On July 3, Guangzhou Xiangxue Pharmaceutical Co., Ltd. issued an announcement detailing the latest progress in the recruitment and selection of restructuring investors—based on the evaluation results from the company’s restructuring investor selection review meeting held on June 30,Guangzhou Guangyao Capital Co., Ltd. was confirmed as the selected investor.

This means that,Xiangxue Pharmaceutical’s pre-restructuring process has encountered a key variable.

Looking back at Xiangxue Pharmaceutical’s path to pre-restructuring, it received a “Notice Letter” regarding pre-restructuring in January 2025 and subsequently underwent four extensions of the pre-restructuring period. After a year and a half, it has now welcomed its “Prince Charming” to rescue the company.

Guangyao Capital’s move at this juncture reflects multiple considerations encompassing “favorable timing, advantageous location, and human harmony”:

First is the alignment of strategic nodes.December 2025,Guangzhou Pharmaceutical Holdings announces that it expects to complete industrial investments and mergers and acquisitions totaling RMB 20 billion to RMB 30 billion during the 15th Five-Year Plan period,Accelerate innovation and transformation at full speed. Entering 2026, its investment activities have been frequentfrequency,One of the steps was to invest RMB 2 billion in establishing Guangzhou Pharmaceutical Capital.

At the time, there were rumors in the industry that Xiangxue Pharmaceutical might be taken over by the Guangzhou Pharmaceutical Group.

Secondly, it possesses the advantage of regional synergy.In May this year, Guangzhou Pharmaceutical Holdings was selected as one of the first batch of chain-owner enterprises in Guangzhou’s strategic industrial clusters, shouldering the important responsibility of driving regional industrial upgrading.Xiangxue Pharmaceutical is also based in Guangzhou, providing an entry point for GPC Group to integrate regional pharmaceutical assets.

If the subsequent restructuring proceeds smoothly, Xiangxue Pharmaceutical will become another listed company under Guangzhou Pharmaceutical Holdings, following Guangzhou Baiyunshan.Currently, Xiangxue Pharmaceutical has a market capitalization of RMB 6.216 billion.

Finally, there is GPC’s own need to fill gaps in its business portfolio.In 2025, Guangzhou Baiyunshan Pharmaceutical Holdings Company Limited restructured its business portfolio into five major segments: Modern Traditional Chinese Medicine, Chemical Technology, Natural Beverages, Pharmaceutical Commerce, and Others. Among these, the highly anticipated bio-innovation business was categorized under the "Others" segment.

Image source: Guangzhou Baiyunshan Pharmaceutical Holdings Company Limited 2025 Annual Report

From a data perspective, the revenue of the modern Chinese medicine sector declined by 6.54% year-on-year, with the gross profit margin dropping to 41.94%; the revenue of other business segments in the accumulation phase also decreased by 5.36% to RMB 1.499 billion.

The data reveals two pressures facing Guangzhou Baiyunshan Pharmaceutical Holdings Company Limited:

On one hand, it holds 13 China Time-honored Brand pharmaceutical enterprises, including Zhongyi Pharmaceutical, Chen Liji Pharmaceutical Factory, and Caishantang; however, in the current pharmaceutical market environment,The vast traditional Chinese medicine industrial system needs to strengthen cost control at the source of medicinal materials and decoction pieces.

On the other hand, its biopharmaceutical segment remains in the investment phase and has not yet generated significant revenue. In July 2025, Guangzhou Baiyunshan Pharmaceutical Holdings Company Limited established a RMB 1.5 billion industrial fund to increase its investments in the biopharmaceutical and general health sectors, aiming to accelerate efforts to address existing weaknesses.

Xiangxue’s business precisely aligns with the two major demands mentioned above.

02

Established in 1997, Xiangxue Pharmaceutical has long since built a complete industrial chain closed loop encompassing “cultivation of Chinese herbal medicines—production of Chinese herbal decoction pieces—manufacture of proprietary Chinese medicines—pharmaceutical distribution.”

Despite the company’s overall descent into losses, the upstream traditional Chinese medicine (TCM) industry is experiencing counter-trend growth—In 2025, the revenue from traditional Chinese medicinal materials reached RMB 979 million, a year-on-year increase of 4.53%, accounting for 61.33% of the total revenue.It is reported that the company has established production bases for Chinese herbal medicines in Ningxia, Sichuan, Yunnan, Guangdong, and other regions.

Additionally,Xiangxue's subsidiary, Huqiao Pharmaceutical, is responsible for the production and operation of traditional Chinese medicine decoction pieces.Approved as a National Key Leading Enterprise in Agricultural Industrialization in May 2023.These robust upstream assets are precisely the “cost-control tools” that Guangzhou Pharmaceutical Holdings needs.

More notably,Xiangxue’s layout in the frontier field of cell therapy is also regarded by Guangzhou Pharmaceutical Holdings as its most promising asset.

Xiangxue Life Sciences Research Center has established a complete technical platform and manufacturing process for TCR-T therapy.It is understood that TCR-T cells can simultaneously recognize intracellular and extracellular antigens, and are widely recognized by the industry as the “new hope for solid tumor therapy” following traditional CAR-T cells.

Image source: Xiangxue Pharmaceutical 2025 Annual Report

As of 2025,Xiangxue has three biological innovative drugs under development, among which the TAEST16001 injection has been included in the Breakthrough Therapy designation by the Center for Drug Evaluation of the National Medical Products Administration.Zeng Lun, CEO of Xiangxue Life Sciences and Technology, revealed that the company strives to have the drug approved for market launch by 2028.

If all goes well, this product is expected to become the first approved TCR-T cell therapy product in China and the second globally.Directly breaking the monopoly of currently imported similar drugs, where a single injection costs as much as 5.2 million yuan.

More importantly, in terms of local strategic value,Xiangxue has tailored its TCR-T pipeline with HLA-A*11:01 and A*24:02 genotypes for the Chinese population,Possesses strong potential for rapid commercialization.

Although the strategic rationale for Guangzhou Pharmaceutical Capital’s restructuring of Xiangxue Pharmaceutical is sound, uncertainties remain in practice.

Industry insiders have pointed out that Xiangxue Pharmaceutical’s prolonged failure to enter restructuring proceedings is partly due to its “excessive historical burdens”—The complex asset structure has prolonged the audit and valuation cycle, while heavy debt and litigation pressures have made it difficult to implement the restructuring plan.

Even Xiangxue itself stated,No pre-restructuring investment agreement or specific related terms have been signed with Guangyao Capital; there are uncertainties and risks regarding the subsequent restructuring investors and whether the restructuring proceedings will be initiated.

Referencing the process of Guangzhou Pharmaceutical Holdings’ restructuring of Kangmei Pharmaceutical Co., Ltd. in that year, only five months elapsed from the court’s acceptance of the bankruptcy reorganization to the formal takeover, demonstrating remarkable efficiency: In June 2021, the court accepted Kangmei Pharmaceutical’s bankruptcy reorganization; in October of the same year, Guangzhou Pharmaceutical Holdings and other relevant parties submitted a reorganization investment plan; and in November, the court ruled to approve the formal takeover plan by the reorganizers, with Guangzhou Pharmaceutical Holdings investing approximately RMB 5.4 billion to become the actual controller of Kangmei Pharmaceutical.

Two years later, Kangmei Pharmaceutical Co., Ltd achieved a net profit of RMB 103 million, marking its first return to profitability after losses. This time, can Xiangxue replicate Kangmei Pharmaceutical’s path to “phoenix-like rebirth”?