China Resources Boya Bio to Divest 80% Stake in Boya Xinhe for RMB 213 Million

On April 13, Boya Bio-pharmaceutical Group Co., Ltd. (300294.SZ) announced its plan to list and transfer an 80% equity stake in Jiangxi Boya Seehot Pharmaceutical Co., Ltd. (“Boya Seehot”) via the Shanghai United Assets and Equity Exchange, with the initial listing price set at approximately RMB 213 million (subject to the appraised value filed with the unit authorized by the state-owned assets supervision and administration authority).

Jiangxi Boya Seehot Pharmaceutical Co., Ltd, established in 2014, is primarily engaged in the research and development, production, and sales of anti-infective, diabetes, and cardiovascular and cerebrovascular pharmaceuticals. Upon completion of the equity transfer, Boya Bio-pharmaceutical Group Co.,Ltd.’s shareholding in Jiangxi Boya Seehot Pharmaceutical Co., Ltd will decrease from 90.69% to 10.69%, and Jiangxi Boya Seehot Pharmaceutical Co., Ltd will no longer be included in the consolidated financial statements of Boya Bio-pharmaceutical Group Co.,Ltd.

This equity transfer is regarded as a significant measure in Boya Bio-pharmaceutical Group Co., Ltd.’s strategy to “focus on its core blood products business and optimize resource allocation,” aiming to enhance return on capital and operational efficiency.

According to Boya Bio-pharmaceutical Group Co., Ltd.'s annual report, the company's total revenue for 2024 was RMB 1.735 billion, a year-on-year decrease of 34.58%, primarily due to the proactive contraction of non-core businesses (such as a 99.73% decline in revenue from pharmaceutical distribution). However, net profit attributable to shareholders reached RMB 397 million, representing a counter-trend growth of 67.18%, while net profit after deducting non-recurring gains and losses surged by 110.77% year on year.

The annual report pointed out that the decline in revenue was mainly due to decreased income from biochemical drugs and pharmaceutical distribution businesses, while the growth in net profit was related to a lower base caused by goodwill impairment provisions made in 2023. This seemingly contradictory data actually reflects the positive results of Boya Bio-pharmaceutical Group Co., Ltd. in asset optimization and business adjustments.

Boya Bio-pharmaceutical Group Co., Ltd. focuses on blood products as its core business, while also covering biochemical drugs, chemical drugs, and active pharmaceutical ingredients (APIs). In 2024, the company’s core blood products segment generated revenue of RMB 1.514 billion, representing a year-on-year increase of 4.32%. The growth in sales of Prothrombin Complex Concentrate (PCC) and Factor VIII indicates that its core business maintains a certain level of competitiveness.

Jiangxi Boya Seehot Pharmaceutical Co., Ltd, established in 2014, is primarily engaged in the research and development, production, and sales of anti-infective, antidiabetic, and cardiovascular and cerebrovascular pharmaceuticals. Since its inception, Boya Bio-pharmaceutical Group Co.,Ltd has cumulatively invested over RMB 500 million in constructing anti-infective drug production lines.

However, Jiangxi Boya Seehot Pharmaceutical Co., Ltd. incurred losses for two consecutive years, with net losses of RMB 56.87 million in 2023 and RMB 34.62 million in 2024, becoming a non-core business burden for Boya Bio-pharmaceutical Group Co., Ltd. Furthermore, its core product, sitafloxacin tablets, failed to win bids in the centralized volume-based procurement, resulting in long-term underutilization of production capacity. With revenue amounting to only RMB 10.1729 million in 2024, the subsidiary struggles to sustain continued investment.

In contrast, as Boya Bio-pharmaceutical’s core business, the blood products segment accounted for a substantial 87.29% of its operations in 2024 and holds significant competitive advantages within the industry. By divesting Jiangxi Boya Seehot Pharmaceutical Co., Ltd., a non-core asset, Boya Bio-pharmaceutical can channel more resources and focus into its blood products business, further solidifying its leading position in this field and enhancing the competitiveness and profitability of its core operations.

In fact, since September 2023, Boya Bio-pharmaceutical Group Co., Ltd. (Boya Bio) has clearly focused on the development of its blood products business, and will divest or dispose of its non-blood product businesses at the appropriate time. Previously, in October and November 2023, Boya Bio divested non-core assets such as Tian'an Pharmaceutical and Fuda Pharmaceutical, resulting in a RMB 298 million reversal of impairment losses.

The blood products industry in which Boya Bio-pharmaceutical operates is ushering in numerous development opportunities, providing ample room for its future growth.

Driven by an aging population, a rising number of patients with chronic diseases, and improved healthcare coverage, market demand for blood products continues to climb. For instance, immunoglobulin products are indispensable in the treatment of immunodeficiency disorders and autoimmune diseases, and their market size is expected to expand further. Industry forecasts predict that China’s blood products market will grow at an average annual rate of approximately 10% in the coming years.

On one side lies vast market demand; on the other, a structural contradiction of insufficient supply.

