China Resources Sanjiu to Divest 49.9% Stake in Sanjiu (Anguo) Modern Chinese Medicine for RMB 1.62 Million

Recently, listing information from the Shanghai United Assets and Equity Exchange showed that CR SANJIU has listed for transfer its 49.8967% equity stake in Sanjiu (Anguo) Modern Traditional Chinese Medicine Development Co., Ltd., with a minimum transfer price of RMB 1.6215 million.

Image source: Shanghai United Assets and Equity Exchange

Sanjiu (Anguo) Modern Traditional Chinese Medicine was established in 2001, with Zhang Pengyue as the legal representative and a registered capital of RMB 9.68 million. Its business scope includes: processed traditional Chinese medicine decoction pieces (cleaning, stir-frying, cutting, steaming, boiling, blanching, and stewing), extracts (Forsythia extract, Acanthopanax senticosus extract), etc.

CR SANJIU is the company’s largest shareholder, holding a 49.8967% equity stake. The remaining individual shareholders include Zhang Pengyue, with a 33.4711% stake, and Fang Zhen, with a 16.6322% stake. As CR SANJIU’s shareholding does not reach absolute control (i.e., over 50%), and the remaining shareholders’ stakes are relatively concentrated, this listed equity transfer indicates that CR SANJIU intends to exit its investment in Sanjiu (Anguo) Modern Traditional Chinese Medicine.

CR SANJIU’s decision to exit Sanjiu (Anguo) Modern Traditional Chinese Medicine is driven by obvious reasons. The company has been incurring losses for years, with its total assets continuously declining and its liabilities steadily increasing.

Source: Shanghai United Assets and Equity Exchange

According to information from the Shanghai United Assets and Equity Exchange, in 2023, Sanjiu (Anguo) Modern Traditional Chinese Medicine reported zero revenue, a net loss of RMB 665,300, total assets of RMB 5.2676 million, and total liabilities of RMB 2.8998 million; in 2024, the company again reported zero revenue, a net loss of RMB 1.2914 million, total assets of RMB 4.4931 million, and total liabilities of RMB 6.2265 million.

By divesting the non-core asset of its associate, Sanjiu (Anguo) Modern Chinese Medicine, CR SANJIU can concentrate more resources and efforts on its core businesses, further consolidating its leading position in the CHC health consumer products and prescription drug sectors, thereby enhancing the competitiveness and profitability of its core operations.

In fact, this marks the second time in nearly a month that companies under the “China Resources” umbrella have announced the divestiture of non-core assets.On April 13, 2025, China Resources Boya Bio-pharmaceutical Group Co., Ltd. (hereinafter referred to as “Boya Bio”) issued an announcement stating its intention to list and transfer an 80% equity interest in Boya Xinhe through the Shanghai United Assets and Equity Exchange. The initial listing price is approximately RMB 213 million, subject to the appraised value filed with the entity authorized by the state-owned assets supervision and administration authority. Upon completion of the equity transfer, Boya Bio’s shareholding in Boya Xinhe will decrease from 90.69% to 10.69%, and Boya Xinhe will no longer be included in the scope of Boya Bio’s consolidated financial statements.

Boya Xinhe’s revenue performance mirrors that of CR SANJIU (Anguo) Modern Traditional Chinese Medicine Development Co., Ltd., with both entities experiencing consecutive losses. Boya Xinhe reported net losses of RMB 56.87 million in 2023 and RMB 34.62 million in 2024, becoming a non-core business burden for Boya Biopharma. Furthermore, its core product, sitafloxacin tablets, failed to win bids in the centralized volume-based procurement program, resulting in prolonged underutilization of production capacity. With only RMB 10.1729 million in revenue generated in 2024, the product line is unable to sustain continued investment.

