence and penetrate grassroots levels.

The announcement stated that HISUN will “focus on the pharmaceutical manufacturing sector, leverage its strengths in this field, and see improvements in indicators such as net profit margin.”Global expansion, animal health, synthetic biology, and general wellness have become the key transformation themes for this traditional pharmaceutical company founded in 1956.

In terms of finished dosage form exports, we are actively developing international markets outside the United States for sales; the first introduced product distributed by HISUN USA in 2025Achieved market share in the U.S. market in Q221%. As an international platform for pharmaceutical formulation exports, HISUN USA not only rapidly expands its own product portfolio but also undertakes the export and sales of formulation products for other companies.

Animal Health Product: Deworming Drug Hai Le Wang Approved for Vietnam Market and First Shipment Completed.

The API business is actively expanding into new markets such as South America, the CIS, and the Middle East. Its products are exported to more than 70 countries and regions, with extensive coverage in the pharmaceutical and healthcare sectors. The company serves over 400 overseas customers, including members of the global top ten pharmaceutical companies.

HISUN Has Deeply Cultivated Its Animal Health Business31 years, possessesWith two production bases and 25 multi-dosage-form production lines (including vaccines), the company has established a strategic layout across four key sectors: pet health, swine health, ruminant health, and international trade. It currently offers more than 40 products, holds 71 approval numbers, and maintains a robust product pipeline. The company has forged long-term strategic partnerships with over 150 partners, providing products and services to more than 50 large-scale livestock farming groups and multiple chain pet hospitals in China.

Founded in 2009,Hisun Animal Health’s portfolio includes several star products such as Hai Le Miao (the first domestically produced combination deworming tablet for cats), Hai Le Wang, Mo Ai Jia, Xi Bei An, and Sai Le Di, primarily covering the fields of anthelmintics and vaccines. In an interview, Hisun Animal Health stated that economic animals constitute its foundational business, while the pet care segment is positioned as its strategic core business. By 2025The pet care segment will account for more than 50% of Hisun Animal Health’s total business, and is projected to reach 60% within the next three years.

On June 20, Yunsheng Synthesis, a wholly-owned Sino-foreign joint venture subsidiary of HISUN focused on the field of synthetic biology, was officially established., August,YunshengThe first three synthetic biology orthopedic products were synthesized and launched on the market.The Flexible Production Line for the Synthetic Biology Industry Officially Commences Operations.

Strategically, Yunsheng SynthesisFocusing on calcium retention and bone strengthening, liver protection, the cardiovascular system, medical aesthetics, and general health, we are strategically positioning dual-use medical-food/medical-chemical products and a tiered product portfolio. WithTop research institutions, including the Shanghai Institute of Plant Physiology and Ecology of the Chinese Academy of Sciences and Zhejiang University of Technology, have established collaborations. Strategic partnerships have been secured for multiple product categories, with technical validation progressing steadily. On the sales front, Yunsheng Synthesis will integrate HISUN’s premium internal sales resources and platforms to create a multi-dimensional sales network spanning both horizontal and vertical axes, thereby building an independent, integrated online-and-offline sales platform that covers domestic and international markets as well as both raw material and end-product sectors.

August, wholly-owned subsidiaryHisun WeilanOfficially launched “Ruili Su · Nuwa Needle,” the first medical aesthetics product following its rebranding and repositioning. In accordance with the strategic layout,Hisun WeilanPlaceDrive product development in medical aesthetics, cross-border health supplements, and functional skincare, building an integrated R&D, production, and sales matrix; strengthen channel development and brand image, and accelerate the introduction of external projects and resource integration.

HISUN’s strategic transformation and industrial upgrading, driven by its e-commerce initiatives and diversification into multiple sectors, stand out among established pharmaceutical companies. This decisive restructuring underscores its determination to secure new growth engines. However, only by solidifying its fundamentals and advancing steadily can it capture incremental gains and unlock the next wave of growth.