The production of blood products relies on plasma from healthy donors, resulting in tight supply and stringent regulatory oversight. According to the Huajing Industry Research Institute, the volume of plasma collected by domestic blood product manufacturers in China reached approximately 10,181 metric tons in 2022, representing an 8.3% year-on-year increase. Despite the post-pandemic recovery in plasma collection volumes, a significant gap persists between the supply and demand for source plasma in China. Constrained by insufficient upstream plasma resources, the per capita consumption of blood products in China remains far below the levels observed in developed countries.

On the other hand, given the unique nature and stringent safety requirements of blood products, national regulations mandate traceable process records for all stages—including raw material collection, testing, storage, transportation, production, and sales—thereby implementing strict end-to-end oversight. Regulatory authorities in China have adopted rigorous supervisory measures and introduced a series of regulatory policies to ensure the healthy and orderly development of the industry.

In China, the production of blood products relies on plasma from healthy donors, with source plasma collected at legally established plasmapheresis centers. These plasmapheresis centers are approved by provincial health and family planning commissions, managed by blood product manufacturers, and serve as exclusive resources for these enterprises. The entire process of blood products, from raw material collection to sales, is subject to strict regulatory oversight, including viral screening and lot release protocols.

According to Boya Bio-pharmaceutical Group Co., Ltd.'s announcement, the Chinese government has not approved any new manufacturers since May 2001 and implements aggregate production control over existing producers. Currently, fewer than 30 blood product manufacturing enterprises are operating normally in China. Moreover, a small number of companies hold multiple production licenses, resulting in high industry barriers and extreme scarcity of production license resources.

Therefore, as one of the few companies in China with a complete portfolio of Class III products and qualified to expand plasma collection stations, Boya Bio-pharmaceutical possesses significant resource advantages.

In 2021, China Resources Pharmaceutical Holdings Limited (3320.HK), a subsidiary of China Resources Pharmaceutical, obtained control of Boya Bio-pharmaceutical Group Co., Ltd. by acquiring shares held by Shenzhen GTJA Investment Group Co., Ltd., accepting voting rights proxies, and fully subscribing to the shares issued by Boya Bio to specific investors, thereby integrating Boya Bio into the China Resources Group’s healthcare sector.

In line with China Resources’ strategic plan, Boya Bio-pharmaceutical Group Co., Ltd. aims to achieve three key breakthroughs by 2025: expanding its total number of plasma collection stations to over 30, increasing plasma collection volume to more than 600 tons, and having new products such as recombinant coagulation factor VIII contribute 15% of its revenue. More importantly, leveraging the industrial fund of China Resources Pharmaceutical, the company is planning acquisitions of regional blood product enterprises such as Danxia Biological, with the goal of establishing a plasma collection network comprising “30 owned plasma stations + 15 controllable plasma stations” by 2027, achieving a plasma collection volume exceeding 1,000 tons, and securing a position among the industry’s top tier.

After China Resources became the actual controller of the company, it provided strong support to Boya Bio-pharmaceutical Group in areas such as new plasma collection station applications, resource integration, and station operations. Data shows that while the number of newly approved plasma collection stations in the industry decreased by 23% year-on-year in 2024, Boya Bio-pharmaceutical Group bucked the trend and secured three provincial-level approvals.

In July 2024, Boya Bio-pharmaceutical Group Co., Ltd. acquired Green Cross Hong Kong for RMB 1.82 billion, adding four plasma collection stations and bringing the company’s total to 20. The patented recombinant coagulation factor VIII technology of Green Cross filled a gap in Boya Bio’s product portfolio, injecting new vitality into the company. More importantly, the four newly added plasma collection stations are located in populous provinces such as Henan and Shandong, forming a geographical complement to Boya Bio’s existing stations. The annual plasma collection volume is expected to exceed 700 tons by 2026.

However, after the Dalad Banner plasma collection station in Inner Mongolia was approved in January 2025, it will require an 18-month ramp-up period before achieving plasma collection capacity. Industry data indicate that new plasma stations typically take three years to reach their designed capacity; therefore, Boya Bio-pharmaceutical’s 2025 target of “exceeding 30 plasma stations” remains subject to market observation.

Upon completion of this equity transfer, Boya Bio-pharmaceutical Group Co., Ltd. will receive approximately RMB 213 million in capital inflow, which holds significant importance for the company’s strategic adjustments. On one hand, these funds can be used to repay part of the interest on the Green Cross acquisition loan, thereby alleviating the company’s financial burden. On the other hand, as new resources such as the plasma collection station in Dalad Banner, Inner Mongolia, gradually mature, the company needs to further increase its investment in the blood products sector to achieve steady growth in plasma collection volume and optimize and upgrade its product portfolio.

Although the development of new plasma collection stations requires time, Boya Bio-pharmaceutical Group Co., Ltd. is expected to achieve steady growth in plasma collection volume in the future as new resources such as the Dalad Banner Plasma Collection Station in Inner Mongolia gradually mature, providing a solid foundation for the company’s long-term development.