It is evident that Boya Bio-pharmaceutical’s divestiture of Boya Xinhe is similar in nature to CR SANJIU’s spin-off of Sanjiu (Anguo) Modern Chinese Medicine. By divesting Boya Xinhe, a non-core asset, Boya Bio-pharmaceutical can allocate more resources and focus to its blood products business, further consolidating its leading position in this sector and enhancing return on capital and operational efficiency. Additionally, Boya Bio-pharmaceutical had previously divested other non-core assets, including Tian’an Pharmaceutical and Fuda Pharmaceutical, in October and November 2023, respectively, resulting in RMB 298 million in reversal of impairment losses.

Currently, driven by policy and demand, China's pharmaceutical industry is transitioning toward high-quality development; however, influenced by various factors, the industry continues to experience slow growth. The transition from old to new growth drivers in the pharmaceutical sector is accelerating, yet the industry still faces numerous challenges marked by uncertainty.

For instance, in the retail market, policies such as outpatient mutual aid, pooled reimbursement at pharmacies, and drug price governance continue to shape the landscape of the pharmaceutical retail sector, which has overall entered an era of sluggish growth. According to data from Zhongkang CMH, the sales volume of drugs in China’s pharmaceutical retail market reached RMB 501.9 billion in 2024, representing a slight year-on-year increase of 0.8%. Among this, drug sales through physical pharmacies (including O2O) amounted to RMB 437.4 billion, with a marginal year-on-year growth of 0.3%; e-commerce channels recorded drug sales of RMB 64.5 billion, with the year-on-year growth rate slowing to 4.6%. Nevertheless, e-commerce outperformed physical pharmacies in growth, its channel importance rose by 0.5 percentage points to reach 12.9%.

Furthermore, against the backdrop of healthcare insurance cost containment, the growth rate of the hospital market has continued to slow down due to multiple factors, including stricter supervision of healthcare insurance funds, accelerated expansion and implementation of centralized procurement, volume-based price reductions for generic drugs, and the normalization of industry compliance rectification. Data from Sinohealth Kasis shows that from January to September 2024, the drug market size in tiered hospitals reached RMB 751 billion, with the year-on-year growth rate declining to -3.3%.

Amid pressure on the pharmaceutical industry, CR SANJIU has stated that it prioritizes the quality of external M&A activities.

Guided by this M&A strategy and leveraging its extensive industry experience and keen market insights, CR SANJIU has successively acquired high-quality assets in recent years, including Huangshi Pharmaceutical, Zhejiang Zhongyi, Kunming Shenghuo, Aonuo Pharmaceutical, Shenzhen CR Hall, Anhui Jinchan Biochemical, Benxi Sanyao, Hefei Shenlu, Shuanghe Gaoke, Guangdong Shunfeng, Guilin Tianhe, Linhua Huawei, Shandong Shenghai, Aonuo Pharmaceutical, and Tasly. These acquisitions have built competitive business advantages in strategic areas such as chronic disease management and pediatric vitamins and minerals, thereby consolidating its industry position.

Among these, CR SANJIU’s acquisitions of core assets such as Tasly and Kunyao have become a hot topic of discussion within the industry recently. In response, CR SANJIU stated during its Q1 2025 earnings conference call that “CR SANJIU, Tasly, and Kunyao each possess distinct resource endowments and core capabilities. Moving forward, the three companies will build differentiated competitive advantages through deepened synergy, thereby achieving their respective market positioning and development directions. CR SANJIU will focus on its Consumer Healthcare (CHC) business as its core, striving to become an industry leader; Tasly will center on prescription drugs, aiming to be the leader in innovative traditional Chinese medicine (TCM) drugs and the top brand in the medical sector; Kunyao Group will prioritize Panax notoginseng products and premium TCM as its core businesses, striving to become a pioneer in the silver economy health industry.”

CR SANJIU is expected to achieve optimized resource allocation and realize synergies through a series of strategic M&A transactions and equity transfers, ultimately providing patients with more high-quality, affordable pharmaceutical products and healthcare service solutions.

References:

1. “RMB 213 Million: China Resources Holdings Plans to Transfer 80% Equity Stake in Subsidiary”

2. “CR Group” Is Set to Sell Another Company